Artificial Intelligence Is Already Revolutionizing Industry, Like It Or Not.
Wall Street occasionally seizes upon futuristic themes with a religious fervor, bidding up shares in companies that supposedly lead in one space or another. AI once occupied that "fascinating-but-far-off" thematic market sector, but the best artificial intelligence stocks to buy today use techniques like machine learning and neural networks routinely as a core function of their business. Millions of consumers interact with AI directly or indirectly on a day-to-day basis via virtual assistants, facial-recognition technology, mapping applications and a host of other software. That said, this is the tip of the iceberg, and the area's profit potential is hard to overstate. Here are 10 AI companies betting big on the technology.
Nvidia Corporation (NVDA)
Even if you've only casually followed the best ways to invest in artificial intelligence, you likely know Nvidia, the specialized semiconductor company whose technology plays a central role in many young, high-growth areas of tech. Central to Nvidia's leadership is the company's graphics processing unit (GPU), which powers autonomous vehicles, high-performance gaming, cloud computing and many other areas requiring deep learning. NVDA's superior technology and jump-start on high-performance GPUs gave it the upper hand for years, and while shares fell in 2018 after a meteoric multi-year rise, NVDA currently enjoys a more reasonable valuation. NVDA now faces more competition, but remains a market leader and one of the best AI stocks to buy.
Alphabet (GOOG, GOOGL)
Google parent Alphabet has a practically existential interest in investing heavily in artificial intelligence. Google uses AI and deep learning to power or automate many extremely important parts of its business. Producing relevant search results, self-driving technology, digital ad pricing, personal assistant software, image- and speech-recognition software -- all of it's powered by AI. With a market capitalization approaching $1 trillion, much of Alphabet's valuation relies explicitly on maintaining and improving these services, and with many observers believing AI could be a winner-take-all market, GOOG has the resources, motivation and experience that make it one of the best artificial intelligence stocks to buy.
If there's one thing Salesforce, the customer relationship management software giant, is known for, it's an obsessive focus on seeking growth and opportunities to scale. The company regularly acquires hot tech startups to improve its software-as-a-service (SaaS) offerings, and in 2019 acquired Bonobo AI, a firm using automated analysis of customer phone calls, texts, and chats to deliver actionable insights. This fits perfectly with Salesforce Einstein, the company's AI-powered software that uses data to identify previously unseen business patterns, deliver the hottest sales leads, predict what marketing copy will perform best, and generally optimize how businesses operate and convert. An increasing focus on these incredibly powerful services makes Salesforce the newest member on this list of best AI companies.
It's no coincidence that the second company to ever reach a $1 trillion valuation, and the company whose CEO became the richest person in the world, invests heavily in artificial intelligence. Like Google, returning relevant search results is central to Amazon's business, and AI also powers key capabilities like forecasting product demand, optimizing logistics and warehousing, and improving the voice-powered Amazon Alexa virtual assistant. Amazon Web Services (AWS), the company's cash cow, is also the leading cloud provider of machine learning services, making Amazon's expertise here even more vital. With about 360 AI jobs posted nationwide, the e-tailer is working rabidly to stay at the forefront of the fast-growing field.
Microsoft Corp. (MSFT)
The most valuable tech companies in the world, without exception, all invest in artificial intelligence. Microsoft's cloud computing service, Azure, is home to AI-driven tools in medicine, language, robotics and medical imaging, to name just a few. A recent $1 billion investment in OpenAI aims to produce the holy grail of AI, artificial general intelligence (AGI), technology that can do anything human intelligence can. If successful, Microsoft becomes OpenAI's preferred partner for commercialization. If AGI is feasible it'll likely take decades, but the profit potential is practically limitless. Anyone who wants a slice should own the top AI companies today -- and that means owning MSFT.
China's leading search engine predictably uses AI to improve results and serve ads. But it goes much further. Baidu recently won a facial recognition competition against competitors including Alibaba Group Holding (BABA), Huawei and elite Chinese universities. Arguably China's most devoted AI investor, Baidu's self-driving software platform Apollo has 135 partners in the auto industry, and Baidu logged 91 percent of all self-driving miles in Beijing last year. Baidu enjoys a head start, vast resources and unique expertise. China's 1.4 billion population and the government's willingness to subsidize its way to AI dominance, combined with a recent pullback in shares, make BIDU one of the top AI stocks to buy today.
Intel Corp. (INTC)
One of the more conservative ways to bet on this space is Intel, the blue-chip, dividend-paying semiconductor giant. Investors get the benefit of an established, well-diversified tech leader -- and a cash cow with $14 billion in free cash flow. That's some decent spare change for boosting R&D, making acquisitions and hiring talent. Intel already provides key hardware components behind the magic; Microsoft uses Intel's field-programmable gate arrays to run deep learning models on its cloud. Additionally, Intel's vision processing units power machine vision in surveillance cameras that can count crowds, perform facial recognition and analyze behavior. Its Mobileye division, which helps vehicles prevent potential collisions, grew by 38% last quarter.
In U.S. News's original write-up of the best AI stocks circa early 2018, Twilio was singled out as a uniquely opportunistic investment. "TWLO may have the greatest risk/reward of the top AI companies," the article read. "At $3.8 billion, the cloud software business could be wildly overvalued -- or shares could quintuple in the next five years." Well, it didn't take that long. By summer 2019, its market value had quintupled to roughly $20 billion. Twilio -- which offers cloud-based application programming interfaces (APIs) allowing developers to build voice, video and messaging features into their apps -- indeed still remains a wildly popular, useful and fast-growing service. So while still deserving mention as a top artificial intelligence company, its risk/reward prospects as an investment are less attractive after its rapid rise. Risk-tolerant investors should consider adding when euphoria dies off.
Facebook is deeply committed to machine intelligence, and since January 2018 has had Jérôme Pesenti, a legend in the field who famously led IBM's (IBM) Watson division, running point on Facebook's AI Research team. Automating self-teaching algorithms to improve Facebook's News Feed algorithm is core to FB's success, and using AI to screen for hate speech and fake news has never been more important to the company. With 2.4 billion monthly active users (MAUs) and 2.7 billion MAUs across all its platforms, FB has a singular opportunity to test machine learning techniques with massive real-time datasets, giving Facebook a huge theoretical advantage over peers. The sprawling social network just released a bevy of machine learning tools that map unmapped parts of the world, and use crowdsourced user feedback to improve the algo.
Transitioning from the largest social company in the U.S. to the largest social company in China, the tech conglomerate Tencent rounds out the list of the best AI stocks to buy. The $400 billion-plus company largely hit the jackpot with WeChat, a dynamic app ubiquitously used in China for messaging, payments, ride-hailing, social media, mail and other functions. One can imagine the practically endless ways machine learning and artificial intelligence could augment that service -- and in the meantime, how WeChat's more than 1 billion daily users can be used to test and rapidly improve this technology. TCEHY has recruited several top AI experts in recent years from rivals including Microsoft and Baidu.