Although artificial intelligence has became a buzzword for a while now, its prospects keep getting better. In the last decade, central systems stored and processed more and more data, thanks to the growth in social networking. Computing power and storage grew in that time, so as the two trends converged, AI emerged.
AI, or machine learning, fits well for tasks that are repetitive and predictable. This includes autonomous driving, security and predictive email writing, as Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Gmail offers, and more. It may free people from mundane tasks as machines replace them. From there, people may work on other tasks that are less predictable and need our intervention.
What are the seven AI stocks to invest in today?
Amazon’s (NASDAQ:AMZN) online retailing site has an AI powerhouse that is learning what each of its customers wants. By learning what consumers are searching for, the site tries to predict what they would likely buy. The better it is at matching goods with what customers want, the more sales it closes, increasing revenue. In the second quarter, Amazon reported a 19.9% year-over-year growth in revenue, to $63.4 billion.
The retail giant owes much of its AWS division for its very strong quarterly revenue growth. Revenue from AWS grew 37% year-over-year in its run rate, from $24 billion to $33 billion. And speaking of AWS, more organizations are choosing AWS for machine learning than any other cloud. It has over 10,000 customers using AWS for machine learning, including T-Mobile (NASDAQ:TMUS), General Electric’s (NYSE:GE) GE Healthcare and the NFL.
Amazon’s AWS is a leader in technology and has a vibrant partner ecosystem, plus it offers strong security. These features appeal to customers. Increased adoption for machine learning services, such as Amazon Sage Maker, is due to the company’s release of over 200 machine learning features and capabilities in 2018. In the second quarter, it saw plenty of strength in demand for the AI service. Plus, the strong usage growth is outpacing revenue growth, driven by a higher rate of enterprise migrations.
Advancements in AI allowed Alphabet to improve Google Assistant. The next-generation Assistant now processes requests up to 10 times faster. Users have an easier time multitasking, writing emails and writing offline. “Duplex on the web” automates filling online forms. At Google I/O 2019, Google introduced the online version that is accessible on a smartphone.
The company continues to advance its AI. To enable its products to better interpret the data input, It invented a technique called federated learning. This allows Google to train AI models to make products even smarter. And it is doing so without having any raw data leave the user’s device.
Alphabet committed plenty of its funds in investing in AI. Many of its engineers are trained in AI techniques. This should further the developments of “AI first.” As InvestorPlace contributor Tom Taulli wrote:
“AI has become pervasive across the product line, such as with Gmail, YouTube, Maps, Photos, Google Cloud and so on. The company has also developed its own assistant, which connects with more than 5,000 devices in the home.”
So, the more helpful Google search is and the faster its users may find what they are looking for, the more often users come back. At a simpler level, Google is determined to infuse AI everywhere. The more productive users are, the more valuable Google’s new AI capabilities become for the company and its user base.
Artificial intelligence is at the center of Nvidia’s (NASDAQ:NVDA) auto business. Naturally, moving from graphics and expanding into AI leads it directly into the auto industry. But the data center is its first phase, in which it may process enormous amounts of data. From there, it may train systems and then iterate and build the deep neural networks needed for autonomous driving. Once that gets established, Nvidia may expand its AI into healthcare, energy exploration and in the financial industries. In effect, Nvidia believes that AI is transforming nearly every industry.
Within automotive, Nvidia’s chips process the data coming from cameras, radars and LiDARs. That data then runs through its deep neural networks, where car systems make decisions and control what the vehicle does. So, Nvidia runs the AI in its Drive platform and sells both the hardware and software as a single architecture that extends from the data center to the edge, and then to the vehicle.
The company has hundreds of developers building “Nvidia Drive.” The effort involves developing ways to integrate many different kinds of sensors with its hardware and software. As an open platform, others may develop on it, improving the rate of adoption.
International Business Machines (NYSE:IBM) is nearing a 52-week high. It deserves to trade at these levels, up ~42% from yearly lows. The company’s digital strategy and iX team proved it may deliver a differentiated and personalized digital experience at Wimbledon. The on-site media used AI that ran on IBM’s Cloud and supported by GTS. Big Blue clearly employed hybrid cloud and artificial intelligence to deliver a digital experience to users during the Wimbledon tennis tournament.
Automatic Data Processing (NASDAQ:ADP) used an IBM Garage method to develop AI-powered digital agents. IBM describes IBM Garage as its “center for high-impact, client-centric innovation. The IBM Garage engages diverse, empowered teams that partner with you to apply purposeful technologies to quickly create and scale new, innovative ideas.” In ADP and IBM’s solution, the AI handles more than one-fifth of ADP’s chat traffic.
IBM is still in the early phase of growth through sales of AI solutions and hybrid cloud. Its GTS division delivered under $500 million in second-quarter profit. Profit margins will be constrained as IBM invests its profit into its go-to-market and delivery capabilities. As it captures the high-value and growing market, expect to hear more customers employing IBM’s AI solutions.
Tencent Holdings (TCEHY)
Tencent Holdings (OTCPK:TCEHY) showcased its AI instant interpretation technology on July 31 at CSS 2019. At Tencent’s 5th Internet Security Leadership Summit, Tencent presented the AI instant translation service. Its average speech recognition accuracy was 95%. Tencent’s translation service was powered by cloud computing, big data and artificial intelligence.
In the gaming world, which is Tencent’s primary business, AI is still not there yet. This is according to the company’s director of AI Lab & Robotics X at internet conglomerate Tencent. Zhang Zhengyou, the director, said that AI is still at the stage of machine learning that is driven by data. To use AI in games, people must figure out how AI may know and understand people. So, that may limit AI in just a few industries, including finance and security. Eventually, Tencent will figure out how to apply AI to video games. But for now, Tencent’s lab will keep its attention on integrating AI in the agriculture and medical service industries.
In the automotive segment, Tencent will provide IT support in China for BMW’s autonomous driving development platform. BMW plans to launch the Data-Driven Development platform in China. And as the platform collects and analyzes data, the goal is to improve safety through simulation, testing and validation.
Twilio (NYSE:TWLO) is using AI internally to look at answer rates and call durations in its operations. But it offers AI chatbots for businesses that should result in time savings and efficiency. Instead of human agents handling basic assistance, staff may instead focus on high-profile customer service or sales.
AI Chatbots improve customer experience levels. Businesses that use them may better re-direct customer calls to the right staff. And since people use messenger apps more often than telephones or social networks, Twilio’s AI Chatbox will help businesses customers scale customer communications. In the back-end, AI has a wealth of computing resources and large data samples. So, APIs and microservices give bots the understanding of such things as a calendar. It may also look up inventory or make updates — all in real-time.
In the second quarter, Twilio introduced new automation and email testing features within its Twilio SendGrid marketing campaigns product. The product simplifies the workflow and integrates tools to facilitate email campaigns.
At a recent price of $137.83, TWLO stock does not come cheap. The stock is up 140% from 52-week lows and has a market capitalization of $18 billion. Still, this application software firm is smaller than Nvidia or IBM, whose market share is $99.5 billion and $134 billion, respectively.
Microsoft (NASDAQ:MSFT) is democratizing AI infrastructure tools and services through its Azure Cognitive Services. By offering an incredibly comprehensive portfolio of AI tools, developers may embed the major senses in their applications. This includes seeing, hearing, responding, translating and reasoning. AI, data analytics, and infrastructure solutions are all leading Microsoft’s growth. But AI-driven applications will empower businesses. Microsoft is not shy about its attempts in having AI imitate intelligent human behavior. Its customer, Telefonica, wants that, too. Its Global Director commented:
“We want our customers to love us. And by using Azure AI to make engagement with our services more human, we will certainly increase customer satisfaction and loyalty.”
This year, Microsoft introduced Dynamics 365 AI. So, the records get converted into systems of engagement and intelligence.
In Q4/2019, Microsoft introduced AI Builder. This adds AI capabilities, such as object recognition, to any Power App. And as a side note, Power BI has more than 25 million models hosted on the Power Platform, with 12 million queries processed hourly.
Microsoft committed much of its operating expenses to investments in Cloud, through AI and GitHub. Business Applications through its Dynamics, Power Platform and LinkedIn, also received plenty of investments.
As of this writing, Chris Lau did not hold a position in any of the aforementioned securities.