Perhaps the hottest buzz word in the stock market right now is “AI”, or artificial intelligence.
AI is the future. There is no hiding it. The benefits today are limited in scope. But, in the future, AI will have far-reaching implications that will amount to billions of dollars in profit. As such, the companies that win the AI battle stand to gain a lot over the next several years.
Because of this, everyone wants to own as many artificial intelligence stocks as possible. But just like with every other hyped-up technology trend, the class of artificial intelligence stocks will have a few winners, and a lot of losers.
Who will those winners be?
Here’s a list of four of my favorite artificial intelligence stocks which all investors should have on their radar.
Artificial Intelligence Stocks to Watch: Alphabet (GOOG)
Source: Brionv via Wikimedia (Modified)
Why? Because when it comes to AI, data is king. Quite simply, AI doesn’t work without data. AI technologies need data in order to train and improve. And, the more data that AI has access to, the better that AI will be.
In the world of data, no one comes close to rivaling Google in terms of the amount of and diversity of data. Over the past several years, Google has leveraged this huge database to become the world’s largest digital advertising player. Over the next several years, Google will leverage this huge database to become the world’s largest AI player.
This is already happening. Google Duplex is miles ahead of the competition in terms of AI voice assistant technologies. Meanwhile, Gmail recently got a makeover that includes an AI companion that can write emails for you, and Waymo, Google’s self-driving unit, is the global leader in autonomous driving.
Over the next several years, Google will continue to make headway in various AI-related markets, and will emerge as the global leader in this field.
Artificial Intelligence Stocks to Watch: Baidu (BIDU)
For the same reasons that Google is going to emerge as the global leader in AI, the Chinese version of Google, Baidu (NASDAQ:BIDU), will inevitably emerge as a close second.
AI is at the heart of everything Baidu does. The biggest present application of AI at Baidu is through enhancing the company’s digital ad business. AI allows Baidu to deliver more personalized search feeds, create enhanced monetization tools, remove clickbait and vulgar content and deliver highly targeted advertisements with high conversion rates.
But Baidu AI is so much more than search and digital ads. Baidu AI powers Apollo, one of the world’s leading self-driving platforms, and DuerOS, China’s leading smart speaker system. Baidu AI was also recently recognized by MIT as a key player for near-real-time translation.
Overall, Baidu is China’s leading AI player. Thanks to the company’s robust database from billions of digital searches, Baidu also promises to be China’s leading AI player in five to ten years. As such, while Google will likely emerge as the Batman of the global AI market, Baidu will be the market’s respectable Robin.
Artificial Intelligence Stocks to Watch: Yext (YEXT)
Source: izzatFulkrum via Flickr
One of the most promising artificial intelligence stocks over the next several years is Yext (NYSE:YEXT).
At its core, Yext is a hyper-growth technology company that provides solutions to help other enterprises manage digital information that is relevant to their brand. A big tailwind for this business is AI. Consequently, as AI matures over the next several years, Yext’s growth should remain robust.
The best way to understand this is through an example management walked investors and analysts through on the last conference call.
Real-time data is on the rise thanks to the mainstream emergence of AI-powered technologies. For example, Google has seen a 900% increase in mobile queries that involve the term “near me”, meaning people are Googling “restaurants near me” or “movies near me” at a much higher frequency than before because AI and voice search are at a point where Google can return highly relevant answers.
These searches return answers via mapping data, and Yext provides solutions that power that data for its customers (the restaurants that consumers are trying to find). Thus, as real-time data becomes gradually more discoverable by consumers thanks to improvements in AI, companies will need to pay more attention to managing that data, and demand for Yext’s suite of real-time data-management products will subsequently boom.
As such, YEXT stock isn’t a traditional AI play, but it is a stock that will inevitably roar higher as the AI revolution plays out.
Artificial Intelligence Stocks to Watch: Facebook (FB)
Perhaps the most underrated artificial intelligence stock in the world is Facebook (NASDAQ:FB).
The social media giant has yet to make a big splash in AI-related markets. Yes, the company does have a highly successful digital advertising business based on targeting. But, that is more leveraging data to create effective ad solutions than using AI.
Outside of that, Facebook doesn’t really appear to have a formidable AI presence. The company doesn’t have a smart speaker. They aren’t dabbling around in self-driving. Robotic automation isn’t really applicable.
That being said, Facebook has all the tools necessary to develop robust AI solutions in the future. Those tools include 6 billion-plus people constantly interacting across four different social media platforms. Those interactions produce a wealth of valuable data regarding how people interact with one another. Importantly, that is data that hardly anyone else has, and that no one else has at Facebook’s scale.
As the science around AI improves over the next several years, Facebook can easily parlay that valuable data-set of human-to-human interactions into multiple AI solutions. In the near future, I expect Facebook’s smart speaker to actually be quite impressive due to it being powered by arguably the world’s most valuable data-set.
Over the next several years, as the AI revolution plays out, Facebook won’t be left behind. Eventually, Facebook will turn its wealth of data into next-gen AI solutions that rival Google’s AI solutions. At that point, Facebook stock could take a big leg higher.
As of this writing, Luke Lango was long GOOG, BIDU, YEXT and FB.
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