The artificial intelligence boom has propelled industry behemoths Microsoft and Adobe onto this list of leading AI stocks and other top-rated companies to have on your watchlist. Adobe, MSFT stock and all the names shown here hail from today's Top 20 industry groups — a factor worth noting since winning stocks tend to come from the top-ranked groups.
Each company is also outpacing at least 95% of all stocks in terms of key stock-picking factors.
With AI increasing spreading across all industries, cybersecurity firms CrowdStrike and Zscaler, which just reported earnings, have tapped into the AI revolution. So have database companies MongoDB and Open Text.
The buzz around artificial intelligence has Microsoft, Adobe and CRWD stock flying high into a Santa Claus rally, one that has run into some turbulence this week. CrowdStrike just reported earnings that lacked oomph amid big 2023 gains. Regrdless, the stock has continued to soar, on pace for a nearly 13% gain for the week.
Education stocks New Oriental Education and Stride have also shown impressive strength.
Microsoft has soared and remains near the top of its buy zone. MDB stock popped Thursday but retreated to right around its 412.67 buy point. Meanwhile, Open Text continues to set up a new move.
MSFT Stock Among Top Stocks In Top-Ranked Industries
| Company | Symbol | Comp Rating | EPS Rating | RS Rating | SMR Rating | A/D Rating |
|---|---|---|---|---|---|---|
| CrowdStrike | 99 | 99 | 98 | A | A- | |
| New Oriental Education | 99 | 82 | 99 | B | A+ | |
| Euronav | 99 | 81 | 87 | A | B+ | |
| Howmet Aerospace | 99 | 84 | 89 | A | A | |
| Dorian LPG | 99 | 99 | 99 | A | A- | |
| Stride | 99 | 99 | 97 | B | A+ | |
| MongoDB | 99 | 82 | 98 | B | B+ | |
| Microsoft | 99 | 97 | 94 | A | B+ | |
| Open Text | 99 | 89 | 86 | A | B+ | |
| Palo Alto Networks | 99 | 98 | 96 | A | B | |
| Skechers | 99 | 93 | 92 | B | A- | |
| Zscaler | 99 | 99 | 97 | A | A- | |
| Adobe | 98 | 96 | 97 | A | B | |
| Dropbox | 98 | 98 | 89 | A | B- | |
| Gen Digital | 98 | 86 | 82 | A | A- | |
| Modine Manufacturing | 98 | 94 | 98 | B | B- | |
| Ross Stores | 98 | 86 | 86 | A | B+ | |
| Urban Outfitters | 98 | 99 | 89 | B | B- | |
| Vertex | 98 | 95 | 97 | A | B | |
| Celestica | 97 | 96 | 98 | B | B- | |
| AO Smith | 96 | 93 | 86 | B | B- | |
| Hess Midstream | 96 | 85 | 86 | A | B+ | |
| Teradata | 95 | 94 | 86 | B | B |
Data as of Nov. 30, 2023
MSFT Among Top-Rated AI Stocks
To make this screen of top stocks to watch in the top-ranked industries, each company must meet the following criteria:
- Industry group rank: between 1 and 20 (on IBD's 197 industries list).
- Composite Rating: 95 or higher.
- EPS Rating: 80 or higher.
- Relative Strength Rating: 80 or higher.
- SMR Rating: A or B.
- Accumulation/Distribution Rating: A or B.
- Current share price: $12 or more.
- 50-day average volume: 400,000 shares or more.
Ratings, or course, are just one part of the equation when evaluating a stock. Be sure to always check the stock chart to gauge when to buy, sell or hold.
Scan the list below and click the symbols to check the stock chart for any bases and buy zones.
Build Your Watchlist With Stock Ratings And Stock Lists
Running stock screens with the IBD Stock Screener or MarketSmith is an effective way to streamline your research.
You can also zero in on the best stocks to watch using IBD stocks lists based on a wide range of preset filters. You'll find top-rated stocks meeting the criteria of the IBD 50, IBD Sector Leaders, IBD Big Cap 20, IPO Leaders and more.
Meta stock and Tesla stock, for example, earn a spot on the IBD Big Cap 20.
Once you've put together potential stock picks for your watchlist, you'll want to evaluate your ideas with IBD Stock Checkup. With pass, neutral or fail ratings for each of your stocks, IBD Stock Checkup provides a detailed look at both the fundamental and technical health of the companies on your watchlist.
Additionally, based on the CAN SLIM system, the Composite Rating provides an overall score that takes into account each of the IBD ratings. The single score considers how a company and its stock are performing in terms of annual and quarterly earnings growth as well as its relative strength vs. the rest of the market. The score also accounts for sales, profit margins and institutional demand.
But note that you should not buy a stock solely on its ratings or placement on one of IBD's stock lists. No matter how compelling a company's story may seem, savvy investors will always check the technical action in the stock chart before buying.
Check The Chart To Know When To Buy MSFT Stock And Others
Using stock lists helps you zero in on the best stocks to watch. Stock ratings look under the hood to diagnose a company and its stock's fundamental and technical health. Both stock lists and stock ratings help you understand what to buy. But to fully understand when to buy stocks, take a look at the stock chart.
It's also critical to understand what type of environment you're currently in. Is it a bull market when most stocks go up? Or a bear market when most stocks go down? Or is it a volatile, choppy and uncertain time when the market indexes tend to fail to make any sustained headway? That was the case for much of 2022.
Use stock charts to evaluate both the market indexes and individual stocks. Charts will help you pinpoint the best time to buy stocks by identifying support and resistance, as well as buy points and buy zones. Using charts also helps you identify warning signs and when to sell stocks.
So when searching for potential stock picks and stocks to watch, always check the charts. They provide the most unbiased diagnosis of a stock's health.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
