Best AI Stock to Buy in December

Key Takeaways

• Artificial intelligence (AI) is driving massive growth in the stock market, particularly among big tech companies like Nvidia, Microsoft, and Alphabet.
• Palantir Technologies has emerged as a top AI performer, with shares surging 345% year to date.
• Palantir is set to join the Nasdaq-100 on December 23, historically a catalyst for strong stock performance.
• Bull markets, on average, last about 5 1/2 years, and we’re only just over two years into the current one.

Best AI Stock to Buy in December

Artificial intelligence (AI) is poised to be the biggest factor influencing whether the stock market continues its strong run or faces a downturn next year. Unlike the Internet boom, which was driven by smaller upstarts, today’s AI boom is led by highly profitable, diversified tech giants.

The S&P 500 is heavily concentrated, with Apple, Nvidia, and Microsoft accounting for about 20% of the index. Nvidia alone represents 6.8%, driven by surging AI infrastructure spending. As long as companies compete to advance AI models, this spending is expected to support the bull market, which typically lasts about 5 1/2 years. Currently, we are only a little more than two years into the cycle.

One standout in the AI economy is Palantir Technologies (PLTR), which has surged 345% year to date, making it the best-performing stock in the S&P 500 for 2024. In November, Palantir transferred its stock from the New York Stock Exchange to the Nasdaq Exchange, anticipating eligibility for the Nasdaq-100—a growth-focused index tracking the 100 largest non-financial companies on the exchange.

Palantir is the largest Nasdaq-listed company not currently in the Nasdaq-100. It is set to join the Nasdaq-100 on Dec. 23 following the Dec. 13 reconstitution announcement. Historically, such inclusions have often led to strong stock performance over the following year.

Here's why that matters: If Palantir is added to the Nasdaq-100 later this month, history suggests the stock could continue its upward trajectory through December. While past performance doesn’t guarantee future results, there’s a compelling case for further growth.

Palantir has momentum: There is another reason to think Palantir stock will soar following its inclusion in the Nasdaq-100. Every headline sends the price higher. In September, Palantir shares soared 14% in one day on news of its inclusion in the S&P 500. In November, the stock soared 11% in a single day when the company said it would relist on the Nasdaq Exchange.

Should you invest $1,000 in Palantir Technologies right now?

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