AI stocks to buy and watch amid rising AI competition

Artificial intelligence stocks are rarer than you might think. Many companies are promoting AI technology initiatives and machine learning. But there really are few public AI-only stocks.

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In general, look for AI stocks that use artificial intelligence technologies to improve products or gain a strategic advantage. Amid heightened investor interest in artificial intelligence, be wary of underperforming companies posing as AI stock games.

Microsoft (MSFT) has increased its stake in startup OpenAI as it aims to take over Google parents alphabet (Google) when searching the Internet.

Also, in early February, Microsoft and Google hosted media events highlighting artificial intelligence initiatives and investments. Analysts said Microsoft came out on top when describing its product strategy and showcasing OpenAI’s ChatGPT technology.

ChatGPT is just one of many “generative AI” technologies that could disrupt a variety of industries by creating text, images, videos and computer program code themselves. Generative AI technology is already finding applications in marketing, advertising, drug development, legal contracts, video games, customer care and digital art.

Prior to the launch of ChatGPT in November, IDC forecast that the conversational AI market would grow at a compound annual growth rate (CAGR) of 37% from $3.3 billion in 2021 to just over $16 billion in 2026 will grow.

Artificial Intelligence “Table Stakes”

“We’re seeing AI becoming a ‘table stake’ for most software companies,” said Mark Mahaney, an analyst at Evercore ISI, in a report. “This generally favors the larger companies with deeper pockets and access to more data.”

Key to the rise of generative AI are improved natural language processing models that help computers understand the way humans write and speak. OpenAI is part of a wave of NLP startups that include AI21 Labs, Anthropic, Cohere, and others.

All AI software requires computing power to find patterns and draw conclusions from large amounts of data. And the race to build AI chips for data centers, self-driving cars, robotics, smartphones, drones, and other devices is on.

Additionally, Bank of America is bullish on AI and internet companies.

“The use of AI will be a critical driver of all things online, including content relevance, ad performance, e-commerce conversion, marketplace efficiency and even customer service,” said BofA analyst Justin Post in a recent note to clients.

AI stocks: acquisitions, investments

shares in Mobileye Global (MBLY), spun from intel (INTC), are up about 36% since their IPO. Mobileye develops and produces advanced driver assistance systems and autonomous driving technologies.

NVIDIA (NVDA) provides software development tools for building artificial intelligence applications. Nvidia faces increased competition from AI chip startups Cerebras, Sambanova and Graphcore, Vijay Rakesh, an analyst at Mizuho Securities, said in a recent note to clients. modern micro devices (AMD) also boosts AI initiatives.

Some companies have aggressively made AI acquisitions. IBM (IBM) has bought at least five artificial intelligence companies since mid-2020. These include Databand.ai, Turbonomic, ReaQta, MyInvenio and WDG Automation.

Alphabet recently acquired Alter for $100 million, an AI avatar startup that enables brands and developers to express virtual identities. The acquisition is expected to help Google expand its content offering and compete with other platforms like TikTok.

For many organizations, achieving an advantage with AI requires ongoing investment in data center, network, and data center infrastructure.

The use of AI in face and voice recognition technology, medical diagnostics, algorithmic trading, and automated customer service bots is exploding.

The top artificial intelligence stocks to buy include chipmakers, enterprise software companies, and tech giants that use AI tools in many applications. Think cloud computing giants Amazon.com (AMZN), Microsoft and Google.

Tech giants among the best artificial intelligence stocks

The cloud computing giants are selling AI analytics services to business customers.

Amazon itself uses AI to customize online retail offers and recommend products to website visitors. The e-commerce giant is also using robotics and AI in its logistics centers. Additionally, Amazon is using AI in retail stores, according to a recent report to customers by Monness, Crespi, Hardt and Co. More than 30 Amazon Fresh US stores, over 25 Amazon Go US stores and two Whole Foods Market stores use Just Walk Out payment technology.

Google, of course, uses AI to better analyze complex search queries, which helps it deliver relevant ads and web results. Also, Google uses AI tools in digital advertising.

In the meantime, Foreclosure (CRM) launched new AI-based tools at its Dreamforce customer conference in September.

Meanwhile, Nvidia rival Intel wants to catch up on AI development tools.

AI Stocks: Key to the Software Market

Venture capitalist Marc Andreessen once watched “software eat up the world” by transforming industries through automation. Artificial intelligence should also modernize software.

Given the shortage of software developers, low-code programming tools make it easier for business units to develop AI applications. DataRobot is part of a new wave of AI startups bringing low-code tools to market.

Meanwhile, Snowflake and startups like Databricks aim to disrupt the database market with lightning-fast analysis of “unstructured data” collected by sensors. An example would be streaming videos.

Databricks announced new contributions to several open source projects at its recent AI Summit

Nevertheless, the introduction of AI technologies in companies is still in the early stages. The majority of companies are still experimenting with AI technology, An said Accenture (ACN) learn. According to Accenture, only 12% are using AI tools at a level of maturity that creates a strong competitive advantage.

But the AI ​​software market is expected to grow 21.3% to $62.5 billion in 2022, according to market research firm Gartner. The research group adds that the global AI semiconductor market will grow to more than $70 billion by 2025, up from $23 billion in 2020.

Artificial intelligence stocks: IBM sells Watson Health

Not every effort succeeds. IBM (IBM) sold Watson Health to private equity firm Francisco Partners in January. The deal was reportedly worth over a billion dollars. But IBM had invested much more in Watson. Despite the Watson setback, IBM continues to acquire AI startups.

AI tools play a big role in Facebook parenting meta platforms (META) legacy business and new initiatives. In transitioning to the “Metaverse,” Meta said it had built a new artificial intelligence supercomputer. Dubbed the AI ​​Research Supercluster, the meta-computer uses Nvidia chips.

In the meantime, Apple (AAPL) continues to build assets in the artificial intelligence space. It hired former Google scientist Samy Bengio, who left the internet search giant amid turmoil at its artificial intelligence research division.

Artificial intelligence stocks include chips, software and internet giants

Microsoft acquired the speech recognition software maker in April 2021 nuance communication (NUAN), whose artificial intelligence tools are widely used in the healthcare market. In addition, Microsoft wants to deliver Nuance AI tools for healthcare customers via its Azure cloud computing platform.

Microsoft, Google and Nvidia have discontinued this IBD LeaderboardIBD’s curated list of leading stocks characterized by technical and fundamental metrics.

AI technology uses computer algorithms. The software programs aim to mimic the human ability to learn to interpret patterns and make predictions.

“Machine Learning” is the most widespread form of AI used in industry. Machine learning systems use massive amounts of data to train algorithms to recognize patterns and make predictions.

“AI workloads are classified as training or inference,” Oppenheimer analyst Rick Schafer said in a recent statement. “Training is the creation of an AI model through repeated data processing/learning. Training is computationally intensive and requires the most advanced AI hardware/software. Generally located in hyperscale data centers, we estimate the total addressable market for training at $21 billion by 2025.”

Software companies integrate AI tools

AI companies to keep an eye on include IT services companies like IBM, Accenture and Epam systems (EPAM).

Research firm IDC estimates that IBM, Accenture and Infosys hold 28% of the $17 billion artificial intelligence IT services market, according to a report by Susquehanna Financial Group.

Additionally, software companies are among the artificial intelligence stocks to watch. Many software-as-a-service companies use AI tools.

Bank of America recently upgraded Palantir (PLTR) citing his AI abilities to buy.

Manufacturer of digital media and marketing software Adobe (ADBE) recently unveiled cloud-based tools at a conference that enable companies to better personalize content for customers at scale.

Follow Reinhard Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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