Companies utilize artificial intelligence (AI) in two primary ways. Many tech firms apply AI to enhance existing operations, including robotics, self-driving cars, and virtual assistants. For instance, Google filters Gmail spam, Amazon recommends products, and Netflix guides content creation — all using AI. Additionally, OpenAI’s ChatGPT highlights advancements in “generative AI,” capable of creating diverse content. The potential of large language models like this is significant.
Seek AI stocks that enhance products or gain competitive advantage through artificial intelligence. Beware of underperforming companies suddenly touting AI plans. Consider these three AI stocks to own before the next phase of the AI gold rush:
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) defies expectations with a 182% year-to-date return, driven by its role in AI innovation and partnerships. Recent news highlights startups utilizing Nvidia’s NeMo software, emphasizing its dominance in machine learning. This makes Nvidia an attractive choice amid market fluctuations, backed by innovation and partnerships.
Nvidia dominates with an 80% microchip market share for advanced AI applications, outpacing rivals. With ongoing AI chip advancements and a history of stock growth, NVDA remains a strong investment. Despite market fluctuations, its Q2 results could boost the stock, as seen previously.
Lastly, Nvidia is leading a major technological shift comparable to the internet’s emergence. Their advanced graphics processing units (GPUs) drive AI in diverse sectors like gaming, robotics, and energy. Nvidia’s EPS surged 28% year-over-year in Q1 FY2024, with net income up 26% to $2.04 billion. Their robotics platform, Nvidia Isaac, shows promise in becoming a market leader.
C3.ai (AI)
C3.ai (NYSE:AI) reports Q2 results soon after Nvidia. The credit downgrade created a contrarian buying opportunity. While some doubt its AI potential, speculators anticipate a price drop, with high short interest.
The company also reported impressive recent earnings with $72.4 million in total revenue, 79% from subscriptions. Notably, the U.S. Air Force adopted their PANDA AI tool for predictive maintenance, enhancing aircraft availability.
C3.ai addresses diverse challenges with products like energy management and supply network risk solutions. While these products find use across industries, the company’s main clients are in oil and gas (34% of bookings) and defense (29% of bookings) sectors. The company introduced a Generative AI product alongside its other offerings. It witnessed demand and sealing three deals shortly after its Q4 launch.
Upstart Holdings (UPST)
Upstart Holdings (NASDAQ:UPST) uniquely employs AI technology in 2023, setting it apart from mere AI trends. UPST stock earns a “B” grade, reflecting innovative use of AI. Potential investors should assess risk tolerance before considering Upstart. Upstart’s goal of aiding qualified borrowers through AI-driven funding is commendable.
UPST stock surged from $13 in May to $70 in August, potentially due to a short squeeze and AI appeal. Upstart isn’t a newcomer to AI; it’s a pioneer in applying AI to lending, enhancing efficiency and accuracy for borrowers and lenders.
Upstart collaborates with 99 banks, aids $32 billion in loans, and serves 2.6 million customers. Its AI models enable 53% lower default rates, challenging incumbents like Experian (OTCMKTS:EXPGY), Fair Isaac (NYSE:FICO), TransUnion (NYSE:TRU), and Equifax (NYSE:EFX). Upstart’s potential disruption could impact the $100 billion incumbents’ market.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
