Tuesday's IBD 50 Stocks To Watch pick is artificial intelligence leader Klaviyo (KVYO), which is breaking out to new highs. That makes the AI stock one of the best ideas to buy and watch right now. Shares rallied 1.3% Tuesday morning.

Klaviyo's marketing platform utilizes advanced machine learning and AI capabilities to enable businesses to harness their data to send messages to potential customers across email, text messages and browser notifications.

On Nov. 6, Klaviyo reported adjusted earnings of 15 cents per share on sales of $235.1 million, which represented year-over-year increases of 67% and 34%, respectively. The company boasts two quarters of accelerating earnings growth, from 18% to 50% to 67%. Accelerating earnings growth is a hallmark of big stock market winners.

"We're proud to deliver another quarter of strong performance, reinforcing Klaviyo's position as an intuitive, centralized data platform essential to customers' businesses," Chief Executive Andrew Bialecki said in the news release. "We made significant progress across a number of key initiatives such as international and upmarket expansion, and we bolstered our leadership team within R&D as we look to solve the future needs of our customers."

For the full year, Wall Street expects the company's earnings to grow 25%, with an increase of 15% in 2025, per IBD MarketSurge.

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AI Stock Breaks Out To New Highs

Following a five-week win streak, the stock settled down last week, adding a handle to the cup base and making its buy point 40.98. On Monday, the stock broke out past the entry in heavy volume. The 5% buy zone goes up to 43.03, and shares were squarely in that buy range at midday Tuesday.

Bullishly, the relative strength line is at new highs as well. That's a sign of strong outperformance vs. the S&P 500 and confirms the AI stock is a market leader.

Another positive signal is that the latest base formation is a second-stage base, still considered early in the stock's long-term move. Early-stage bases are more likely to net bigger gains than later-stage formations. That's another reason the AI stock is one of the best names to watch.

Finally, the IBD Stock Checkup shows that Klaviyo stock boasts a perfect 99 IBD Composite Rating, another bullish attribute.

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Source: IBD Data as of Dec. 17

Follow Scott Lehtonen on X at @IBD_SLehtonen for more on the best stocks to buy and watch and the Dow Jones Industrial Average.

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