With major indices all over the map, and individual sectors suffering varying degrees of misery, this holiday season failed to deliver much joy to investors. That said, every bear market provides shrewd speculators with a steep discount on quality names. Among them, those armed with a long-term strategy should zero-in on artificial intelligence (AI) stocks.
Integrated AI represents the ultimate paradigm shift for society and the global economy. Prior technological innovations have introduced various iterations of assisted applications. For instance, we have computers that allow us to perform our work faster, or vehicles that greatly expand our range. But for the most part, they require human input.
In the last few years, we’ve witnessed massive leaps in deep learning, or the capacity for computers to engage in dynamic decision-making protocols. It’s not just in the theoretical realm, either. Every time we log on to the internet, multiple platforms deep-learn our tendencies, providing us with relevant marketing and query answers.
Now imagine that tech developers combine mechanical advancements with deep-learning intelligence. The possibilities are seemingly limited only to our imagination. While we’re a bit away from that integration, every year we push closer to that reality.
That alone makes AI stocks worth serious consideration. But with the recent market volatility, high-potential tech firms are on markdown. Here are 15 companies that will lead the next wave in artificial intelligence applications:
Alphabet (GOOG, GOOGL)
Industry: Information Technology
If you’re seriously considering jumping onboard artificial intelligence stocks, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is your one-stop shop. Although it’s an incredibly predictable idea considering its size and influence, GOOG stock is a proven long-term winner.
Plus, there’s nothing quite like Alphabet. As I’ve said repeatedly, the tech giant owns the internet. “Whoever owns the internet, owns the future. It really is that simple.” Nowadays, people can’t do anything without Google; not because they physically can’t, but because its platform is undeniably effective.
Now, Alphabet is taking this open-source mentality and applying it toward the AI sphere. One powerful application is utilizing Google’s deep-learning capacities to predict earthquake aftershock locations. Eventually, once the science is fine-tuned, it’s not inconceivable for Alphabet to predict the initial earthquake.
This has powerful ramifications for the international community, and of course for GOOG stock.
Industry: Internet Content
Most people who use Facebook’s (NASDAQ:FB) front-face product consider it as the premiere social-media firm. With over two billion active users, that lofty standing is not in dispute. Indeed, no American company is likely to challenge this dynamic.
But because it has such mass appeal, FB stock is truly a powerhouse among AI stocks. I’m not just talking about its AI initiative, in which they have invested heavily. Rather, I’m referring to their human database. If Google owns the internet, Facebook owns the hearts and minds of the international community.
At this time, I must address the pink elephant in the room: FB stock suffered a disastrous showing this year, and we’ve still got a month to go. Nevertheless, investors should think about the future of AI stocks. Facebook offers unprecedented synergies as it practically owns the largest database of human behaviors and trigger points.
After all, there’s a reason why Cambridge Analytica was so keen on accessing this data goldmine.
Industry: Specialty Retail
Amazon (NASDAQ:AMZN) is another company that most people utilize for its primary retail business. However, if you’re looking for a top-notch name among artificial intelligence stocks, Amazon also offers far-reaching synergies.
Everyone, especially in the current season, recognizes AMZN stock as the retail industry’s gold standard. Yes, the brick-and-mortar concept will probably never die out, but let’s not kid ourselves: e-commerce continues to steal market share from total U.S. retail sales. This trend shows no signs of stopping.
Next, factor in Amazon’s machine-learning platform. Through the AWS infrastructure, data scientists and various developers and researchers can quickly tailor AI technologies for their specific needs. But internally, Amazon, and by extension AMZN stock, levers something more valuable: a database of human purchasing behaviors.
This isn’t just about analyzing how people think. Rather, it’s about what motivates people to open their wallets. AMZN brings an economic twist to AI stocks that deserves serious consideration.
Industry: Infrastructure Software
Among large capitalization artificial intelligence stocks, Microsoft (NASDAQ:MSFT) soars in rarefied air. As with the other top names in this sector, MSFT stock benefits from extensive and natural synergies.
If Facebook covers how people think, and Amazon how people buy, then Microsoft levers knowledge of how people work. Compared against all device platforms, Microsoft Windows is the leading operating-system provider. That’s a massively impressive statistic when you consider how many consumers have purchased an Android-based smartphone.
When you narrow the framework down to desktop computers, Microsoft wins by a landslide. And this victory has significant implications. Despite the chic nature of trendy devices, most people get their work done through traditional PCs. Knowing this, Microsoft can apply analytics and algorithms towards applications that regular folks frequently depend on.
Even if you consider MSFT stock a bit “old school,” it’s this very nature that should contribute long-term upside.
A distinct challenge in deciphering AI stocks to buy is balancing potential with performance. Most, if not all, tech companies market their potential. But only the elite few have the goods to back it up. Fortunately for Intel (NASDAQ:INTC) shareholders, their target investment falls into the latter category.
Earlier in August, Intel made the rare step of disclosing its AI-specific chip sales, which numbered $1 billion in 2017. Undoubtedly, management wanted to pressure its semiconductor rivals, which have recently challenged Intel’s dominance in next-generation markets. But it also demonstrates how much confidence the leadership has in its strategies, which bodes well for INTC stock.
Another tailwind for Intel is the company’s robust fundamentals. Compared to its lesser-capitalized rivals, Intel enjoys ample resources. This wealth isn’t just for bragging rights. Management has invested heavily in beefing up its CPUs for AI applications, further bolstering INTC stock.
I have no way to sugarcoat it: Nvidia (NASDAQ:NVDA), which once bedazzled Wall Street for its amazing string of skyrocketing returns, is now in crisis mode.
During the October rout, few artificial intelligence stocks suffered the kind of bloodshed that Nvidia incurred. For that month, NVDA stock dropped nearly 26%. At that point, you’d expect at least a dead-cat bounce in the following month. Unfortunately, we have no such luck as shares are down 28% so far in November.
But with that terrible news out of the way, I genuinely believe that NVDA stock looks enticing from a patient speculator’s perspective. This is because Nvidia is a leader in graphics processing units, or GPUs. In turn, GPUs are best suited for AI applications.
Why? Artificial intelligence requires multiple data computations. CPUs perform mathematical processes in sequential order, requiring one computation to complete before another could begin. In sharp contrast, GPUs allow these processes to occur in parallel.
We’re talking millions of algos running simultaneously. This structural advantage allows GPUs to transmit realistic graphics on your video-game console while preventing your future autonomous vehicle from running over a pedestrian. This underappreciated fact makes Nvidia a compelling contrarian buy among AI stocks.
Similar to many other semiconductor-centric artificial intelligence stocks, Micron (NASDAQ:MU) has suffered badly this year. And while the October collapse in the broader markets didn’t help matters, MU stock has suffered steep declines since the end of May.
Moreover, Micron shares have been mired in a perfectly-bearish trend channel for the trailing half-year period. Gambling that this time, it’s different is akin to a knife-catching game. Admittedly, MU stock has many challenges ahead. Plus, the ongoing economic conflict with China is an acute sour spot for chip-based AI stocks.
Nevertheless, I believe patient contrarians should strongly consider MU stock. As the AI sector expands its scope, demand for Micron’s memory chips will inevitably increase. Additionally, the tech company recently announced that it will invest $100 million in AI-related startups and research projects.
The leadership team isn’t just focused on raw numbers, it’s focused on positioning the organization for future success. I like that they remain bullish on their prospects despite nearer-term pain.
Industry: Information Technology
International Business Machines (IBM)
Out of all the large-cap artificial intelligence stocks, I’m most disappointed in International Business Machines (NYSE:IBM). As a boring investment which many folks view as a legacy entity, IBM stock typically flies under the radar. That’s not great if you love high-flying growth names but in a bear market, ignorance is bliss.
Or so I thought. During the October selloff, IBM stock took it on the chin, absorbing a 24% freefall. That is an Nvidia-style decline, but without any of the sex appeal. Typically, dividend-paying companies mitigate losses better than non-paying firms in a corrective phase. That too didn’t help Big Blue.
Still, I see potential for IBM stock. For one thing, its huge discount puts shares in Great Recession territory. That’s a little overkill considering the iconic firm’s AI cred. Most people recognize IBM for its Watson commercials, but their investment goes far deeper, extending into diverse subjects like chemistry and speech recognition.
Intuitive Surgical (ISRG)
Industry: Medical Instruments & Supplies
Arguably, the bulk of artificial intelligence stocks focus on technologies that people can utilize for themselves. But one of the most compelling implications for AI is the platform’s capacity to integrate within ourselves. I speak of course about medical technologies, with Intuitive Surgical (NASDAQ:ISRG) standing above the rest.
An investment in ISRG stock provides buyers with exposure to the da Vinci Xi robotic surgery system. Specializing in minimally-invasive surgical procedures, the da Vinci allows doctors to work on their patients without unnecessary incisions. Through precise, microscopic instruments and optics, medical professionals have greater access to complex functionalities at minimal risk to the patient.
Better yet, the industry is just now witnessing growing competition to the da Vinci Xi. Ordinarily, that would represent a headwind for ISRG stock. However, the ultimate aim for AI is to marry smart platforms with robotics. In my opinion, Intuitive Surgical is light years ahead of its incoming rivals regarding this potentiality.
Industry: Infrastructure Software
Yext (NYSE:YEXT) is a newcomer among AI stocks, having launched its initial public offering in spring of last year. But despite its youth, Yext has already left an indelible impact upon its many Fortune 500 clients.
So what makes Yext, and by extension, YEXT stock, so special? The company acts like a real-time social-media administrator. Suppose a prospective customer wants to purchase a product or service right away. That buyer will go online to seek businesses that meet specific criteria. Yext allows companies to transmit their best digital foot forward, helping to capture new sales.
This is the reason why restaurants have found Yext invaluable. Patrons typically make decisions on where they want to eat almost immediately. Therefore, an eatery must provide accurate, up-to-date information for that hungry customer.
As you might expect, the markets have responded very positively to YEXT stock. But thanks to the recent correction, you can pick up this emerging tech firm on the cheap.
Industry: Internet Content
If you’ve followed my work over the years, you’ll know I haven’t been the biggest cheerleader for Chinese companies. While my bearish thesis missed the mark during their run-up, the trade war with China has finally proven me right.
Still, the bad blood between our nations can’t completely dissuade me from exploring Baidu’s (NASDAQ:BIDU) longer-term potential. Levering China’s most popular search engine with a nearly 71% market share, BIDU stock is virtually an uncontested powerhouse. Second place is Shenma at 15%, while Google comes in at a lowly 1.5%.
As with the other American large-cap AI stocks, BIDU stock enjoys immense synergistic opportunities. China is a country that hosts nearly 1.4 billion people. That’s more than four times the size of the U.S., providing ample fuel for its machine learning and AI-centric businesses. Plus, as a Chinese company, BIDU stock has superior leverage in China than its western counterparts.
Industry: Internet Content
As a social-media giant as well as operating businesses in varied fields like messaging and payments, Tencent (NASDAQ:TCEHY) has no comparable rivals. Nevertheless, I can’t help but draw parallels between TCEHY stock and Facebook.
Both obviously feature social media as their primary vehicles. Facebook is the king in terms of absolute numbers, but Tencent owns China. Moreover, the two companies have suffered sharp setbacks this year. FB was embroiled in various controversies, and loss of investor confidence ultimately sank shares. On the other hand, the China trade war severely pressured TCEHY stock.
That said, I’m excited about their positive similarities, which again centers on synergies. Tencent can easily advantage its one-billion strong WeChat user base, acquiring valuable behavioral and spending data. And just like compatriot Baidu, Tencent features a homegrown advantage that foreign competitors have yet to crack.
Industry: Auto Parts
Obviously, investing in artificial intelligence stocks implies that you’re banking on the economy of tomorrow. Among these emerging technologies, perhaps none is simultaneously fascinating and dangerous as automated transportation.
We’ve all heard the horror stories of AI-powered vehicles apparently not reacting in time to dynamic events, causing fatal accidents. Naturally, some investors may be hesitant on companies like Aptiv (NYSE:APTV). While I’m not entirely sold on the idea of automated vehicles – who is? – APTV stock at least features serious credibility.
Once known as Delphi Automotive, the parent company sold off its powertrain and accessories business, which became Delphi Technologies (NYSE:DLPH). Aptiv today focuses largely on AI-driven vehicles and integrated technologies.
In other words, Aptiv isn’t just about making your car smarter and more effective. Instead, management’s ultimate aim is to develop a seamless AI infrastructure. Imagine street lights communicating in real-time with your car, and coordinating traffic to the most efficient route possible.
It sounds like science fiction, but Aptiv has the scientific goods to deliver. Thus, I’d keep a close eye on APTV stock.
Industry: Application Software
I’ve previously worked in financial investigation units where my end goal was to uncover any accounting discrepancies and assess them. As somewhat of a data geek, I found the work fulfilling. What wasn’t so pleasant was the number of hours necessary to extract the information I was looking for.
I’m glad Cloudera (NYSE:CLDR) was a relatively-unknown commodity back then, because I would have been out of a job. But if I managed a financial institution, you can bet every dollar that I’m setting up a meeting with Cloudera. The next best thing is to invest in CLDR stock.
Here’s why: artificial intelligence is all about numbers. The more numbers your platform can crunch, the higher your chances of success. But to really rise to the top, your platform must produce actionable advice. In my case, I could modulate Cloudera’s system to seek out discrepancies based on specific parameters.
Of course, the company’s services extend beyond finances. Anything that involves moving parts, whether data management and security, or supply-chain logistics, will find Cloudera incredibly useful. This utility should eventually boost CLDR stock.
Industry: Scientific & Technical Instruments
Rounding out this list of AI stocks is Japanese healthcare-technology firm Cyberdyne (OTCMKTS:CYBQY). I always try to include some speculative names for the risk-takers out there, and CYBQY stock definitely earns that title.
Over-the-counter investments usually don’t have a reputation for stability. That said, CYBQY stock has been a tough pill to swallow for even the most risk-tolerant, dropping 60% year-to-date. The only good news here is that shares may have found a bottom late last month.
We’ll see how that turns out. But in terms of potential, Cyberdyne generates considerable interest. Its exoskeleton HAL helps immobilized patients develop assisted movements, and in turn, greater personal independence. Earlier this year, U.S. researchers at the Brooks Cybernic Treatment Center in Jacksonville, Florida began extensive testing on HAL.
Although a risky investment, the future is bright for CYBQY stock. As AI and machine integration improves, we can potentially see HAL incorporated in more complex cases of paralysis. This could be the breakthrough that so many patients are seeking, providing Cyberdyne with a sweet PR boost.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.