With the coronavirus pandemic taking a devastating toll both in the U.S. and the rest of the world, it’s hard to think about anything else. Furthermore, mandatory shelter-in-place orders haven’t exactly helped us out, disrupting our daily routines. Nevertheless, at some point, we will reach the other end. But before we do, we should consider adding artificial intelligence-based investments or AI stocks to our portfolios.
Primarily, this sector enjoys substantial relevance. Prior to the media’s 24/7 pandemic coverage, we were on the cusp of incredible, transformative changes in society. No longer was technology merely a tool to enhance human productivity. Instead, artificial intelligence had grown to a point where it could replace human-operated jobs. Though somewhat cynical, astute investors picked up AI stocks in droves. After all, progress stops for no one.
Second, AI stocks don’t just belong in lofty, highly intellectual sectors. The beauty of this innovation is that you don’t have to understand its granularity to appreciate its effectiveness and utility. Of course, many AI names are levered toward tech firms and cloud computing services. However, this platform is also found frequently in everyday tasks such as shopping, socializing and streaming.
Therefore, when we finally enter the post-coronavirus phase, AI stocks should experience a substantial ramp up in demand. Simply put, we’re too dependent on the technology. Even if we weren’t, the platform is too efficient to ignore. Here are nine companies that have caught my eye:
- Amazon (NASDAQ:AMZN)
- Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL)
- Facebook (NASDAQ:FB)
- Microsoft (NASDAQ:MSFT)
- IBM (NYSE:IBM)
- Dynatrace (NYSE:DT)
- Netflix (NASDAQ:NFLX)
- Trade Desk (NASDAQ:TTD)
- Match Group (NASDAQ:MTCH)
That said, I offer a word of warning: although I’m long-term bullish on these AI stocks, please exercise caution. Buy a small portion of your favorites now and keep the powder keg dry for additional discounts.
At time of writing, Amazon’s shares are in the black for the year, though barely. However, that’s a win in my books. Heck, even if AMZN stock was down by a few percentage points, I wouldn’t be worried. Starkly, we’re in a world where bankers have resigned themselves to the idea that “Everyone has a gun to their head.” Well, that’s unless you’re a stakeholder in Amazon.
For one thing, the e-commerce giant is one of the most powerful names among AI stocks. With most folks essentially forced to do their shopping online, this logically benefits AMZN stock. Even without the coronavirus catalyst, Amazon has utilized artificial intelligence to maximize their marketing reach.
Beyond that, the company’s expansion into smart home voice-activated devices, along with its dominant market share in cloud computing makes AMZN stock much more than an e-commerce play.
Alphabet (GOOG, GOOGL)
No list of AI stocks that we’re dependent on is complete without mentioning Alphabet. First off, the company basically owns the internet. That’s been a central part of my bullish thesis for GOOGL stock for years. While this utter dominance generates controversy, the coronavirus has also demonstrated Alphabet’s capacity to enforce the greater good.
Back when the outbreak caused Americans to hoard and later price-gouge personal protective equipment, many helpless consumers felt no recourse but to pay the exorbitant premiums. Further, this panicked environment allowed nefarious actors to scam people out of their hard-earned money. Well, Alphabet put an end to those shenanigans by banning all ads for medical face masks.
Such an undertaking requires massive AI capabilities, but clearly, Alphabet was up to the task. And for once, GOOGL stock has a feel-good story attached to it.
Given its alleged role in influencing the 2016 presidential election, it’s no wonder that many people don’t care too much about Facebook. Heck, they might even relish the fact that FB stock has taken a good-sized beating due to the market crisis. Nevertheless, we’ve got to give credit where it’s due: as the world’s biggest social media platform, it’s a huge goldmine for data.
Thus, whether we like it or not, FB is also one of the most important AI stocks.
During this crisis, Facebook also plays a vital role in how we cope as a country. Obviously, the virus has created stress, both in terms of avoidance procedures and worrying about our families. However, it’s also straining mental health due to the sudden isolation. With Facebook’s huge network, it allows people to connect without connecting in person.
It’s a small but significant factor. Plus, it’s one of the rare examples of positive press for FB stock.
Given its growing disruptive capacities in the cloud computing arena, Microsoft is no slouch when it comes to AI stocks. In October of 2019, the software giant made huge waves when it beat out Amazon over the Pentagon’s $10 billion Joint Enterprise Defense Infrastructure (JEDI) cloud contract. Lasting a period of 10 years, it gave MSFT stock substantial credibility.
Undoubtedly, when we get out of quarantine, Microsoft will play a vital role in getting back to the old normal. But in terms of the company’s significance to artificial intelligence, I really appreciate its myriad Software as a Service offerings to promote “home grown” AI.
I’ll give you a personal example. I was one of the first analysts to note the differences between the coronavirus and other infectious diseases by comparing infection rates at the onset of major community spread in early February. Later that month, I warned readers that we’re not taking “this outbreak seriously enough.” In early March, I made the statistical argument that Italy is our harbinger.
In mid-March, I warned that “Italy may face a crippling blow to its healthcare system.” Frankly, I’ve been ahead of the mainstream media thanks to Microsoft allowing me to even the playing field. Thus, I can attest to the likely viability of MSFT stock.
A legacy tech powerhouse, IBM has unfortunately struggled to keep pace with next-generation innovators. However, I believe that its very high-profile Red Hat acquisition helped even the playing field. Though IBM stock has struggled like most other names during this pandemic, it also offers one of the most compelling picks among AI stocks.
Further, an email sent to me by Timothy Davidson, who works in IBM Corporate Communications, demonstrated the exceptional steps that the company is taking to assist government and healthcare agencies. According to IBM’s press statement:
With a flood of information requests from citizens, wait times in many areas to receive answers can exceed two hours. Available for no charge for at least 90 days and available to our client’s citizens online or by phone, IBM Watson Assistant for Citizens on the IBM public cloud brings together Watson Assistant, Natural Language Processing capabilities from IBM Research, and state-of-art enterprise AI search capabilities with Watson Discovery, to understand and respond to common questions about COVID-19.
It’s always great when big corporations give back to the community. As a bonus, these measures will also help lift the profile of IBM stock.
As mandatory stay-at-home orders have forced millions of Americans to work remotely, this has caused new strain on our networks. Indeed, without an effective solution, companies with lesser platforms can expect severe disruptions. This is where Dynatrace’s AI-powered platform, and by deduction DT stock, comes into the picture.
I’m going to borrow significantly from Sam Johnston, Account Director of ICR, who works directly with Dynatrace’s corporate communications team. In an email sent to me, Johnston writes:
As businesses continue to come to terms with the “new normal” of supporting a remote workforce, IT support is stretched more thin than ever to keep critical infrastructure up and running. Failure is simply not an option…
In short, Dynatrace helps companies monitor the performance of their applications, so they can fix them before a catastrophic failure (worst case) or quickly improve performance of lagging apps (best case). So clients like BARBRI, the global learning and leading bar preparation provider, for instance, will rely on Dynatrace more than ever to create more seamless online learning experiences, drive better business results and ensure uptime.
Currently, DT stock may not be the most popular among AI stocks. However, you can expect that to change in the coming months ahead.
When you hear the name Netflix, you typically don’t associate it as ranking among AI stocks. As a content streaming giant, NFLX stock has a more pressing bull case right now: a massive hostage audience. With nothing to do and nowhere to go – especially with movie theaters shut down – people want their entertainment and they want it now.
But if you think about it, very few tech-related companies don’t use AI in some fashion. For instance, Netflix users will receive automated content recommendations. And that comes from sourcing millions of data points to generate probabilities based on user behaviors.
However, Netflix’s AI street cred goes beyond the banal. Now, the company is using data science to help determine where and when to shoot based on metrics such as weather-event probabilities. That’s some hardcore analytics, giving investors another reason to consider NFLX stock.
Trade Desk (TTD)
Although it doesn’t quite look like it right now, the pandemic has delivered a powerful bullish case for Trade Desk. With millions stuck at home, those who haven’t made the switch from traditional linear TV to connected TV will soon realize the latter’s limitations. In this crisis, you want your favorite programs on demand. Subsequently, Trade Desk promotes efficient advertising campaigns using artificial intelligence for this new paradigm of content viewership.
Now, one of the few benefits of linear TV is live sports broadcasting. However, this may be due for a huge shift as many Americans cut the cord following the crisis. When they do, advertisers will have new opportunities, particularly when it comes to games going into overtime. In an email to me from Trade Desk’s corporate communications representative:
Within linear TV, the broadcast gives away ad slots or puts a low price tag on them during overtime for advertisers because live sports is just so unpredictable; there’s no way a broadcaster can predict the game will go into overtime. But with CTV [connected TV], TTD can capitalize on the overtime and find advertisers willing to pay in real-time because that last 20 minutes may bring an audience that is the most engaged.
This is one of the gamechangers in the connected TV realm. Therefore, don’t ignore TTD stock in your search for the best AI stocks.
Match Group (MTCH)
A significant reason why most Americans don’t consider the current shutdown as a free vacation is that every aspect of life has been quarantined. In other words, you can’t just wonder off to the local pub when you ordinarily would be preparing your sales reports. In fact, wondering off is the last thing you should do. Obviously, this has impacted dating, which initially doesn’t bode well for Match Group and MTCH stock.
But in the long run, I view the volatility in Match shares as a temporary headwind. At our core, we are social creatures. Furthermore, the urge to meet that someone special will never go away. I imagine that when this is over, we’ll see a surge in dating activities. Therefore, going negative on MTCH stock may be shortsighted.
Plus, Match Group is one of the most interesting AI stocks. Similar to content streamers, Match utilizes AI in its Tinder mobile dating app to help deliver appropriate connections. Fewer rejections and more viable candidates are huge benefits for all involved.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he did not hold a position in any of the aforementioned securities.