4 Stocks to Gain as Artificial Intelligence Simplifies Life

Zacks Equity Research

Since its invention in 1955, Artificial Intelligence (AI) has constantly been studied by several researchers and many big firms have invested billions each year just to accomplish one goal -simplifying life.

This simulation of human intelligence process by machines, especially computer systems is the base of AI. With wide applications that include natural language processing (NLP), speech recognition and machine vision, the field has lot more to provide than just navigating people to their final destination.

Today, nearly 40% businesses use AI to run their daily course. A survey by IBM, clearly shows that the scale of AI’s existence will grow to 80% to 90% over the next 18-24 months. What’s more, LinkedIn’s definitive list for emerging job growth reports for 2020 points at an annual growth of 74% in the AI specialists’ category, and ranks it as the number one job role for this year.

In fact, this report proves the myth wrong that AI is replacing human workforce. Rather AI collaborates with workforce and in the process saves considerable amount of time and effort by offering a smart and useful tool for better judgment.

According to Grand View Research, the global AI market is projected to witness a compound annual growth rate of 57% between 2017 and 2025 and expand into a $36-billion market. Additionally, according to estimates by research firm IDC, globally spending on AI systems will be $97.9 billion in 2023 versus $37.5 billion in 2019, courtesy of a compounded annual growth rate of 28.4%.

Embracing the opportunity, tech giants are spending dollars to cater to the needs of AI software, focusing on finding patterns and to make inferences from large quantities of data. From mitigating individual requirement to catering to business needs, this AI boom will be boosting three segments of the bigger tech space, AI chips, cloud computing and smart home devices.

Chips are a major requirement for AI systems from data centers to self-driving cars to health bots. Intel Corporation INTC and NVIDIA Corporation NVDA are in the race for a long time and are trying to design immaculate technology to cater to various needs.

With personalization becoming a core requirement, giants like Microsoft Corporation MSFT, Alphabet Inc. GOOGL and Amazon.com, Inc. AMZN are using AI to sell products and services to millions of customers. Though voice-activated smart home devices trended in the past decade, the usage of smart tech has been reshaped by many others. For instance Netflix, Inc. NFLX uses AI to personalize Internet TV content for its subscribers.

Meanwhile, Google and Microsoft are constantly pushing AI technology into cloud computing and selling AI analytical services to business customers.

4 Stocks to Watch Out

With already fierce AI competition in industries like financial services and cybersecurity, the opportunities for an uptrend in the technology is certain. Hence, keeping the growth trend in mind we have selected four promising AI stocks that can give handsome returns.

Alphabet Inc.’s search engine Google, has been a gold mine for AI services. The giant ventured into AI with the launch of Google Brain in 2011. In fact, this Zacks Rank 2 (Buy) company recently released open datasets to help researchers build better tools to detect fakes. CEO Sundar Pichai on several occasions cited the company’s AI developments that include a Google Health algorithm which can spot breast cancer more accurately than doctors.

Additionally, Google’s AI division has also been working on accurately predicting the weather and its self-driving car unit, Waymo. The company’s expected earnings growth rate for the current year is 6.6%. Shares of Alphabet have risen 37.2%, outperforming the Zacks Internet - Services industry’s rise of 16.4% over a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

 

NVIDIA Corporation makes chips that power heavy computational and memory requirements of AI, and generally generates revenues from gaming GPUs. The company has made AI advancements in other markets that include upscaling 1080p videos to 4K resolutions with deep learning and providing AI services for 5G networks and IoT. This Zacks Rank #3 (Hold) company is stabilization its gaming GPU and Tegra CPU businesses to stand out in the AI-Chip market this year.

Additionally, once NVIDIA acquires Mellanox, the company can reach across the data center market and improve its bundling capabilities with the latter’s networking hardware for data centers. The company’s expected earnings growth rate for the next year is 30.4%. Shares of NVIDIAhave risen 67.6%, outperforming the Zacks Semiconductor - General industry’s rise of 39% over a year.

 

Microsoft focuses on developing conversational AI, machine learning, data sciences, robotics, IoT, and more for years now. What has consistently caught the attention of investors and users globally is its cloud computing service, Azure. Microsoft’s Azure contains AI-driven tools for medicine, language, robotics, medical imaging and more.

In 2019, the giant also invested $1 billion in OpenAI that produces artificial general intelligence, a technology that works like human intelligence. The company’s expected earnings growth rate for the current year is 12.8%. Shares of Microsofthave risen 58.2%, outperforming the Zacks Computer - Software industry’s rise of 43.3% over a year.

 

salesforce.com, inc. CRM, a Zacks Rank #3, which helps businesses to use AI for better customer service. This company makes AI available to individuals and businesses for real world uses. Salesforce’s AI-powered voice recognition can be integrated with clients applications and facilitate in customer interactions by their sales and service teams.

The company has been focusing on solving customer problems by developing AI technology to make individualized product recommendations, launch email marketing campaign with personalized messages, chatbots for websites, and much more. The company’s expected earnings growth rate for the current year is 5.1%. Shares of Salesforcehave risen 15.6%, outperforming the Zacks Computer - Software industry’s rise of 13.1% over the past 6 months.

 

More Stock News: This Is Bigger than the iPhone!                  

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. 

Click here for the 6 trades >>

Click to get this free report Netflix, Inc. (NFLX) : Free Stock Analysis Report Amazon.com, Inc. (AMZN) : Free Stock Analysis Report Alphabet Inc. (GOOGL) : Free Stock Analysis Report Microsoft Corporation (MSFT) : Free Stock Analysis Report salesforce.com, inc. (CRM) : Free Stock Analysis Report NVIDIA Corporation (NVDA) : Free Stock Analysis Report Intel Corporation (INTC) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research