Artificial intelligence is already changing the world.
Five years ago, few investors were searching for the best artificial intelligence stocks to buy. Scarce was the Silicon Valley executive who would emphasize AI as a catalyst in analyst calls or quarterly reports — instead it was bandied about in vague futuristic terms. Since then, progress in the field has been lightning fast — today, everybody who’s anybody in the Valley is racing to develop and use machine learning, neural networks, natural language processing and a range of other sub-fields to innovate and monetize. Already that race has seen intense jockeying for position, with early leaders and laggards swapping positions. Here are 10 companies making big bets on AI.
Nvidia Corporation (Nasdaq: NVDA)
Even if you’ve only casually followed the best ways to invest in artificial intelligence, you’re likely familiar with Nvidia, the specialized semiconductor company whose star has shone brilliantly in recent years. As it began to see accelerated growth in 2016 due to its AI-focused products, the company doubled down. At the center of its success is the graphics processing unit (GPU), a technology enabling innovation in self-driving cars, gaming, the cloud, Big Data and many other areas. Nvidia’s headstart and expertise make it one of the best AI stocks to buy today — just be mindful that Wall Street is now watching carefully, and more serious competition is on the horizon.
As one of the five most valuable companies in the world, Alphabet, Google’s parent company, doesn’t have the same ability to skyrocket like a smaller company would if its AI investments pay off. It’s harder to take revenue from $100 billion to $200 billion than $500 million to $1 billion. Still, for a company perhaps a few years away from a $1 trillion valuation to use AI as a driving force behind almost everything it does — from search results to ad pricing to autonomous driving technology to its personal assistant software — GOOG must be considered one of the best artificial intelligence stocks around.
Twilio (TWLO)
Most readers probably haven’t heard of Twilio — and it’s no coincidence TWLO may have the greatest risk/reward of the top AI companies as a result. At $3.8 billion, the cloud software business could be wildly overvalued — or shares could quintuple in the next five years. What happens next depends largely on how well Twilio can capitalize on developments in artificial intelligence to execute its own goal and carve out a growing niche. Twilio’s application programming interfaces (APIs) are used by software developers to make and receive voice and text messages; not only does TWLO boast speech-to-text technology but it’s getting better at understanding intent in phone calls.
Amazon.com (AMZN)
In a letter he wrote to shareholders in 2017, visionary CEO Jeff Bezos — now the richest man in the world — emphasized the enormous power of AI and a wide variety of ways that Amazon would take advantage of it. Noting that machine learning already informs core parts of Amazon like product search rankings, recommendations, demand forecasting, fraud protection and warehouse fulfillment, artificial intelligence is also central to the Alexa virtual assistant and future plans for drone delivery and cashier-less grocery stores. It’s likely that the health care partnership with JPMorgan Chase & Co. (JPM) and Berkshire Hathaway (BRK.A, BRK.B) will also be an AI-driven company.
Micron Technology (MU)
While Nvidia is the semiconductor choice du jour as far as AI chips are concerned, Micron, another chipmaker, is a more indirect way to play the trend. Micron’s specialty is memory chips; along with Samsung and SK Hynix, it controls about 80 percent of the global market — and demand is booming. Machine learning can drive great change in fields like autonomous driving, the “internet of things,” and industries like health care and finance, but these advancements require the processing of voluminous amounts of data. That means demand for data centers, and demand for Micron’s NAND and DRAM chips.
Microsoft Corp. (MSFT)
The boring, Steve Ballmer-led Microsoft of the 2000s died a few years ago, and instead of aging into a legacy large-cap tech company resting on its laurels, MSFT has pivoted to become a cloud-centric company, jockeying with Amazon and Google for AI breakthroughs. CEO Satya Nadella is not afraid to focus Microsoft’s elite talent on artificial intelligence research, where it’s developing cloud-based tools for genomics and precision medicine, human language technologies, assistive robotics, machines that can read medical images and much, much more. With consumer-facing services like Cortana as well, Microsoft is definitely one of the best artificial intelligence stocks to buy for the coming years.
Baidu (BIDU)
Search giant Baidu, arguably the most advanced AI company in China, enjoys two advantages that U.S. rivals don’t. First, a native population of nearly 1.4 billion, roughly four times that of the United States, gives Baidu a leg up — the pace of machine learning improves with more quality data inputs, after all. Second, China itself has publicly set the goal of being the world’s leader in AI by 2030, and the Chinese government isn’t shy about subsidizing national priorities. BIDU is hoping that its Apollo technology will eventually power most of the world’s cars, while other projects like virtual assistants and voice replication are already coming along.
Intel Corp. (INTC)
While Nvidia is perhaps the best example of a pure-play artificial intelligence stock, Intel, the quintessential blue-chip semiconductor company, has taken notice of the enormous growth potential. In late 2017 Intel poached the chief GPU architect at AMD (AMD) to help lead a new team, dubbed Core and Visual Computing. In doing so, it’s aiming to seize share in both the internet of things area and, more importantly, in machine learning and artificial intelligence with discrete GPU offerings. While Nvidia boasts a formidable head start, Intel generates more than $10 billion in free cash flow a year to Nvidia’s $1.5 billion, giving it a considerable cushion with which to invest.
Facebook (FB)
Remember how machine learning thrives with large amounts of data? Well, Facebook has one of the most enviable high-quality data sets in the world, with 2.2 billion monthly active users. Artificial intelligence is at the core of FB’s business, driving its News Feed algorithm, empowering its facial recognition technology, screening for fake news, and powering its chatbot and virtual assistant technology. In January 2018, Facebook hired Jérôme Pesenti, an AI pioneer who led IBM’s (IBM) Watson division, to lead the Facebook AI Research team and its machine learning division. CEO Mark Zuckerberg, never one of humble ambitions, aims to get machines achieving human-level seeing, hearing, language and cognition by 2025.
Tencent (TCEHY)
China’s biggest social media company, Tencent, the company behind the WeChat app, recently built a Seattle-based AI research lab headed by a two-decade veteran of Microsoft Research. As a diversified tech giant with thriving businesses in messaging, payments, video, mail and social media, Tencent is not directly comparable to any U.S. counterpart. But its many popular platforms give it ample ways to test and implement real-world AI software, such as voice-to-text and virtual assistants. Those are the immediate projects; longer-term, Tencent believes there will be applications that are impossible to envision today that will represent much larger, more exciting and more lucrative opportunities.
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Artificial Intelligence Stocks: The 10 Best AI Companies originally appeared on usnews.com
