Savvy investors will want to check out stocks that capitalize on artificial intelligence — using computers to simulate human thinking, reasoning and problem solving. Companies that use AI technology often do so by using software to process huge amounts of data. Gartner Inc. predicted that AI-driven machines would account for a whopping 20% of the global workforce and 40% of all economic productivity by as early as 2028.
7 AI Stocks To Watch
Wondering what the best AI stocks on the market are? Here are seven well-known, industry-leading AI companies that could make for good long-term investments.
|Company||Stock Price||P/E Ratio|
|Amazon (Nasdaq: AMZN)||$116.25||264.20|
|Nvidia (Nasdaq: NVDA)||$312.64||179.57|
|Alphabet (Nasdaq: GOOGL)||$122.76||26.86|
|Pinterest (NYSE: PINS)||$22.70||NM|
|Adobe (Nasdaq: ADBE)||$371.25||35.42|
|IBM (NYSE: IBM)||$127.26||56.56|
|Micron Technology (Nasdaq: MU)||$68.17||48.35|
It will come as no surprise that the company that likes to dip its fingers into every pie is finding many uses for AI technology. Amazon already uses AI for myriad tasks such as Amazon Alexa, cashier-less grocery stores and improved customer recommendations.
In 2020, Amazon Web Services teamed up with Intel to provide hardware for many of its cloud computing services. Amazon also uses AI to make its delivery system more efficient. More recently, AWS jumped into the chatbot wars by partnering with AI startup Hugging Face to develop a rival to ChatGPT.
Amazon stock is up 39% this year and 9% over the past year. Despite the rebound, most analysts think Amazon still presents an excellent opportunity, and the consensus rating is “strong buy.”
Nvidia is the leading provider of AI chips used for drug development, self-driving vehicles and cloud computing. It also makes graphics processing units, and the future of computer gaming in the cloud combines both of these elements.
Nvidia is also investing in AI with Amazon, but the bedrock of its business is chip technology. In multidimensional ways, Nvidia is a major player in AI and is definitely one to watch. The stock is back in a significant uptrend in 2023, with shares rising 112.34% after a 50% drop in 2022.
Alphabet is a holding company with a long list of subsidiaries and standalone companies under its umbrella — Google being the largest. Its operating segments include Google Services, Google Cloud and Other Bets.
Google uses AI technology for digital advertising and the Alexa rival Google Assistant, among other ventures. Alphabet is heavily invested in AI research and development with other companies, such as London-based DeepMind and the self-driving car company Waymo, which began as a Google project.
Alphabet’s stock has bounced back about 40% in 2023 and is up over 10% in the past year. Long-term investors still have plenty of opportunity with this stock.
If you’re familiar with the social media website Pinterest, you know it has an uncanny ability to predict things you might be interested in, or “pins.” It uses AI technology to do this, and its 450 million active users per month as of the end of 2022 seem happy with the visual data it provides.
Pins are concepts or ideas that Pinterest finds through AI, and users post them to pinboards, which they can then share with other users. This may sound frivolous, but a huge number of people use Pinterest, and the company became profitable in 2021. The stock is highly volatile right now due to Pinterest’s restructuring. But the platform is rolling out lots of new features, including video and an advertising collaboration with Amazon, to help users build brands and monetize their content.
Adobe Sensei is the company’s AI and machine learning technology. Layered on top of the insights gleaned from the Adobe Experience Cloud, Sensei can analyze data, predict the best ways to engage with customers and then analyze customer interactions afterward.
Adobe has integrated Sensei into its Creative Cloud products to help users edit photos and videos and create visual effects, graphic designs and social media content. Although the Creative Cloud suite isn’t the only creative software out there, and it’s certainly not the least expensive, the breadth and depth of its capabilities are unrivaled.
IBM’s AI supercomputer Watson might not have changed the world in ways the company had hoped, but an analysis by market research company Fact.MR projects rapid growth for Watson in the future, with Watson language services dominating the landscape over the coming years.
With its own blockchain platform and capabilities focusing on natural language processing, hypothesis generation and evaluation and dynamic learning, “Watson helps organizations predict future outcomes, automate complex processes and optimize employees’ time,” according to IBM’s website. End users have deployed IBM AI in industries as diverse as healthcare, retail and finance, making it a market share leader among AI giants.
One thing that sets IBM apart from competitors is that it’s a hybrid cloud solution that links multiple public clouds, reducing companies’ vulnerability to outages.
7. Micron Technology
Micron makes the world’s broadest portfolio of memory and storage technologies, including DRAM, RAND and NOR. These memory and storage solutions accelerate information into intelligence.
Micron made a splash in the AI market with its 2019 purchase of the artificial intelligence hardware and software startup known as Fwdnxt — pronounced “forward next.” The acquisition opened the door for Micron to integrate computers, memory and software into a powerful AI development platform able to supply the building blocks needed to explore memory storage and AI solutions.
Like other chip and AI stocks, Micron is bouncing back in 2023, up nearly 35% year-to-date. However, shares are still down 5% over the past year.
ChatGPT is dominating the AI headlines these days, but you can’t buy shares in its parent company OpenAI, which is private. While ChatGPT made a splash, competitors such as Amazon and others are already jumping into the fray to become the best AI technology. AI is no doubt the wave of the future and a good investment, but be sure to pick the right stock for you in consultation with your financial advisor to ensure you’re investing within your personal risk tolerance.
FAQHere are the answers to some of the most frequently asked questions regarding AI stocks.
- Is AI a good investment?
- AI technology is here to stay, so companies that utilize AI and machine learning should be well positioned for the future. Companies that either develop AI or use it to improve customer experience are ones you should consider adding to help diversify your portfolio.
- Who is the leading company for AI?
- Here are seven industry-leading AI companies:
- Amazon (Nasdaq: AMZN)
- Nvidia (Nasdaq: NVDA)
- Alphabet (Nasdaq: GOOGL)
- Pinterest (NYSE: PINS)
- Adobe (Nasdaq: ADBE)
- IBM (NYSE: IBM)
- Micron Technology (Nasdaq: MU)
- Here are seven industry-leading AI companies:
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Data was compiled on May 19, 2023, and is subject to change.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
- Nvidia. 2021. "GeForce NOW Gets New Priority Memberships and More."
- Investor's Business Daily. 2022. "Is Nvidia Stock A Buy? Chip Giant Offers New Buy Point After UBS Calls It Top Pick For 2022."
- Alphabet. 2021. "Alphabet Announces Third Quarter 2021 Results."
- Bain & Company. 2022. "When Will the Chip Shortage End?"
- The Wall Street Journal. 2022. "Google in Talks to Invest $200 Million Into AI Startup."
- PC Mag. 2022. "Nvidia's GeForce Now Game-Streaming Service Tops 20 Million Users."
- PC Mag. 2022. "Nvidia Gaming Revenue Drops 51% on Weak Demand, Crypto-Mining Drying Up."
- Yahoo Finance. 2022. "IBM (IBM) Stock Moves -0.85%: What You Should Know."
- Stefanini Group. 2022. "Gartner® Top Tech Trends For 2023: AI TRiSM."
- Los Angeles Times. 2023. "Amazon enters chatbot wars with AI startup partnership."
- Fact.MR. "IBM Watson Services Market."