[Editor’s note: “7 AI Stocks to Watch With Strong Long-Term Narratives” was previously published in May 2019. It has since been updated to include the most relevant information available.]
Artificial intelligence has captured the public’s attention for its seemingly boundless potential. However, the companies behind several popular AI stocks have also generated significant controversy. As technology advances at breakneck speed, the question is not if something can be done, but if it should it be done.
This is no longer a theoretical inquiry that’s pressuring artificial intelligence stocks. The European Commission has disclosed a series of ethical principles designed to influence the underpinnings of AI infrastructures. The idea is to ensure a clear and transparent foundation before AI firms run wild with their products and services.
Indeed, it’s no surprise that the European Union is taking a lead in this field. In years prior, the EU introduced groundbreaking data-privacy laws that protect consumers from predatory behavior. Additionally, the organization aggressively prosecuted AI stocks for anti-competitive actions and tax evasion.
The commission’s attention to this matter demonstrates the awesome potential of AI stocks. We already know from the Terminator series how AI can go awry. That said, we see in real-time the many positive impacts that AI platforms provide.
Thanks to the EU’s guidelines, we can set aside many of the ethical concerns, and instead focus on optimistic trends. Here are seven artificial intelligence stocks to consider:
Facebook (NASDAQ:FB) sparked the lion’s share of controversies among tech firms. It’s no coincidence that many of the commission’s forwarded guidelines appear to address Facebook and its litany of problems. Nevertheless, FB is one of the top AI stocks on the rise this year, and it deserves a second look.
I get it: Facebook inadvertently allowed fake news and Russian trolls to proliferate across its network. The mainstream media also exposed some grave user-privacy violations. Yet FB stock is up 41% in 2019 This enthusiasm is largely due to the underlying company’s unprecedented scope and influence.
But another factor drives FB stock, and that’s artificial intelligence. Earlier this year, the company released an AI-based population map of the African continent. Designed to highlight areas of great humanitarian need, such technology will help government and charitable organizations effectively deliver aid.
This is just one of many reasons why FB belongs on your list of artificial intelligence stocks to buy.
Nvidia (NASDAQ:NVDA) is a name that really hurt a lot of folks. Levered to several lucrative markets, including video games, NVDA appeared to be a no-brainer among AI stocks, and throughout most of 2018, shares defied gravity. Unfortunately, when October came around, gravity won.
However, I’ve contended since that time that NVDA stock is an example of a good investment caught in bad times. Shares incurred a worrying level of chop for a few months before the company found its groove. Now, Nvidia is up almost 15% since the beginning of January.
I’m still sold on the organization’s graphics chips for advanced video gaming. However, what will really drive NVDA stock over the next several years is AI.
Nvidia boasts an enviable deep learning division, and I’m particularly intrigued with its contributions for automated driving. With ride sharing disrupting traditional taxi services, it’s inevitable that automation will take over the road.
Alphabet (GOOG, GOOGL)
Speaking of automated driving, next on our list is Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). Known primarily as the undisputed king of internet search engines, the company formerly known as Google launched into taxi services. But of course, Google’s offering had a wrinkle: there would be no human driver.
Earlier this year, I declared that GOOG stock is an investment you can trust. One of the reasons I said that was Alphabet’s next-generation taxi service Waymo. Anytime you have humans involved, a few bad apples invariably imposes an asymmetric impact. With Waymo, that human element is gone. Also, the advent of 5G makes GOOGL one of the most compelling AI stocks.
But don’t forget the other reason to trust GOOGL stock: the underlying tech firm veritably owns the internet. Plus, they’re making significant inroads into hardware, even beating out established names in the sector.
Recognized primarily for its dominance in e-commerce, Amazon (NASDAQ:AMZN) is always a good pick. I don’t say that just because I shop all the time at Amazon.com, and everybody reading this column probably does as well. Instead, AMZN stock represents a new, digitalized culture. Once the emerging Generation Z hits its peak earnings, most retail dollars will probably travel through Amazon’s coffers.
But because Amazon is so exceedingly dominant in a pivotal part of our economy, we forget that AMZN is also an artificial intelligence stock on the rise. A brilliant component of the company’s investment thesis is that it never stops innovating. The AWS division and the machine-learning solutions it provides is proof of this corporate ethos.
What makes AMZN stock stand out, though, is that it’s not just innovating for innovation’s sake. AWS has garnered high-level, high-visibility clients, including the NFL and Formula 1. Therefore, don’t ignore Amazon when considering AI stocks.
Match Group (MTCH)
About a decade ago, internet dating had gained serious momentum. Still, I recall at the time that this trend was a niche one. Yes, you could meet the love of your life online, but there was a stigma attached to dating websites. Now, it’s almost weirder not to meet someone online.
The shift in public opinion has put dating stocks on the rise, including Match Group (NASDAQ:MTCH). Since the advent of online dating, Match transitioned from merely facilitating hook-ups to forecasting them. How? The company really has a big data goldmine. With millions uploading their profiles, Match has a canvas with which to make accurate coupling predictions.
AI technologies directly benefit Match’s Tinder app. But further down the line, I see MTCH and its competitors utilizing artificial intelligence to help take the guesswork out of human chemistry. It’s a scary thought, but it’s also an inevitability.
Palo Alto Networks (PANW)
Throughout this list of AI stocks on the rise, I’ve discussed the positive implications of technology. But as the European Commission reiterated, technology left to its own devices present vulnerabilities. This is where cybersecurity firm Palo Alto Networks (NYSE:PANW) steps up.
Regardless of the drivers underpinning AI stocks, PANW will always enjoy substantial demand. That’s because the average data breach costs affected organizations nearly $4 million. Multiply that over several companies across a library of industries and you can end up with an epidemic. Moreover, hackers have become increasingly proficient at their “craft,” ramping up costs.
Fortunately, PANW has some tricks of its own, and that includes fighting fire with fire. With AI technologies, Palo Alto is able to quickly identify and stop data breaches before they spiral out of control. Additionally, these innovations save time and resources, which is a benefit for all involved.
Lockheed Martin (LMT)
Lockheed Martin (NYSE:LMT) suffered a terrible year in 2018. However, 2019 looks notably better, with LMT stock gaining almost 45% year-to-date. Whether it can keep the momentum going, though, is another question all together.
But if I had to offer my opinion, I think Lockheed Martin’s prospects are bright, especially over the long run. The company benefits from two fundamental tailwinds: first, rising geopolitical tensions makes LMT extraordinarily relevant; and second, warfare has become highly technical.
Now, Lockheed Martin isn’t what you call a traditional name among AI stocks. It is, though, a critical one. Of the billions that management invests in research and development, industry experts believe several million goes toward AI-related projects. We’re talking automated drones and vehicles that can perform high-risk operations.
And anything that protects our service members is all right by me.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.