The 3 best AI companies to invest in
Artificial intelligence, also known as AI, is one of the most exciting technological frontiers. This is because AI has such a wide range of uses. It powers everything from self-driving cars and voice recognition to social media news feeds. In fact, new AI use cases appear almost every year. For this reason, investors are constantly on the lookout for the best AI companies to invest in. I’ll dive into my top three picks in a second. First of all, I want to take a look at what exactly artificial intelligence is.
IBM describes artificial intelligence as the use of machines to solve problems and make decisions like a human. So far, no computer has achieved “strong AI”. This is when a computer would have intelligence similar to that of humans (just like Terminator). However, there are many examples of “narrow AI”. Narrow AI is when a computer is trained to perform specific tasks. Examples of narrow AI can be found in Amazon Alexa, Siri, and self-driving cars.
Machine learning and deep learning are two subfields of artificial intelligence. You can think of both as big algorithms that process data. Basically, machine learning requires a bit more human intervention to “learn”. For example, humans may need to label data points in a specific way before the algorithm can process them. On the other hand, deep learning requires less help from humans. This allows it to process a lot more data.
With all of that out of the way, let’s answer a bigger question. How to make money with artificial intelligence? To answer that, we’ll take a look at the top three AI companies to invest in.
NOTE: I am not a financial advisor and am simply providing information and commentary. Please do due diligence before making any decisions.
Top 3 AI companies to invest in
Nvidia # 3 (Nasdaq: NVDA)
Nvidia is a versatile technology company. It has such a wide range of solutions that it’s hard to squeeze everything into one section. To name a few, it offers solutions for AI, cloud computing, gaming, advanced computing, and self-driving cars. Notably, Nvidia also offers hardware and software. For example, you can buy an Nvidia GeForce RTX laptop. These are high powered laptops used for gaming. From there, you can download GeForce powered by Nvidia to digitally access your games. In that sense, Nvidia is a lot like Apple. You can buy an iPhone, put your Air Pods on, then browse the App Store.
As it is involved in so many growing industries, Nvidia’s business has been in tears lately. In the third quarter of fiscal 2022, data centers, gaming and professional visualization all posted record revenues. In particular, games grew 42% year-on-year to $ 3.22 billion. Its data center division grew 55% year-over-year to $ 2.94 billion. Overall, total revenue grew 55% year-over-year (YOY) to $ 7.1 billion. Nvidia also boasts an impressive profit margin of 34.69%.
Many Nvidia solutions have been qualified as high-end. In 2021, Time Magazine named two of Nvidia’s products “Invention of the Year”. These products were Nvidia’s Omniverse and Broadcast.
If you’re looking for one of the best AI companies to invest in, Nvidia is a great choice. At least, members of the US Congress certainly think so. In total, 10 different members of the House of Representatives have traded Nvidia shares since 2020.
Nvidia’s stock has risen 130% so far in 2021. It has also increased by around 1,030% in the past five years.
Amazon # 2 (Nasdaq: AMZN)
When it comes to mainstream businesses that use AI, Amazon is one of the heaviest users. This makes them one of the best AI companies to invest in. Guess you know Amazon and save yourself the “what Amazon does” section. Instead, I’ll focus on how he uses AI.
Amazon harnesses artificial intelligence internally in a number of ways. First, it uses AI to recommend related products to customers. Think about it when you buy a product on Amazon. Immediately after that you will see a section on “products that we think you will love”. It’s AI in action. This feature improves both the customer experience and Amazon’s bottom line. According to some sources, Amazon’s recommendation engine generates 35% of its sales. Amazon is also using AI to power the Amazon Go store and, more importantly, Alexa.
Like Nvidia and Apple, Amazon is unique primarily because of its ecosystem. Amazon’s core business is e-commerce. Alexa and the Amazon Go store operate seamlessly on top of this business. With Alexa, customers can order more products, check the weather, or search for a recipe. If they need to, they can visit an Amazon Go store to purchase or return products. This creates a seamless customer experience. Amazon’s artificial intelligence helps all of these business divisions work together.
After honing its AI, Amazon began selling AI solutions to other businesses through Amazon Web Services (AWS. In fact, AWS is the real profit pup for Amazon, not its e-commerce business. , Amazon sells AWS services to over 1,000,000 organizations, including Airbnb, Netflix, NASA, Pfizer and more.
Amazon’s stock rose 7% through 2021. It has also increased by around 355% in the past five years.
AI Firms to Invest in # 1 C3.AI (NYSE: AI)
Nvidia and Amazon both use artificial intelligence in various ways. However, they both have tons of other lines of business as well. C3.AI, on the other hand, operates exclusively in AI. This makes them one of the top AI companies to invest in when it comes to pure AI stock.
If you’re not familiar, C3.AI basically offers AI as a service. It helps the world’s most complex organizations run more efficiently. This means streamlining supply chains, improving employee safety and optimizing business practices. It currently has 4.8 million AI models in use by other companies. These models produce 1.7 billion predictions every day. In this sense, C3.AI helps leaders make more informed decisions.
C3.AI has been losing money since its IPO at the end of 2019. In 2021, its net losses have widened every quarter. This is most likely the reason its stock has fallen over 70% so far in 2021. However, there is a lot of good news that makes it a favorite for the best AI companies to invest in.
Land and expand
Notably, C3.AI now works with 104 clients. This represents a 64% year-over-year increase. C3.AI also does not work with Mom-and-Pop stores. Its clients include Sunoco, Raytheon, and the US Department of Defense. These are Big Fish that have even larger budgets. At present, C3.AI must continue to gain a foothold in large organizations. Once the contract is signed, there are many opportunities to provide a valuable service. If the value is there, chances are these companies will have no problem signing larger contracts later. This strategy is sometimes referred to as “Land and Expand”.
C3.AI has already done this successfully. In the second quarter of fiscal 2022, C3.AI extended its contract with Baker Hughes in terms of duration and size. It was the second restructuring of the contract. Each restructuring means more guaranteed future income for C3.AI. If successful, C3.AI will continue to be one of the top AI companies to invest in.
C3.AI recently went public at the end of 2020. Since then, that AI stock has declined by over 70%.
Hope you found this article useful for knowing the top three AI companies to invest in. Please base all of your investment decisions on your own due diligence and risk tolerance.
About Teddy Stavetski
A graduate of the University of Miami, Teddy studied marketing and finance while playing for four years on the soccer team. He has always had a passion for business and used his experience from a few personal projects to become one of the top rated business copywriters on Fiverr.com. When he’s not hammering out words on paper, you may find him hammering notes on the piano or walking to a random place.