Artificial intelligence has expanded its grip during the novel coronavirus pandemic. Lockdown restrictions have essentially uncovered the value of AI and its ability to add value to a variety of tasks for companies. Therefore, AI has become a centerpiece of the post-pandemic reality.
According to a 2020 report from Grand View Research, the estimated market size for AI will grow at a projected 42.2% between 2020 and 2027. This means that AI stocks have the potential of being massive money-spinners in the coming years.
When people think about AI, they usually think about the usual suspects in Nvidia (NASDAQ:NVDA), Google, or IBM (NYSE:IBM). These companies have invested heavily in their respective AI capabilities but are not precisely AI pure-plays. Hence, it’s imperative for investors to broaden their horizons and look at other AI stocks with similar potential.
AI Stocks to Buy: Twilio (TWLO)
Twilio is a cloud communications platform-as-a-service that enables its users to develop, scale, and operate communications within software applications. The company’s unique suite of applications provides robust solutions to increase customer engagement.
AI has been a focal point of the company’s services, particularly with its Autopilot offering, which facilitates intelligent bots, IVRs, and Alexa applications.
TWLO stock has been on a roll in the past six months growing at a healthy 43%.
The company’s earnings results have been nothing short of stellar, with it continuing the double-digit growth trend this past year. In its most recent quarter, revenue grew by more than 50%. Covid-19 helped Twilio gain a massive number of new customers that it will cross-sell into in the coming quarters.
The company is poised for growth across several of its core segments, with its application services leading the charge. Twilio will continue to change communications and customer engagement through its AI capabilities.
Tencent Holdings (TCEHY)
Chinese tech giant Tencent offers an array of online advertising and value-added services to its massive customer base in China and internationally.
TCEHY stock is among the few tech giants that are investing heavily in developing AI infrastructure. Back in 2016, it opened up its AI lab in Shenzhen to develop practical AI applications for businesses. It launched its AI open platform in businesses upgrading their capabilities. Most recently, it pledged to invest roughly $70 billion over the next five years in areas from cloud computing to artificial intelligence.
From a fundamental perspective, the company has been doing incredibly well. Its top-line benefited from the Covid-19 tailwinds posting double-digit growth in revenue. Revenue in the third quarter rose by 29%, comfortably beating analyst estimates. AI continues to play a huge role in the company’s resilience as it continues to invest in AI start-ups to optimize its myriad of business activities. It recently invested in Shanghai-headquartered Enflame Technology, which develops chips to process vast amounts of data to train AI systems.
Splunk develops software solutions that allow various enterprises to gain access to real-time operational information. Its enterprise platform provides real-time data and tools for reporting, data collection, indexing, monitoring, and others. It also has its cloud service for machine data called the Splunk Cloud. It is not precisely an AI pure-play but has an array of offerings that make effective use of machine learning (one of the oldest forms of AI). Moreover, it continues to invest in its AI capabilities to improve the quality of its products. SPLK stock’s short-term weakness allows investors to pick up shares at a discounted price.
It was a relatively tough year for the company, but its long-term outlook looks outstanding. Its most recent quarter was weighed down by delays in a “handful of seven-and-eight-figure deals“. Hence, expect a much stronger 2021, powered an improved pipeline, newer products, and robust execution.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.