Best Artificial Intelligence Stocks to Watch

The world is now armed with algorithms, and data is the ammunition for the digital world.

Citizens around the globe don’t always get to opt in or out of this digital world – even when they are not actively participating in it, most people are still passively involved in the digital world. Data and the algorithms that feed upon the data are shaping our future and changing the way we look at and interact with the world. 

As a market participant, however, you are in a unique position where you could capitalise on the ongoing developments in Artificial Intelligence (“AI”).

What are AI Stocks?

AI stocks refer to the shares of companies that are involved in the development, integration, or use of artificial intelligence (AI) technologies. 

These companies might design algorithms, build AI-driven products, or use AI to enhance their services. As the AI space growings in importance and adoption, investors may view these stocks as an opportunity for future growth. Just like stocks in any other sector, the performance of AI stocks can vary based on factors like market demand and overall economic conditions.

AI State of Affairs 

AI, a field of study that seeks to teach computers by allowing them to learn from experience, has existed for over six decades. However, its day-to-day impact can only be felt in today’s society. 

According to a report by PWC, AI has the potential to boost the global economy by a staggering $15.7 trillion USD by 2030 ^[1]. This massive growth can be broken down into $6.6 trillion USD from heightened productivity and another $9.1 trillion USD from consumer-driven effects ^[2]. Although AI adoption varies across industries and regions, it’s predominantly in its infancy.

How Do Companies Use AI Technology?

Companies and businesses can utilise AI technology to help streamline workflow, and more. Here are some examples of AI technology usage:

1. Enhanced Customer Experience

Companies deploy AI-powered chatbots and virtual assistants to provide real-time responses to customer queries, thereby enhancing the user experience. These tools can handle a wide variety of tasks, from answering frequently asked questions to guiding users through complex processes.

For example, banks can use AI chatbots on their websites and mobile apps. When a customer has a question about their account or how to perform a particular transaction, the chatbot can provide instant answers, reducing the need for the customer to call customer support or make a trip to visit the bank branch to solve their problem.

2. Data Analysis and Decision Making

AI algorithms can be used to analyse large sets of data, identifying patterns and predicting future trends at a speed quicker than humans. By processing this information, businesses are able to understand their customers better and help to optimise their business operation while identifying new opportunities.

Business owners can use AI to analyse customer purchase data and customer behavior during their website visits to predict which products will be popular in the upcoming season. Based on this analysis, they can adjust their stock levels, marketing strategies, and promotions accordingly.

3. Automation and Efficiency

Companies implement AI-driven automation to handle repetitive tasks, streamline workflows, and reduce human error. This not only enhances efficiency but also allows employees to focus on more strategic, high-value tasks.

In manufacturing, companies use AI-powered robots to handle tasks such as product assembly, quality control, and packaging. These robots can work around the clock without fatigue, ensuring consistent product quality and faster production rates.

5 Best AI Stocks to Watch in US

Here are a few AI stocks to consider for your portfolio:

Nvidia Corporation (NASDAQ:NVDA)

The American tech powerhouse, Nvidia, is globally recognised for its pioneering work in graphics processing units (GPUs) and AI technologies. It has carved out a dominant position in the gaming industry and is rapidly expanding into the realms of data centers and automotive AI solutions. 

For Q1 2024, Nvidia showcased remarkable progress ^[3]:

• Nvidia’s revenue reached $26.0 billion, marking an 18% increase from the previous quarter and a substantial 262% rise from the same period last year. This growth was fueled by robust and growing demand for generative AI training and inference on the Hopper platform. 
• Additionally, its data center revenue hit a new high of $22.6 billion, growing 23% from the previous quarter and soaring 427% compared to last year. 

C3.ai Inc

C3.ai Inc is at the forefront of enterprise AI solutions, delivering scalable and customisable applications for a wide range of industries. Its strength lies in its cloud-based platform that facilitates rapid development of AI-driven applications, making it a go-to choice for businesses seeking digital transformation.

For Q4 2024, C3.ai Inc recorded a strong earnings report ^[4]:

• C3.ai Inc. reported a revenue of $86.6 million, a 20% increase from $72.4 million the previous year. 
• Their subscription revenue was $79.9 million, making up 92% of the total revenue, and saw a 41% increase from last year.

Symbotic Inc (NASDAQ:SYM)

Symbotic Inc is a frontrunner in the field of automation and robotics solutions. 

Recognised for its advanced warehouse automation systems which, the company provides a blend of proprietary software and hardware, making supply chains more efficient and sustainable. 

Its competitive edge lies in its innovative solutions which cater to a wide range of industries, from retail to manufacturing. The company is reinventing warehouse automation for increased efficiency, speed and flexibility.

For Q2 2024, Symbotic Inc reported an earnings report as follows ^[5]:

• For the second quarter ending 30 March 2024, Symbotic posted a revenue of $424 million. 
• Symbotic Inc cash and cash equivalents increased by $276 million from the prior quarter, culminating in $951 million at the quarter’s close. 

Alphabet (NASDAQ:GOOGL)

Alphabet is the company behind Google  — a top tech giant globally. Besides its main search engine, it offers many digital services, from cloud computing to artificial intelligence. 

Alphabet also owns Waymo, which is working on self-driving cars. Additionally, they have a subsidiary, Verily Life Science, which uses AI to study large amounts of medical data with a goal to find new treatments and cures for diseases.

Alphabet Inc reported their Q1 financial results for the quarter ended 31 March 2024 as follows ^[6]:

• Alphabet posted a revenue of $80.539 billion which is an increased of 15% from the year earlier period 
• Alphabet also reported that YouTube ads, Google Cloud, and traffic acquisition costs surpassed their expectations, with earnings of $8.09 billion, $9.57 billion, and $12.95 billion, respectively. 

IBM (NYSE:IBM)

IBM, or International Business Machines, has been a stalwart in the technology sector for over a century. Renowned for its enterprise solutions, cloud computing, and quantum computing endeavors, the company has consistently evolved to stay relevant in an ever-changing tech environment. 

The company’s breakthrough innovation, such as Watson, is a set of AI assistants that will help accelerate the impact of AI to businesses. Through its commitment to AI-first initiatives, IBM has been reinventing enterprise solutions to empower businesses with predictive insights, automation, and data-driven decision-making tools. 

IBM with its Q1 earnings reports are as follows ^[7]:

• IBM reported a revenue of $14.5 billion, showing a 1% increase from the previous quarter. 
• Their software business segments performed better, with revenues reaching $5.9 billion, a 5.5% increase. 

Final Thoughts

In conclusion, investing in AI sectors comes with high risks, but there are macroeconomic factors that point to future upward price movement. You are encouraged to learn about the market, practise in the demo account, and develop a solid risk management approach, before making a commitment to invest or trade. Also, you should always do your own research and only invest in what you understand and are comfortable with.

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