10 Stocks With Great Artificial Intelligence Exposure
As with the dawn of the internet, it's all about picking the right horse
It’s probably too early to pick the best stock with great artificial intelligence exposure, but it’s never too early to look at the top 10. By most accounts, we’re not even in the first inning of this game. Today’s AI tech - mostly in the generative AI space (think ChatGPT) - is rudimentary compared to what some predict will come with artificial general intelligence (AGI).
Depending on who you talk to, however, AGI could arrive in less than three years (Elon Musk) or in the distant future, if at all (Yann LeCun).
Given that nobody knows for sure, and that many of the foremost experts disagree (as they did at the dawn of the Internet), you should consider a wide range of players to stake your bets. Rebalance as performance and projections demand.
Of course, none of this is investment advice, but here are the 10 stocks I am watching that have great artificial intelligence exposure.
Perhaps one of them will be the next Amazon or Google?
My prediction: we still have not seen that dark horse to date in the AI space (i.e., I think it will be a new entrant to the public markets that many do not foresee, just like Amazon and Google in the late 1990s).
Nvidia ($NVDA). An obvious no-brainer. They are the leader in GPUs, which are essential for AI and machine learning. Their stock is up some 224% in the last year for that reason. And it’s not like they’re new to the GPU space - they are the entrenched and leading player given they started as a gaming GPU company. In addition, they have over 80% market share in the AI accelerator chip market and they’re building out their software stack, including frameworks, libraries, and tools to make it easier for developers to build and deploy AI applications. This AI heavyweight is unlikely to go anywhere soon, but the entry price is high given most of their growth is already priced in.
Alphabet ($GOOGL) - Google’s purchase of DeepMind in 2014 cemented its lead at the time in artificial intelligence, which led Elon Musk to form OpenAI with Sam Altman and others. While Elon went his separate ways with OpenAI, Google continued innovating and today has one of the largest and most sophisticated AI research teams in the world. It also has vast data resources across its search engine and other widely-used internet services (which can be used to train AI models). Google can deploy AI directly to end users across its existing product suite (search, Gmail, etc.). Despite its recent embarrassment with Gemini, don’t expect this leading AI player to lose any competitive advantage soon.
Microsoft ($MSFT) - In addition to its large ownership stake in OpenAI, Microsoft has been rapidly building out its Azure cloud platform, which offers a comprehensive suite of AI and machine learning services. Similar to Google, they’re also embedding AI across its product portfolio (Office 365, enterprise software, etc.). They’ve made other strategic acquisitions (e.g., Nuance Communications, which bolstered its healthcare AI capabilities), not to mention their recent big hires from Inflection AI (Mustafa Suleyman, who co-founded DeepMind). Their AI talent bench is deep, strong, and positioned for huge growth moving forward.
Amazon ($AMZN) - As one of the most efficient (and biggest) retailers in the world, Amazon is likely to streamline even more with AI across its retail operations (powered - like Google - by all their existing data): product recommendations, demand forecasting, and automated fulfillment. Soon their robots may handle most of your orders! In addition, AWS offers a host of AI services, including serverless compute and cloud optimization. Prepare for more advances with Amazon Alexa, Amazon Go stores, and robotics!
Salesforce ($CRM) - Salesforce has embedded AI capabilities into its customer relationship management (CRM) platform, automating tasks like lead scoring, opportunity insights, and predictive analytics. They’ve also integrated their AI tools across cloud services, allowing Salesforce to optimize the entire customer experience lifecycle from lead generation to customer support. As a cloud-based SaaS provider, they’re primed to supercharge their customers who already pay predictable subscriptions that investors love.
Advanced Micro Devices ($AMD) - Nvidia may be the 800-pound gorilla of the sector, but Advanced Micro Devices offers quality and competitive GPUs for AI. They’ve expanded their AI chip offerings and made strategic partnerships with AI framework providers like TensorFlow. If you believe in the growth potential for AI, more computing power and chips will be needed, so AMD’s growth potential should not be underestimated.
Baidu ($BIDU) - Want to hedge in case America does not win the AI race? Baidu is China’s leading search engine, which also has strengths in autonomous driving and AI chips (basically the Chinese version of Google). China is the world’s largest internet market so Baidu should not be ignored. They also are developing their own chips (like Nvidia and AMD), vertically integrating their stack. That development combined with their direct access to the Chinese market makes up for any uncertain regulatory headwinds that might blow their way.
C3.ai ($AI) - Unlike all of the other companies on the list thus far, this is the first pure AI play (hence their ticker: AI). C3.ai is an enterprise AI software company that offers an end-to-end AI platform (for building, deploying, and managing AI applications). They also develop industry-specific AI solutions for verticals like oil and gas, utilities, and aerospace, with a who’s who list of current customers: Shell, the U.S. Air Force, and Raytheon. As AI enterprise software grows across more industries, C3.ai should be well-positioned as a first mover in the space.
Micron Technology ($MU) - If you want to bet beyond the CPUs and GPUs that power AI workloads, Micron Technology is a good hardware bet on the memory and storage chip side. Their chips provide the necessary high-speed data storage and transfer capabilities to support AI applications. While not direct competitors, Nvidia, AMD, and Micron's products are highly complimentary in powering AI systems. The CPUs and GPUs work in tandem the memory and storage chips, and Micron is arguably best positioned in the latter category.
Snowflake ($SNOW) - Snowflake offers a cloud-based data platform designed to support advanced analytics and AI capabilities. Its scalable and flexible data infrastructure is ideal for enterprises to ingest, store, and process large volumes of data required for AI/ML applications. The biggest downside to be aware of when investing in Snowflake is that it’s competing with the likes of Amazon, Microsoft, Google, and IBM is the cloud space. Although with that said, it’s solidified itself as a leader in AI/ML infrastructure.
As you can see from this list, companies across sectors and industries are implementing and leveraging AI technology. It’s likely, therefore, that there won’t be one or two big AI players, but many.
There are also major investors seeking exposure to this space. Saudi Arabia, for example, recently announced a massive $40 billion fund. We can reasonably expect to see more money flood public companies with artificial intelligence exposure.
Although the AI equivalent of Amazon from the internet era may not have arrived (yet), it would be terrible to miss out. We’ll revisit this list and add to it in the next few months, so be sure to subscribe!