Analysts love these stocks with big upside potential to play the ChatGPT-driven artificial intelligence craze

Published Tue, Feb 7 20234:17 PM ESTUpdated Tue, Feb 7 20236:19 PM EST

Every few years there's a surge of renewed buzz around artificial intelligence. With the current hype around ChatGPT and its competitors, investors must be able to distinguish an exciting opportunity from an overhyped one. This week, Alphabet's Google announced a new conversational AI technology it will open up to public testing, called Bard, that would rival ChatGPT. Chinese search engine company Baidu revealed plans to launch its own ChatGPT-style "Ernie Bot." It's not the first time the tech world has seen companies treat a trend as some magical elixir that could make them more attractive — just think of the "blockchain" or "metaverse" crazes. But like each time before this one, investors want to know which names have the potential to generate real returns. CNBC Pro screened about a dozen AI funds — including the Global X Robotics & Artificial Intelligence ETF , the ARK Autonomous Technology & Robotics ETF and the First Trust Nasdaq Artificial Intelligence and Robotics ETF — using data from FactSet, for NYSE- or Nasdaq-listed AI plays. Each name in the list that follows has potential upside of about 35% or more, buy ratings from at least 60% of analysts and at least 10 analysts covering the stock. Here are the stocks: Centene and CrowdStrike are the biggest names that turned up — and Centene shares are trading at a discount, being down more than 13% for the year. It has about 39% potential upside and buy ratings from almost 62% of the analysts covering it. CrowdStrike gets the most coverage, however, with 39 analysts. About 77% of them have buy ratings on the cybersecurity name, and the shares have 40.5% upside based on their average price target. The biggest upside is in smaller companies, however. Intellia Therapeutics , a company focused on gene-editing treatments, has upside potential of about 140% and buy ratings from 72% of its 27 analysts. Denali Therapeutics , which is focused on defeating neurodegenerative diseases, is close behind, with upside potential of 104% and buy ratings from almost 89% of its 18 analysts. They're followed by Stem , a provider of battery systems and smart energy AI software, and biotech company Relay Therapeutics , whose shares could rise by 75% and 71%, respectively, according to analysts. Relay also has the second-largest percentage of buy ratings, from 90% of 11 analysts. Karuna Therapeutics , which specializes in schizophrenia treatments, holds the largest percentage of buy ratings, coming from 95% of its 20 analysts. They see the stock rising about 49%. Karuna is down about 1% for the year. AppLovin , Exelixis , Ovintiv , Darling Ingredients , Intra-Cellular Therapies and Nomad Foods are also on the list.