Artificial intelligence stocks have certainly gotten their fair share of attention from investors in recent years. Using artificial intelligence to make businesses more efficient is an undeniable trend in stock market investing right now. If you are just learning how to invest and building your first portfolio, you should consider adding Artificial Intelligence Stocks. And we want to highlight three companies worthy of your investment dollars.
The best definition I’ve read to describe artificial intelligence says it is “the simulation of human intelligence processes by machines”. In other words, getting machines/computers to do things previously done strictly by humans.
The earliest works of artificial intelligence date back to 1943, but artificial intelligence really started to get momentum in the late 1990 and early 2000’s. It was then that successes in medical diagnosis and data mining showed the possibilities of artificial intelligence to help with real world problems that society faced.
Imagine going to a doctor’s office with certain symptoms that are bothering you. The doctor runs a series of tests and once the test results are loaded into an artificial intelligence model it will help the doctor rule in or out the probabilities that you have certain diseases. This use of artificial intelligence is not a replacement for the experience of the doctor, but instead helps supplement the doctor’s knowledge and experience.
Or imagine using artificial intelligence to data mine the attributes of your current customers to determine what they have in common. Better determining what your customers have in common will allow you to better pinpoint prospects that have the best chance of being converted to customers in the future.
Fast forward 20 years to the present day and artificial intelligence is imbedded more and more in businesses, aided by faster computing speeds, access to more data, and more aggressive thinking about how artificial intelligence can help people and businesses in ever day life.
The answer is 100% yes. As imbedded as artificial intelligence is in our day to day life, its use and impact on our daily lives will only increase over time, often with us not even being aware of it.
Think about more and more of our customer service questions being handled, not from a voice to voice, or face to face interaction with a human, but instead being done by a bot powered by artificial intelligence.
Imagine doctors being able to predict long term health issues of a patient based on using artificial intelligence to see how prior patients with similar health conditions played out over decades.
If self driving cars become the norm it will be the result of artificial intelligence being able to adequately simulate how a human driver reacts to different conditions while driving a car.
Or imagine replacing historical and outdated credit scores with artificial intelligence algorithms to evaluate the probability of you defaulting on a house or car loan in the future.
Replacing or supplementing human processes with artificial intelligence’s review of big data will play a large part in how work will be done in the coming decades.
Likely the biggest obstacle to artificial intelligence in the years ahead will be government regulation. Many people, as well as state and federal agencies will struggle with artificial intelligence supplementing or replacing human reasoning and the long term implications that this will have on society.
So how can take advantage of this undeniable trend around artificial intelligence and find the best artificial stocks for your portfolio? Many people are looking for artificial intelligence stocks under $10. The reality is that many of these stocks have increased in value beyond $10 a share. So, you might need to buy a fractional share if you want to keep you invested capital that low.
As we’ve discussed in other articles, we at Wealthplicity have a very strict five step filter that we run all our stocks through before we make a recommendation. And that is no different for artificial intelligence stocks. Specifically, we require the following in each recommendation we make:
And only if the stock makes it through all five filters above will me make it a recommendation.
Here are three examples of fantastic companies with deep seeded roots in artificial intelligence that pass our five step criteria. They are worthy of your investment dollars. We are not sure what the stock prices of these companies will do over the next couple weeks or months but believe that if you take the long term view you will be richly rewarded.
Alphabet (the parent company of Google)
When looking for the best artificial intelligence stocks, you’ve got to start with Alphabet, the parent company of Google.
When you think of near monopolies, few businesses have a higher share then the 90%+ market share that Google has for search engines. And that is reflected in their tremendous profitability and nearly $2 trillion market capitalization.
One of the linchpins of artificial intelligence is access to and ability to use big data. No one has more information than Google on our who we are then Google, through what we search for on the internet, including through their Chrome and YouTube applications. And they use that data to help advertisers present us with ads that are relevant to our needs.
Alphabet has also invested heavily in self driving cars through their Waymo subsidiary. Waymo is all about using artificial intelligence to simulate what a human driver would do behind the wheel.
In fact, Alphabet/Google has been all in on artificial intelligence for years now, as it was in 2017 that they changed their emphasis from “mobile first” to “AI first”. And they are just getting started.
Some say that when it comes to artificial intelligence, all roads lead through Nvidia. This is because Nvidia’s chip technology is what drives much of the artificial intelligence when it comes to data centers, self driving cars and virtual reality, to name just a few.
Co-founder and chief executive Jensen Huang has grown Nvidia into the $500 billion powerhouse that it is today through significant investments in research and development, such that Nvidia’s products are in much of the key technology today.
Nvidia products can be found in much of the technology that is pushing artificial intelligence to have a significant return on investment for the businesses that use it.
Nvidia stock is expensive based on traditional metrics like price to earnings ratio, but few businesses have a clearer path to growth over the coming decades.
In fact, Nvidia is poised to become an excellent income stock, as it is already paying out a dividend and set to increase it in the coming years.
Alphabet/Google and Nvidia are both proven winners. They are well established companies that have historically produces spectacular results for investors and their futures are quite bright. But if you are looking for more of an up-and-coming artificial intelligence company look no further then Upstart Holdings.
Upstart Holdings provides a cloud based artificial intelligence platform to improve access to credit while reducing risk and cost of lending to its bank partners.
In short, Upstart has artificial intelligence algorithms that look beyond the standard FICO scores of individuals to grant them better access to credit ( i.e. lower rates), while reducing costs to its bank partners via lower default rates. It is the ultimate win-win scenario.
Upstart is run by chief executive officer and co-founder Dave Girouard, who has an impressive resume having worked previously for Alphabet/Google, Apple, Boz Allen and Accenture. The kind of resume you love to see for the person in charge of running your business on a day to day basis.
Given the smaller size of the company, the stock price of Upstart will likely be the most volitale of the three stocks in this article. But we see this buinsess as a wealth builder over the long run.
One proven method of wealth building is to look for large, undeniable trends and invest in proven companies that are operating in that space. You will be rewarded over the long run as those companies ride the wave of success from those undeniable trends.
Artificial intelligence stocks, like the three discussed in this article, should each successfully ride the wave of artificial intelligence in the coming decades.
Use the examples of Alphabet/Google, Nvidia and Upstart to help you get started with your research in this important and profitable megatrend.