The three tech stocks here can each be viewed as underdogs powering the future. Some will immediately dismiss this list for the fact that the first company discussed in the article is one of the largest in the world. It’s almost impossible to call it an underdog in any sense.
Yet, when it comes to the AI revolution, that is arguably very much the case. The arguments favoring the other two companies as underdogs rely on different arguments.
Regardless, each is maligned in its own right in relation to AI. That makes each an arguable underdog and who doesn’t like an underdog? Most of us have felt like an underdog at some point in our lifetimes. Many of the greatest stories ever told rely on the underdog beating seemingly insurmountable odds.
These stocks each exemplify some of those characteristics as it relates to AI.
Apple (AAPL)
Apple (NASDAQ:AAPL) can be considered an underdog when it comes to AI. The other dominant Silicon Valley Tech stocks have certainly benefited from AI much earlier and to a greater degree than Apple.
Although Apple was late to the game, we now know much more about its plans for AI following the Worldwide Developers Conference from June.
One of the primary reasons to root for Apple as it implements AI is the company’s focus on privacy and security. Apple will prioritize on-device machine learning rather than sending user data to the cloud.
It also seems that Apple’s AI focus centers on leveraging generative AI to improve user experience. That’s unsurprising given Apple’s extreme focus on user experience historically.
The point here is that Apple is differentiating itself in relation to AI. Many of the big tech companies are focused on maximizing AI to extract as much data as possible from the respective user bases.
Apple appears to have differentiated itself in that regard.
It remains to be seen whether that unique take on AI privacy will be well-received, but the application of AI is certainly expected to spike flagging iPhone sales. That is another strong reason to consider investing in Apple, as it attempts to move past its AI underdog status.
Tesla (TSLA)
Tesla (NASDAQ:TSLA) is simultaneously an underdog stock and one representing the future AI revolution.
Share prices are still down year-to-date, despite a period of resurgence that began in early July. Tesla has long been associated with the application of artificial intelligence to its vehicles.
The autopilot feature in its vehicles isn’t fully autonomous, however, the company continues to invest heavily in the development of AI for that purpose. When it has to delay that development, as it did in relation to the robotaxi, shares often suffer.
Regardless, Tesla is one of the more prominent AI stocks certainly in the automotive sector. Yet, it is also an underdog as pressure continues to ripple across the EV sector.
The company no longer enjoys the margins it once did, as competition increases sector-wide. Tesla is now engaged in a volume war that will rely on lower pricing moving forward.
Meanwhile, it is also simultaneously representing the future of AI through its Optimus robots. They represent the other side of AI at Tesla beyond the vehicle autonomy. In time, they may assemble Tesla’s vehicles.
Alibaba (BABA)
Alibaba (NYSE:BABA) continues to play the underdog role in the Chinese e-Commerce space, even as other stocks, including PDD Holdings (NASDAQ:PDD), have stolen some of Alibaba’s former clout.
Alibaba, once the king of Chinese eCommerce, has become an underdog. However, Alibaba is no slouch when it comes to AI. It’s the combination of that underdog status — plus the strength of platforms like Temu — that makes it so potentially potent.
Alibaba has invested heavily in AI across its business. For example, the company utilizes natural language processing for its customer service bots, computer vision for product recommendation and machine learning and Big Data to better understand user behavior.
Beyond that, Alibaba uses AI to improve its logistical capability. The technology helps the company optimize delivery routes and better analyze demand fluctuation. And the list goes on and on in relation to Alibaba’s AI development.
Remember, Alibaba is still the largest player in the Chinese e-commerce market with a 40% share. It’s been temporarily counted out and that is creating a big opportunity especially as the company continues to develop AI.
On the date of publication, Alex Sirois 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
