Artificial intelligence (AI) is transforming the world as we know it. From chatbots like ChatGPT that can converse with humans in natural language, to deep learning models that can analyze massive amounts of data and make predictions, AI is revolutionizing various industries and sectors. In this article, we will look at three AI stocks that are poised to power the next Industrial Revolution and deliver strong returns for investors.
Nvidia (NVDA)
While Nvidia‘s (NASDAQ:NVDA) shares have surely skyrocketed more than 200% since the start of 2023, there is still time to allocate and profit handsomely. Right now, Nvidia remains to be the undisputed leader in artificial-intelligence hardware, and despite a slump in the semiconductor market, the GPU maker still delivered record earnings results to investors in 2023. This was primarily due to the robust demand for server GPUs and AI-powering chips like Nvidia’s A100 and H100 chips.
In their recent earnings report, Taiwan Semiconductor Manufacturing Company (NYSE:TSM), the company responsible for manufacturing Nvidia’s chips, not only boosted revenue guidance but also noted the chip slump appeared to be coming to an end. This could spell great news for both Nvidia’s business and its share price. Volatility since the end of July have caused to NVDA to trade down more than 10% below its high point for 2023. Therefore, investors eager to allocate to AI stocks should consider Nvidia now while shares trade at a relatively attractive price point.
GXO Logistics (GXO)
GXO Logistics (NYSE:GXO) is a spin-off from XPO Logistics (NYSE:XPO) that focuses on contract logistics and supply chain solutions. In recent years, GXO has begun leveraging AI to optimize warehouse operations, inventory management, and transportation. For example, GXO uses AI-powered robots to automate picking and packing tasks, AI-based algorithms to forecast demand and allocate resources, and AI-enabled sensors to monitor and track shipments.
The company operates in space that necessitates novel solutions to drive efficiency, and AI-powered technology will prove critical in driving that efficiency. Moreover, e-commerce has gained traction in the past decade and has spurred the demand for warehousing solutions. These trends are exemplified by GXO’s strong customer base, serving Fortune 100 and Fortune Global 500 companies in the United States and Europe. Lastly, GXO has generated double digit revenue growth while maintaining bottom-line profitability in recent quarters.
While trading at 19.5 times forward earnings, GXO Logistics may prove to be a good bet for investors looking for companies transforming the industrial sector with AI solutions. If you are looking for some top AI stocks, start here.
Samsara (IOT)
Samsara (NYSE:IOT) began its journey first in the supply chain and logistics sectors, primarily servicing vehicle fleets with three core software applications: Video-based Safety, Vehicle Telematics, and Apps and Drivers Workflows. The former leverages AI algorithms to detect safety risky behaviors and incidents in real-time. The Vehicle Telematics solution provides businesses with GPS tracking, fuel management, and preventative maintenance. The third application, Apps and Drivers Workflows, improves driver productivity by providing them with a schedule of upcoming jobs, necessary electronic documents, and maintenance compliance logs. Today, Samsara’s solutions are used by companies operating in a variety of industrial sub-verticals, and all software applications are hosted and deployed via the company’s Connected Operations Cloud.
In late September, Spruce Capital Management released a short report on Samsara, accusing the company of inflating adjusted profits based on the way it was amortizing hardware costs. The basis of this accusation was simply, Spruce had acquired some of Samsara’s government contracts, which were an average three years in length rather than the company’s stated average five-year contract length. I find this key accusation to be overblown because several government contracts, which only accounted for around 5% of ARR in Samara’s Q1’24, do not necessarily imply the length of contracts for Samsara’s other customer sets.
Undoubtedly, the company has generated robust revenue growth in recent years while improving profitability. Samsara’s key focus on transforming the old industrial sectors with AI and cloud computing should put AI investors on alert.
On the date of publication, Tyrik Torres is a research analyst at Prince Capital, which holds a direct position in Samsara, Inc (IOT). The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
