In today’s uncertain economic environment tech stocks (specifically AI stocks) are proven to be a safe bet. Given that technology will power future innovation and growth, investments in this sector remain largely recession-proof. Once considered a technology of the distant future, today millions of people interact with AI systems on a daily basis.
AI is defined as the use of computers to complete tasks that would otherwise require human intelligence. This is done using machine learning and neural networks that allow machines to mimic human behavior. Although this technology is still in its early stages, experts predict the spending on AI will reach $97.9 billion by 2023.
Given the potential for growth in this industry, an investment in AI stocks would be a good bet before prices take off. If you are looking to get in on the AI action, here are my top four picks:
AI Stocks: Nvidia (NVDA)
After flying under the radar for many years, chipmaker Nvidia is now one of the big players in the AI sector. The company’s chips, traditionally used in video games are now ideal for machine learning thanks to its computing power. Nvidia also controls 80% of the graphics card market putting the business in a prime position to benefit from new developments in AI.
The company also had a spectacular 2020. In its last quarter, Nvidia earned $1 billion in revenue. A large proportion of this income can be attributed to the accelerated growth of its graphic cards used in data centers. Nvidia stock is also up 226% since March with room to go higher.
Another great play for Nvidia is its upcoming acquisition of Arm for $40 billion. This will give the company a lead in AI verticals such as self-driving cars. Autonomous vehicles will need to process lots of data — meaning more computer power. This is where Nvidia’s computing chips play a big role.
Nvidia holds a strong market position right now, but with greater innovations in AI technology, this AI stock has a lot of upside ahead.
IBM is a legacy name in the computing space, but it has reinvented itself to play a big role in futuristic technology. One of the company’s core concepts is to use artificial intelligence to replace human intelligence and increase efficiency. IBM has a number of successful AI products with more promising innovations in the pipeline.
For many businesses in the financial sector, regulatory compliance is considered an arduous task. IBM acquired Promontory Financial Group to create an AI system to complete the job. The company also has its own in-house AI tool, Watson. This machine learning program has enabled IBM to use AI to solve real-world business problems. IBM also has more projects in development such as the “AI Captain,” which allows ships to self-navigate across oceans. More recently, the company announced a partnership with Advanced Micro Devices (NASDAQ:AMD) to help bolster its AI arm.
IBM’s IT business segment has been sluggish for a couple of years but growth in its AI technology shows promise for the future. The company can take advantage of its strong position in the market to deploy a number of AI innovations. As IBM aggressively transforms its business in the coming years, this AI stock is totally worth buying at its current price.
Google is known for being a search engine veteran but the tech giant is quickly shifting its focus to AI. In 2011, the company created an AI team to lead innovations in the field. Since then its AI solutions have disrupted various sectors from healthcare to auto, making it one of the top names in the industry. Google’s ultimate goal is to use AI to improve its core service- the search engine. With the help of AI, information on the worldwide web will be accessible to everyone in the most efficient way possible.
The company has already deployed a number of useful tools in its software business. These include speech recognition in its search engine, ad pricing and self-driving cars. While much of this is still in its early stages, building on this technology will be key to Google’s growth. Looking ahead, Google will tie many of its services to AI in an effort to better dominate the online market. This makes the AI stock a great buy for its future potential.
Amazon is a juggernaut in the e-commerce sector, but the company has made some big plays in AI as well. One of its most famous innovations is the Alexa digital assistant powered by Amazon’s Echo product. With the help of neural networks, AI technology can read commands and generate the appropriate responses. Alexa quickly became a fan favorite and is a staple in almost every household today.
Amazon also introduced Amazon Web Services (AWS), an AI tool that plays into its e-commerce platform. This machine learning system analyzes users’ browsing activity and recommends products of interest. This tool was a gamechanger for Amazon and a big reason for the platform’s reigning success.
Amazon has a noteworthy line of AI products and services, but claims that it is just getting started. The company believes that with the help of AI, it can help identify solutions to big problems and improve lives. The e-commerce giant is a trailblazer in the tech world making this one of the top AI stocks to buy right now.
On the date of publication, Divya Premkumar did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for InvestorPlace since 2020.