AI stocks are, without a doubt, investments in a future we may only imagine but that is already upon us. Covid-19 managed to turn the world economy upside down but sped up several long-term technological trends in the process.
Artificial Intelligence is at the heart of these technologies enabling businesses to make sense of their massive troves of data and react pro-actively. It allows users to expand revenues and significantly reduce costs. This is why there are some deep-rooted opportunities for investors in AI stocks.
According to PWC’s latest AI research, 86% of businesses have benefitted from improved customer experience through AI. Moreover, 25% of companies that opted for widespread AI adoption feel it will substantially impact revenues in 2021. Therefore, the pandemic seems to have uncovered the true value of AI and is lending itself to critical business tasks such as demand projection, workforce planning, and others.
As AI technologies continue to evolve, they will help cut costs and expand revenues in the post-pandemic world. With that being said, let’s look at three AI pure-play stocks which could supercharge your portfolios in the future.
AI Stocks To Buy: C3.ai (AI)
Enterprise AI company C3.ai had its blockbuster IPO last year, raising $651 million in proceeds. It priced its IPO at $42 on Dec. 8, but the stock jumped 138% the following day to $100.
Despite the recent pull-back in AI stock’s price, its market capitalization stands at a whopping $6.8 billion. However, even if it takes up a 1% share of its 2027 addressable market of $737.7 billion, it will justify its lofty valuation.
C3.ai provides software solutions primarily focusing on AI for enterprise businesses. It generates its revenues primarily from subscriptions which often involve high-value contracts.
Moreover, once it locks in a customer, it adds add-on services which further expand its margins. Revenues have been on an upward trajectory over the past several years, with a 71% increase in fiscal 2020.
Its services allow companies to streamline their operations and make effective data-driven customers. Some of its customers include machinery maker Caterpillar (NYSE:CAT), European energy company Engie, and Oil and Gas giants Royal Dutch Shell (NYSE:RDS.A,RDS.B) and Baker Hughes (NYSE:BKR). Hence, with an impressive growth runway ahead, expect great things from AI stock down the line.
Palantir Technologies (PLTR)
Palantir Technologies develops software solutions for the intelligence sector in the United States, assisting in various operations.
Its software platforms use AI to predict future outcomes for firms operating in the private and public sectors. Though government contracts form the bulk of its revenues, it is quickly expanding its corporate customer base.
Despite the challenges presented by the pandemic, it has performed superbly in the past year. PLTR stock is up a spectacular 136% in the past six months.
It was a solid 2020 for Palantir, as its revenues grew 47% on a year-over-year basis. The company expects revenues to rise by 30% in 2021, with 85% of this growth attributable to its sticky government contracts. Furthermore, it struck some pertinent deals with Amazon’s (NASDAQ:AMZN) AWS and IBM (NYSE:IBM) in expanding its AI competencies.
Additionally, its enterprise revenues rose 30% in the first nine months of the year from the same period last year. There is a lot of depth and potential with Palantir’s portfolio making it one of the best AI stocks.
iRobot produces autonomous floor-cleaning robots under its Roomba and Braava lines.
The consumer robotics business has taken off rapidly in the past few years, and iRobot occupies a leadership position in the sector. The company has differentiated itself from its increased emphasis on software, specifically in machine vision and AI.
Moreover, it recently introduced its Home Intelligence software enabling greater personalization.
It recently reported its stellar fourth-quarter results where revenues smashed past the $500 million mark and rising 27.6% on a year-over-year basis. Additionally, its earnings per share of 84 cents came in well ahead of analyst expectations.
Looking ahead, the company estimates revenues to fall between $1.63 billion and $1.67 billion. Moreover, it is looking to expand into other critical areas of its business and its product line in the future.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article