Artificial intelligence stocks (AI stocks) represent one of the most exciting and potentially lucrative industries to invest in going into 2020. In fact, artificial intelligence stocks have the potential to be some of the best performing tech stocks of the next decade along with technologies like the internet of things, 5G technology, and more.
Artificial intelligence is a technology that enables machines to complete tasks that generally require the type of natural intelligence possessed by human beings. As a result, AI tech allows computers to analyze highly complex data, gain insight from such data, and then use it to make predictions and optimize systems for performance.
AI isn’t merely one technology but rather a group of technologies that enable machines to mimic human thinking. Some of these technologies include Machine Learning (MI), Natural Language Processing (NLP), Predictive Analysis, Image Recognition, and Robotics.
The artificial intelligence market was valued at $23.94 billion in 2018. It is expected to grow to $208.49 billion by 2025, a compound annual growth rate (CAGR) of 36.2%.
The technology is already promising to transform everything from automobiles to healthcare to online advertising. This creates many opportunities to invest in companies that are leveraging AI for their own businesses. Here’s a list of some of our favorites.
The Top AI Stocks to Watch for the Coming Year
- Alphabet Inc. (Nasdaq: GOOG)
Sundar Pinchai, the CEO of Google, has called the search engine gargantuan an “AI first” company repeatedly. And he isn’t kidding.Google made the most acquisitions in artificial intelligence technology of any of its competitors since 2012. They have acquired twenty investments overall, including a purchase of predictive analytics platform Kaggle.
They’ve also acquired the British DeepMind project. Google uses the technology with Gmail, Maps, its cloud system, Photos, its Home device, and more. They are also poised to become a top player in autonomous vehicles, which rely heavily on AI.Shares of Google have been climbing steadily since June and are currently trading around $1,300. They boast a robust PE ratio of about 28 and an EPS of about $46.
- Nvidia Corporation (Nasdaq: NVDA)
Nvidia, based in Santa Clara, CA, is a gaming technology company that has long been a leader in the AI space. But it is now far from just a gaming company.It’s graphics processing unit (GPU) chip technology powers much of the gaming industry but also self-driving cars, cloud computing, big data, and more. These GPU chips are able to process massive amounts of data.
As they tell it, NVIDIA has evolved the GPU into, “a computer brain at the exciting intersection of virtual reality, high performance computing, and artificial intelligence.”
Like Google, NVIDIA stock has been climbing steadily since June but trades around a much more affordable $210 per share right now. However, its PE ratio is about 47 based on its earnings per share of $4.43.
- Microsoft Corporation (Nasdaq: MSFT)
Bill Gates’s technology empire currently has 8,000 employees working on Artificial Intelligence products. And one of the products they are working on is direct competition for both Google and NVIDIA: a new AI chip for the cloud that competes with NVIDIA’s GPU and Google’s tensor processing unit.
These chips are able to make intelligent predictions based on complex data patterns and can unlock key insights. Microsoft has used this technology to develop products across a variety of sectors and industries including human language technologies, precision medicine, assistive robotics, medical imaging readers, genomics and the consumer-facing platform Cortana.Microsoft CEO Satya Nadella seeks to democratize the AI landscape across even more industries such as education and manufacturing. That philosophy is behind the company’s acquisition of the Canadian company Maluuba.Perhaps the most exciting project at Microsoft is their attempt to create the first Artificial General Intelligence (AGI) technology. Such technology is special in that it can do virtually anything that human intelligence can do and is not limited to specialized niches of thought. The moneymaking power of such a project – if it is successful – is virtually infinite.
- Amazon.com, Inc. (Nasdaq: AMZN)
If you’ve ever shopped at Amazon.com – and let’s be honest everyone has including you – you’ve seen their artificial intelligence program in action. All of those personalized product recommendations that have you reaching back into your wallet are created with intelligent technology. Everyone’s good friend Alexa also leverages AI.
But Amazon’s use of the technology is not limited to their storied e-commerce platform. Now Amazon is using partnerships with major players like JP Morgan and Berkshire Hathaway to deliver the technology to even more spaces like healthcare.And Amazon Web Services (AWS) is also a major profit engine for the tech giant making making significant use of computer brains. Powering the cloud computing services of AWS, Amazon’s technology offers everything from speech translation to image and even facial recognition capabilities. Amazon currently has around 360 AI jobs posted around the United States. That is nearly certain to grow in the coming years.
Other Artificial Intelligence Stocks of Note
- Intel (Nasdaq: INTC) – Helping self-driving cars prevent collisions is one way this blue-chip semiconductor legend is playing the AI game. But it’s not the only way. In addition to its Mobileye division, Intel manufactures visual processing units that allow smart cameras to perform tasks such as facial recognition and counting crowds.Microsoft is also leveraging Intel’s technology. Intel’s field-programmable gate arrays run deep learning on Microsoft’s cloud. Keep this in mind if you invest in both Intel and Microsoft at the same time as it exposes you to more company exposure than you might have anticipated.
- Twilio (NYSE: TWLO) – Twilio is a cloud software company whose Application Programming Interfaces (APIs) enable software developers to build various features into apps including messaging, voice, and video capabilities. This omnichannel customer engagement platform can be a fit for any size organization, so its field of potential business and enterprise customers is vast.
- Tencent Holdings (OTC: TCEHY)This Chinese firm is that country’s largest social media player. They invented the omnipresent (in China) WeChat app, and have recently invested in building a major AI lab in Seattle, Washington. The aim of the lab is to expand upon the company’s virtual assistant and voice-to-text product offerings.Other capabilities offered by the company’s stake in AI include smart news aggregators, facial recognition tech, and natural language processing devices. Tencent Holding is also investing intelligently in AI people, stealing away top talent from rivals like Microsoft and Baidu.
Best of the Rest
- Facebook, Inc. (Nasdaq: FB) – Mark Zuckerberg’s social media empire – love it or hate it – is deeply committed to developing machine learning technologies. Using AI to detect and filter out hate speech and fake news is one of many abilities Facebook is pursuing to continuously improve its ever-popular platform.
- Baidu, Inc. (Nasdaq: BIDU) – Baidu is, quite simply, the Google of China. The search engine giant has made a heavy investment in artificial intelligence to help improve both their search engine results and the ads they serve up. It’s also a major player in the self driving automobile market.
- Match Group, Inc. (Nasdaq: MTCH) – And finally, in case you are still seeking an artificial intelligence stock to swipe right on, Match Group is using artificial intelligence on its popular “casual” dating app Tinder. Its new “Super Likable” feature is powered by machine learning technology. So, if you want an alternative way to play Artificial Intelligence stocks, make a hot date with your stock broker and pick up some shares of Match.
– Brian M. Reiser,
Investment U Contributing Writer