I asked ChatGPT to name the best growth stocks for the S&P 500 and it chose this AI powerhouse.

Sometimes people have to accept that we don’t always make the best investment decisions. So, I thought I’d turn to ChatGPT and ask them to name a high growth stock in S&P 500.

What’s your favorite AI for productivity?

The generative Artificial Intelligence (AI) tool initially gave me a list of six companies from the index. A tech giant Nvidia (NASDAQ:NVDA) was the first name on the list. Surprise, surprise.

Other names were Amazonchip maker Advanced Micro Devicesdefense company Axon Companyand a cybersecurity company Fortinet.

“Can you narrow it down to one company?” I asked next. Nvidia was the answer.

The reason given was the company’s dominance of the graphics processing unit (GPU) market and leadership in the AI ​​revolution. It has affected the tech giant’s valuation, but they think this was justified due to the company’s strong growth and outlook.

Honestly, this didn’t enlighten me. The points it gave were very basic and general, so, I was somewhat disappointed.

My thoughts on Nvidia

I agree that Nvidia is a great company. Its growth frankly amazes me. Revenue to increase by 112% in FY25. It is then expected to increase by 52% in FY26.

Achieving this level of growth as a small company is difficult. However, it is very exciting to see the company turn $27bn in sales in 2023 into an expected $196bn in 2026. For a blue-chip stock, this is very impressive.

Success also fits into its bottom line. Last quarter, revenue increased 168% year over year.

For this reason, the stock price has increased by 859% since the beginning of 2023, leading many to believe that Nvidia stock is expensive. However, I disagree with this view. I actually believe its forward price (P/E) ratio of 32.8 is cheap for the company.

Nvidia’s GPUs are becoming a cornerstone in the field of AI. It looks set to dominate the AI ​​arms race with growth rates much higher than the industry’s already strong annual growth rate (CAGR) of 37%.

Another concern I have about the company is Trump’s potential pricing. If the production materials for their products become more expensive because of this, it can have a negative impact on the company’s earnings.

I feel bad for ChatGPT

I want to end this article by saying that while I understand why they chose Nvidia as their top choice, I’m disappointed that they missed out. Palantir (NASDAQ:PLTR) in its first listing.

The company was the biggest winner in the S&P 500 in 2024, with its shares rising 341%. This is because it is also experiencing rapid growth from the rise of AI.

However, perhaps the productivity AI tool had a reason for it. For a company with a market capitalization of $155bn, Palantir’s trailing 12-month revenue of $2.6bn is concerning. Any weakness can send the stock price down. For example, an insider sold $36m of Palantir stock in the past few days (January 7), causing the share price to drop by 8%.

However, I don’t think ChatGPT has given me much use in my quest to find the best growth stocks in the S&P 500. I believe it is still better for an investor to do their own thorough research instead of using AI for stock selection purposes.