There’s no doubt that artificial intelligence is being used by more and more industries. As Information Age points out, Enhancing E-commerce, calculating valuations, inventory management and of course enabling driverless cars are among the many uses of artificial intelligence. With this in mind, which tech stocks should investors buy to cash in on this trend?
Although Nvidia Corporation (NASDAQ:NVDA) now appears to be the prime beneficiary of the machine learning aspect of artificial intelligence, Nvidia stock has soared over 200% in the last year and likely already reflects a great deal of revenue from AI.
Consequently, investors should wait for a better entry point before buying Nvidia stock.
But four other tech stocks Intel Corporation (NASDAQ:INTC), Delphi Automotive PLC (NYSE:DLPH), Visteon Corp (NYSE:VC), and Baidu Inc (NASDAQ:BIDU) — are definitely poised to get a meaningful boost from AI and should be bought at current levels.
The first three companies have significant exposure to technology that enables self-driving cars. That technology is not only poised to proliferate in cars, but could very well potentially spread to other mobile systems, i.e., drones and robots. Obviously, both drones and robots could be used to carry out a plethora of highly useful functions. As a result, companies that provide the technology that enables autonomous or semi-autonomous mobile systems should do quite well over the longer-term.
Additionally, Intel has a number of products and upcoming products that should generate strong, needle-moving revenue for the company as AI becomes more widespread. Baidu has spent a great deal of money on AI. Moreover, the company should benefit from the superior data it has on Chinese consumers and from the tremendous size and growth of the Chinese market.
Tech Stocks to Buy: Intel Corporation (INTC)
The combination of INTC’s huge financial capital and MBLY’s superior technology should enable Mobileye remain the leader in the space. And, as mentioned above, it’s easy to envision its technology being integrated into the drones and robots of tomorrow.
Meanwhile, Intel’s FPGA, Xeon and Xeon Phi chips are being used to transfer “relatively simple data” to devices that have neural networks that are already trained.
To cope with “high velocity and resolution data” requirements in devices such as “4K video cameras or radar,” the chip maker “has pre-announced a new version of … [its] multi-core Xeon Phi, code named Knights Mill, which is expected to be available later this year.”
INTC is also working on a higher-caliber ASIC chip, known as Nervana Engine, that is expected to “meet the demands of a low latency and low power environment such as a vehicle or an autonomous drone or missile.” Finally, Intel’s FPGA chips reportedly work well when hardware needs to be reconfigured or low power must be utilized.
These facts make INTC a strong tech stock to buy to ride the trend in artificial intelligence.
Tech Stocks to Buy: Delphi Automotive PLC (DLPH)
Delphi is also an appealing tech stock as it looks like a leader in the race to develop effective technology for autonomous cars. In fact, Mobileye and several other major companies have chosen to partner with it in the development of self-driving vehicles.
Additionally, according to TechCrunch, DLPH has developed one of the few autonomous vehicles that can carry objects in its trunk.
Finally, Delphi recently decided to split its powertrain unit into a separate, publicly traded company. According to RBC Capital analyst Joseph Spak, the company that continues to trade under the Delphi name will be a pure play on “autonomy, mobility and connectivity.”
Since ADAS utilizes artificial intelligence, DLPH will also be an AI stock. Additionally UBS analyst Colin Langan recently raised his price target on the shares to $97 from $87, saying that the company could be acquired in the wake of the spin off.
Tech Stocks to Buy: Visteon Corp (VC)
Yet another company involved in using AI to enable autonomous mobility is Visteon.
VC is going all out to develop its AI capabilities for autonomous driving. In December, it launched a “technical center” in Silicon Valley to “lead the company’s development of artificial intelligence for autonomous vehicles.” Also in December, the company hired Matthias Schulze, who worked at Daimler AG (OTCMKTS:DDAIF) for 20 years and headed up its “advanced driver assistance system development and vehicular communications.”
Meanwhile, at least two top research firms are very upbeat on VC stock. Goldman Sachs called the company “a potential takeover target” and said that it should benefit from “increasing vehicle digitization and connectivity.” Meanwhile, Morgan Stanley upgraded Visteon to Overweight from Market Weight, calling the company “a play on ‘Auto 2.0’” and saying that the company reported “strong” first quarter results.
Additionally, VC should benefit from Delphi’s spin off, as that move and the subsequent rally in the stock has made investors more aware of companies that provide advanced automotive technology.
Tech Stocks to Buy: Baidu Inc (BIDU)
Finally, Bloomberg proclaims that Chinese Internet search engine Baidu has also gone “all in on AI.”
Most of the $2.9 billion it has spent on R&D since mid-2014 has been devoted to AI. The spending seems to have borne fruit, as in recent months, the company has unveiled a small robot that Bloomberg compares to Amazon’s Echo.
BIDU has also launched “a Siri-like personal assistant,” the news service noted
As Bloomberg points out, the tremendous amount of personal data that Baidu has on the Chinese population should give it an edge when it comes to developing products that use AI. Additionally, the company can use its AI capabilities to expand to new areas, “such as cloud computing and self-driving cars.”
Of course, the Chinese market is huge and growing quickly, so each of these areas — AI personal assistants, cloud computing and self driving cars — are all multi-billion dollar opportunities for BIDU. Since Baidu’s market cap stands at $66 billion now, there’s a good chance that its foray into products derived from AI will have a significant positive impact on the stock price over the longer-term.
As of this writing, Larry Ramer did not hold a position in any of the aforementioned securities.