Artificial Intelligence (AI) stocks have been some of the hottest stocks in 2024. For penny stock traders, AI presents a high-risk, high-reward sector with significant potential for volatility. This volatility cuts both ways — that’s why I trade penny stocks, and never invest in them.
Here, we’ll look at three AI penny stocks that are catching the stock market’s attention this month. These companies operate in sectors ranging from robotics to 5G technology, where AI applications are expanding rapidly. While none of these stocks come with guarantees, they’re worth watching for their growth potential and the catalysts that could send their prices soaring.
As always, remember the importance of having a clear trading plan and never holding penny stocks long-term. The nature of AI penny stocks is speculative, and the goal is to capitalize on momentum rather than making long-term investments.
3 AI Stocks To Watch
My top AI stock picks for October — rated on chart pattern, price action history, and news — include the following:
| Stock Ticker | Company | Performance (YTD) |
|---|---|---|
| NASDAQ: RR | Richtech Robotics Inc | - 85.79% |
| NASDAQ: DTSS | Datasea Inc | - 7.46% |
| NASDAQ: APLD | Applied Digital Corp | + 20.81% |
The penny stocks on this list are some of the wildest movers on the market …
Trading any of these stocks should be approached with a clear strategy and an understanding of the risks involved. I don’t trade until I see a setup I like.
Take a look at my complete AI penny stock watchlist here!
Top 3 AI Stocks to Watch for October 2024
My top AI penny stock picks are:
- NASDAQ: RR — Richtech Robotics Inc — The NVDA-Partnered Robotics Penny Stock
- NASDAQ: DTSS — Datasea Inc. — The 5G Stock Whose New Agreements Are Paying Off
- NASDAQ: APLD — Applied Digital Corp — The Data Center Stock With the NVDA Deal
Before you send in your orders, take note: I have NO plans to trade these stocks unless they fit my preferred setups. This is only a watchlist.
The best traders watch more than they trade. That’s what I’m trying to model here. Pay attention to the work that goes in, not the picks that come out.
Sign up for my NO-COST weekly watchlist to get my latest picks!
Here’s some background info on the AI sector:
- What is the most promising AI stock?
A sector leader like NVIDIA Corp (NASDAQ: NVDA) is the best bet for the most promising AI stock. But remember, we’re traders, not investors. So the stocks on this list are ones we’re watching for short-term moves, not predictions of which will lead stock exchanges in 2030.
- What are the top 3 AI stocks to buy now?
My top 3 AI stocks to buy now (as long as their price action is strong) are Richtech Robotics Inc (NASDAQ: RR), Datasea Inc (NASDAQ: DTSS), and Applied Digital Corp (NASDAQ: APLD).
- Which company is most advanced in AI?
NVIDIA is the most advanced publicly traded company in AI, that’s why it’s the sector leader. But other leading tech stocks like Apple, Microsoft, Google, and Facebook are all safe bets to pull ahead at some point.
- Which Artificial Intelligence stocks have a “Strong Buy” analyst rating?
Analysts tend to love these tech leaders — NVIDIA, Microsoft, Google, and Facebook. Most analysts have rated all of these stocks as “strong buys.”
Let’s get to the picks …
Richtech Robotics Inc (NASDAQ: RR) — The NVDA-Partnered Robotics Penny Stock
Richtech Robotics Inc (NASDAQ: RR) is my first AI penny stock pick.
This stock has a history of spiking, as we saw back in August when it ran 330% in three weeks. As we all know…
The company had multiple high-quality catalysts in recent months with its AI-powered robot and its partnership with NVIDIA (NASDAQ: NVDA). This collaboration integrates NVIDIA’s AI technologies into Richtech’s robotics systems, giving it the best catalyst there is in the AI sector.
Richtech Robotics has a relatively low float of around 12 million shares, which can lead to significant price spikes when demand rises. Former spikers like RR have a tendency to spike again, which is why this stock remains a prime candidate for short-term trading. NVIDIA’s involvement also adds a layer of credibility to the company, making it a no-brainer for this watchlist.
Datasea Inc. (NASDAQ: DTSS) — The 5G Stock Whose New Agreements Are Paying Off
Datasea Inc. (NASDAQ: DTSS) operates in both the AI and 5G sectors, positioning itself to benefit from two rapidly growing markets. In September 2024, Datasea announced that the 5G contracts it signed in August had already generated $9 million in revenue, with the total contract value expected to reach $30 million over the next year. This news caused a 50% spike in the stock’s price, a move I traded three times…
My best trade was for a $3,150 profit (on a starting stake of $42,900).
What I like about DTSS is its ability to generate these quick spikes, even if they don’t last long. For traders, it’s not about holding onto shares and hoping for long-term gains; it’s about recognizing a pattern, getting in, and getting out at the right time.
The stock has a tiny float of 1.7 million shares, making it highly volatile and ideal for short-term trades. I’m keeping DTSS on my watchlist, waiting for the next AI-related press release that could trigger another spike.
Applied Digital Corp (NASDAQ: APLD) — The Data Center Stock With the NVDA Deal
Applied Digital Corp (NASDAQ: APLD) is gaining attention after NVIDIA (NASDAQ: NVDA) and other investors bought a stake in the company on September 5. NVIDIA’s involvement has consistently been a strong catalyst for AI penny stocks, as seen with Serve Robotics (NASDAQ: SERV), SoundHound AI (NASDAQ: SOUN), and Richtech Robotics Inc (NASDAQ: RR).
APLD operates in the data center space, focusing on AI-driven solutions, and NVIDIA’s investment is a strong signal of confidence in the company’s future. Following the announcement, APLD spiked 150%, making it a prime candidate for traders looking for high volatility and fast-moving opportunities.
What I like about APLD is that despite the impressive two-week run, the stock recently broke past the $7 resistance level from June and July, showing continued momentum. APLD might be overextended, but if you follow my 7-step framework you’ll know that the pullbacks will present more opportunities to profit.
MEMORIZE THIS CHART…ITS A BIG PART OF WHY MY 7-STEP https://t.co/46W8tDBAGj FRAMEWORK WORKS SO WELL! https://t.co/FgAdUFBLAF
— Timothy Sykes (@timothysykes) February 28, 2024
The volatility is likely to persist, offering short-term traders a chance to capitalize on price action without taking on multi-day risk. Keep an eye on this one as NVDA’s involvement continues to drive interest and trading volume.
What Are AI Penny Stocks?
AI penny stocks are low-priced shares of companies that develop, utilize, or invest in artificial intelligence technologies. These companies often operate in cutting-edge sectors like robotics, machine learning, and big data. Due to the speculative nature of AI technology, these stocks are prone to significant price fluctuations, making them attractive to traders looking for volatility-driven opportunities.
AI penny stocks usually have a low market cap and limited financial stability, which is why I recommend trading rather than investing in them. The AI sector is still evolving, and while some companies will succeed, many won’t survive long-term. Traders must be prepared to act quickly, using technical analysis to find the best entry and exit points, without holding onto these stocks for extended periods.
What to Look for in an Artificial Intelligence Penny Stock
When trading artificial intelligence penny stocks, it’s important to focus on key factors that can signal a potential opportunity. These companies often operate in cutting-edge sectors, from self-driving cars to AI-driven analytics services, making their technologies attractive to businesses worldwide. You want to look for AI companies with innovative products or partnerships that give them a competitive advantage. For example, a lot of penny stocks in AI see rapid price movements when they secure new clients or launch AI-driven solutions that have a clear impact on customers and the broader economy. Always monitor how a stock moves on your trading platform and pay attention to volume spikes that can indicate increased interest.
As I’ve taught students over the years, a big piece of the puzzle is spotting the right entry. Often, the best AI penny stocks are those with low floats and a history of quick spikes. Companies that offer advanced AI technologies and services have the potential for rapid price action, but they also carry significant risk, especially in a market as volatile as AI. Use sources like news articles, investor opinions, and market analytics to stay informed about key developments that could influence a company’s stock.
Tradable Patterns on Stock Charts
When trading AI penny stocks, chart patterns are critical. Some of the most reliable patterns for these stocks include triangles, flags, and head-and-shoulders formations. Identifying these patterns allows traders to time entries and exits more effectively, capitalizing on short-term price swings.
AI penny stocks often exhibit high volatility, making them ideal for traders who know how to read charts and spot opportunities. Using tools like moving averages and RSI can also help confirm momentum changes, ensuring that you’re not buying or selling too early. Learning to recognize these patterns is key to profiting from AI penny stock trades.
Low-Float Stocks
Low-float AI stocks, which have a limited number of shares available for trading, are highly volatile and can move quickly in response to news. These stocks are favored by momentum traders because even small amounts of buying or selling can lead to significant price swings. However, the lack of liquidity also means that prices can drop just as fast, making risk management essential.
Low-float AI penny stocks offer traders the chance for quick gains, but they require a disciplined approach. Without a well-thought-out exit strategy, it’s easy to get trapped in a stock that moves against you. Always keep your position sizes small to limit potential losses.
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Unusual Trading Volume
Unusual trading volume can be a signal that an AI penny stock is about to make a big move. When a stock that usually trades at low volumes suddenly sees a spike, it could indicate new investor interest, positive news, or market speculation. Monitoring volume spikes alongside price action helps traders confirm whether a stock’s movement is backed by solid momentum.
Volume is one of the simplest yet most powerful indicators to watch in AI penny stocks. Unusually high volume often precedes major price movements, whether up or down. Be prepared to react quickly when volume spikes, but always consider the broader context, including market sentiment and news.
Where to Buy AI Penny Stocks
AI penny stocks can be traded on different platforms depending on where they are listed, and knowing where to find them is crucial. Many of the more established AI penny stocks are traded on major exchanges like Nasdaq or the NYSE, where you’ll find businesses focused on AI solutions for clients across various industries. These platforms offer better liquidity, which is an advantage when looking to enter or exit positions quickly.
However, some of the riskiest but potentially rewarding AI stocks trade on the over-the-counter (OTC) markets. These stocks can be harder to find, but with the right research, they can present a strong opportunity for short-term returns.
In my experience, traders often find the best opportunities in AI penny stocks by leveraging platforms that provide access to both major exchanges and OTC markets.
Whether you’re looking at a company developing self-driving car technologies or an AI-powered voice service from China, the key is to understand where these stocks are listed and how they react to market news. This is where analytics, articles, and other links from trusted sources can help you make informed trading decisions in this fast-moving sector.
NYSE/Nasdaq Penny Stocks
Most of the AI penny stocks that offer the best trading opportunities are listed on major exchanges like the NYSE or Nasdaq. These stocks are generally more stable than those on OTC markets, as they must meet stricter listing requirements. Nasdaq-listed AI companies often have more liquidity and institutional backing, which can reduce some of the inherent risks of trading penny stocks.
That said, just because a stock is listed on a major exchange doesn’t make it a safe bet for long-term investment. Always remember that trading penny stocks on the Nasdaq or NYSE still comes with considerable risk, and the goal should be to capitalize on short-term price movements.
OTC Penny Stocks
OTC penny stocks, which trade outside of formal exchanges, can offer even higher volatility than their Nasdaq or NYSE counterparts. These stocks are often more speculative, with less oversight and reporting requirements, making them riskier. However, for experienced traders, OTC AI penny stocks can present significant opportunities for quick gains.
Trading AI penny stocks on the OTC market requires careful research and a solid understanding of technical analysis. Since these stocks can be more prone to manipulation or sudden price drops, it’s crucial to limit your exposure and always trade with a plan.
Trading AI Penny Stocks: A Quick Guide
The key to trading AI penny stocks is timing and discipline. First, use technical analysis tools like moving averages, volume indicators, and support/resistance levels to spot opportunities. Second, never risk more than you can afford to lose, and always have an exit plan in place.
AI penny stocks can be unpredictable, with prices often reacting to news or broader market trends. The volatility creates both opportunities and risks, so it’s essential to stay focused and stick to your strategy. By using a combination of chart patterns and momentum indicators, you can improve your chances of making profitable trades.
Key Takeaways
- AI penny stocks offer high volatility and the potential for significant gains.
- Look for low-float stocks, unusual trading volume, and tradable chart patterns to identify the best opportunities.
- AI penny stocks on Nasdaq or NYSE generally offer more liquidity, but OTC stocks can provide even bigger short-term moves.
Trading isn’t rocket science. It’s a skill you build and work on like any other. Trading has changed my life, and I think this way of life should be open to more people…
I’ve built my Trading Challenge to pass on the things I had to learn for myself. It’s the kind of community that I wish I had when I was starting out.
We don’t accept everyone. If you’re up for the challenge — I want to hear from you.
Apply to the Trading Challenge here.
Trading is a battlefield. The more knowledge you have, the better prepared you’ll be.
What’s on your AI watchlist? Write “I’ll keep it simple Tim!” in the comments if you picked up on my trading philosophy!
Frequently Asked Questions
How Should You Value AI Companies?
Valuing AI companies can be challenging due to their speculative nature and reliance on future growth. Look at revenue potential, partnerships, and technology development. However, remember that in penny stocks, short-term price momentum often trumps fundamentals.
What AI Company Is Elon Musk Investing In?
Elon Musk has been involved in various AI ventures, including names like OpenAI and xAI. However, these aren’t in the penny stock range — right now you can’t buy into them for any amount of money as they aren’t public companies.
How Do You Invest in the AI Industry?
Investing in AI involves buying stocks of companies that are advancing in fields like robotics, machine learning, and software development. For penny stocks, trading is a better approach, focusing on short-term moves rather than long-term investments.
What Determines the Market Cap of AI Penny Stocks?
Market cap is determined by multiplying a company’s share price by its total outstanding shares. AI penny stocks often have small market caps, making them more volatile and prone to large price swings.
What Fundamentals Should I Look for in AI Penny Stocks?
When trading AI penny stocks, focus on key fundamentals such as revenue growth, technological advancements, and strategic partnerships. While these companies are often early in their development stages, strong leadership and innovative products can drive significant momentum. However, remember that penny stocks are highly speculative, so prioritizing technical analysis and short-term trends is essential for maximizing gains while managing risk effectively.
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