The rise of artificial intelligence (AI) technologies is a theme from 2023 that was unignorable. Going into the new year, don’t expect generative AI tech to fade away. Indeed, we’ve had more than our fair share of bubbly themes arise in recent years, from cryptos to cannabis. Though blockchain technology showed promise, it’s unclear how the tech was to produce actual earnings over the medium term.
In 2024, we’ll likely witness AI tech spreading its wings across a broader basket of industries, as it looks to work its way into the earnings results of various companies that leverage it well. And as more firms adopt AI, my bet is that productivity and efficiency will rise, potentially helping the economy avoid a nasty economic downturn.
Indeed, AI seems to be that wild card that helps drive economic growth after many years of pandemic-induced pains. And though the long-term potential of generative AI is most profound, I think the technology has a lot to offer in the near term. Positive surprises are possible. And AI, I believe, is such a surprise that helped make 2023 a great year for investors.
Without further ado, here are two tech stocks I view as great buys for young investors looking to get into the AI scene for 2024 and beyond.
Adobe
Undoubtedly, American software firm Adobe (NASDAQ:ADBE) is just one of many tech plays that stand to see their fundamentals be improved drastically by advancements in generative AI.
The company has its own AI products (think Firefly AI) that help enhance its existing offerings, like platforms with its Adobe Creative Cloud. With AI-powered products, consumers will probably be willing to pay more, even in the face of a recession. Why? AI stands out as one of those value-creating services that can actually save customers money.
So, if you’re a fan of Adobe’s Photoshop or Illustrator, just wait until you try the applications with a bit of AI on the side! Though shares of ADBE seem expensive at more than 33 times forward price to earnings (P/E), I view it as an AI winner that could help propel your portfolio over the long haul.
The stock has gained over 77% year to date. But I have a feeling it’s not done yet, especially if Adobe has more AI surprises in store for the new year. With a wide moat (many designers and creatives stand by the Adobe Creative Cloud) and enviable AI talent, young investors shouldn’t be afraid to nibble on shares, even after a hot run.
Shopify
Shopify (TSX:SHOP) is the Canadian e-commerce giant that young Canadians should look to whenever the stock chart’s terrain gets rough. After more than doubling (108% in gains year to date) in 2023, it’s clear that Shopify has what it takes to bounce back from tough times.
With a strong Black Friday in the books and a robust Boxing Day that could be in the cards, it may prove tough to stop SHOP stock in its tracks with all the momentum behind it going into the new year.
In 2024, expect Shopify to shed just a bit more light on new AI features. As always, such announcements could drive investor excitement to the next level. For now, many analysts are curbing their enthusiasm for shares now that they’re going above $100 per share. Shopify stock’s getting expensive again. But if you believe in AI, I think the stock’s more of a hold than a sell.
