Top Artificial Intelligence (AI) Stocks to look for in 2023

What Is AI?

AI, short for Artificial Intelligence, refers to the simulation of human intelligence in machines that are programmed to learn, reason, and perform tasks autonomously. It involves developing computer systems capable of replicating human cognitive functions, such as speech recognition, problem-solving, and decision-making. AI utilizes techniques like machine learning, natural language processing, and computer vision to enable machines to analyse vast amounts of data, recognize patterns, and make predictions or take actions without explicit programming. The goal of AI is to create intelligent systems that can perceive and understand their environment, adapt to new situations, and interact with humans in a natural and intelligent manner. Why AI Stocks are considered to Outperform the Rest? AI stocks have the potential to outperform other sectors in the future for several compelling reasons. First, AI technology is rapidly advancing, with breakthroughs in areas like deep learning and natural language processing. These advancements are expected to drive innovation and create new opportunities across industries. Second, there is increasing adoption of AI solutions by businesses. Industries such as healthcare, finance, retail, and manufacturing are recognizing the value of AI in improving efficiency, automation, decision-making, and customer experiences. This growing demand for AI-related products and services is likely to benefit AI companies in the stock market. Third, the proliferation of big data and the availability of cloud computing resources have significantly contributed to the growth of AI. AI algorithms require large amounts of data to train and improve their performance. The availability of big data and cloud infrastructure allows AI systems to leverage these resources, extract valuable insights, and deliver more accurate results. Companies with expertise in AI and access to extensive data sets are well-positioned to benefit from this trend. Moreover, AI is not limited to a single industry but has the potential to revolutionize multiple sectors. From autonomous vehicles and robotics to healthcare diagnostics and personalized marketing, AI has diverse applications. This broad adoption across industries allows AI companies to tap into multiple revenue streams and benefit from the overall growth of the AI market. Lastly, governments worldwide are providing support and investment in AI. Recognizing the strategic importance of AI, governments are funding research and development and implementing policies and initiatives to foster AI innovation. Increased government investment creates a favourable environment for AI companies to thrive, driving technological advancements and accelerating the adoption of AI solutions.

Here are some AI-related stocks that have gained attention in the past, along with their historical performance from 2015 to March 2023.

1- Nvidia Corporation (NVDA):

• Performance (2015-2021): The stock price of Nvidia has shown significant growth over the years, starting at around $5 in 2015 and reaching over $232 by March 2023.
• Reason: Nvidia is a leading semiconductor company known for its graphics processing units (GPUs), which are widely used in AI applications such as deep learning and data centres. The company has been actively involved in AI research and development and has a strong presence in the AI hardware market. Nvidia’s GPUs are crucial components for training and running AI models, and the increasing demand for AI technologies has contributed to the company’s growth. Furthermore, Nvidia’s acquisition of Mellanox Technologies in 2020 has strengthened its position in data centre and networking solutions, further fuelling its growth potential.

2-Alphabet Inc. (GOOGL/GOOG):

• Performance (2015-2021): Alphabet, the parent company of Google, has seen steady growth during this period. The stock price started around $26.4 in 2015 and surpassed $100 in March 2023.
• Reason: Google has been at the forefront of AI research and development. Its AI-driven products, such as Google Assistant and Google Cloud AI services, have gained popularity. Google’s search engine and advertising platforms also benefit from AI technologies, enabling more personalized and relevant experiences for users. Additionally, Google’s subsidiary, DeepMind, has made significant advancements in AI, particularly in the field of reinforcement learning, which holds promise for various applications, including healthcare and robotics. With its vast resources and commitment to innovation, Google is well-positioned to continue capitalizing on the growing AI market.

3- Amazon.com, Inc. (AMZN):

• Performance (2015-2021): Amazon’s stock price has shown remarkable growth over the years. Starting around $15.4 in 2015, it reached over $100 by March 2023.
• Reason: Amazon has heavily invested in AI technologies to enhance its e-commerce platform and improve customer experience. The company’s AI-powered virtual assistant, Alexa, has gained widespread adoption and is integrated into various devices, including smart speakers, smartphones, and smart home devices. Amazon’s AI capabilities are also utilized in its logistics and supply chain management, enabling efficient operations and delivery. Furthermore, Amazon Web Services (AWS), the company’s cloud computing division, offers a wide range of AI services, such as machine learning, natural language processing, and computer vision, allowing businesses to leverage AI without significant infrastructure investments. Amazon’s dominance in e-commerce and its commitment to AI innovation have contributed to its impressive stock performance.

4- Microsoft Corporation (MSFT):

• Performance (2015-2021): Microsoft has experienced steady growth during this period. The stock price started around $46.7 in 2015 and exceeded $280 by March 2023.
• Reason: Microsoft has made significant investments in AI, particularly with its Azure cloud platform. The company offers AI services and tools, including Azure Machine Learning and Cognitive Services, to developers and businesses. Microsoft’s AI applications span various domains, including healthcare, finance, and natural language processing. The integration of AI technologies into its software products, such as Office 365 and Dynamics 365, has improved productivity and provided intelligent insights for users. Microsoft’s acquisition of LinkedIn in 2016 also brought valuable AI capabilities, enhancing its offerings in areas like talent management and professional networking. With its strong position in enterprise software and cloud services, Microsoft is well-positioned to capitalize on the growing AI market.

Conclusion:

In conclusion, AI stocks have the potential to outperform other sectors in the future due to several key factors. The rapid advancements in AI technology, such as deep learning and natural language processing, are driving innovation and creating new opportunities across industries. The increasing adoption of AI solutions by businesses, driven by the value it offers in improving efficiency and decision-making, further contributes to the potential growth of AI stocks. Additionally, the availability of big data and cloud computing resources enables AI systems to extract valuable insights and deliver accurate results, benefiting companies with AI expertise and access to extensive data sets. The broad adoption of AI across multiple sectors allows AI companies to tap into various revenue streams and capitalize on the overall growth of the AI market. Moreover, the support and investment provided by governments worldwide in AI research and development create a favourable environment for AI companies to thrive and accelerate the adoption of AI solutions. When looking at specific AI-related stocks, Nvidia Corporation stands out due to its leading position in providing GPUs for AI applications and its active involvement in AI research and development. Alphabet Inc., the parent company of Google, benefits from its forefront position in AI research, AI-driven products, and the advancements made by its subsidiary, DeepMind. Amazon.com, Inc., with its heavy investment in AI technologies, particularly in enhancing its e-commerce platform and logistics operations, has gained significant traction. Microsoft Corporation, known for its Azure cloud platform and AI applications in various domains, is well-positioned to capitalize on the growing AI market. However, it’s important to note that investing in stocks carries risks, and thorough research and consultation with a financial advisor are essential before making any investment decisions. The performance of AI stocks in the past may not guarantee future success, as market conditions and individual company performance can vary.