Companies delving into artificial intelligence (AI) have witnessed a meteoric rise in their stock prices lately. This surge, however, might just be scratching the surface, given that AI is still in its nascent stages. The escalating interest in AI within the corporate landscape is evident, with a mere 16.6% of companies globally referencing AI in their earnings calls last year, as per Goldman Sachs data.
Forecasts predicting the AI market to exceed $1 trillion by 2030 indicate that growth is merely in its infancy, suggesting a potential wave of opportunities lying ahead. Consequently, the current timeframe presents a prime opportunity to invest in AI players, with many demonstrating promising trajectories despite previous stock price escalations. Here are the top AI stocks poised for success in the evolving landscape:
Image source: Getty Images.
Embracing the AI Revolution: Amazon
Amazon (NASDAQ: AMZN) stands to gain from AI in multiple ways. The retail giant leverages AI across its e-commerce operations to enhance efficiency, consequently trimming costs over time. By employing AI algorithms to optimize delivery routes, Amazon streamlines its logistics operations, contributing to cost reduction.
Moreover, Amazon not only deploys AI internally but also extends AI products and services to customers through its cloud computing division. Amazon Web Services (AWS) is deeply entrenched in AI, offering a spectrum of services from proprietary chips to ultra high-performance chips from market leaders like Nvidia. AWS’s dominance in the cloud computing realm positions it favorably to attract AI clientele, potentially strengthening its market leadership.
AWS, as the premier cloud services provider globally, holds a strategic advantage in enticing AI customers, some of whom might already be utilizing AWS for other cloud offerings. Presently, Amazon’s stock is trading at 43 times forward earnings estimates, aligning with the company’s robust growth track record, leadership in burgeoning sectors like e-commerce and cloud, and the potential to dominate the AI space.
Cutting-Edge Innovations: Medtronic
Medtronic (NYSE: MDT), synonymous with medical devices, is immersing itself in AI advancements, positioning itself to reap the benefits of integrating AI technology into its flagship products. Boasting regulatory approval for five AI-enabled products, including a cutting-edge surgical system and the GI Genius intelligent endoscopy device, Medtronic exemplifies its commitment to AI integration.
The burgeoning AI in healthcare sector, anticipated to surpass $430 billion by 2032, according to Polaris Research, underscores the transformative potential of AI in healthcare. Nvidia’s Jensen Huang foresees healthcare as a pivotal sector benefiting from AI’s advancements, potentially revolutionizing diagnostics, drug development, and patient outcomes.
Implementing an AI center of excellence, Medtronic strives to optimize resource allocation across its diverse business verticals, fostering AI development at a cost-effective scale. As a global leader in medical devices, Medtronic’s robust commercial infrastructure bolsters its capacity to introduce AI-driven products into various markets, poised to expand its market share.
Currently trading at approximately 15 times forward earnings estimates, Medtronic presents an enticing entry point for investors eyeing a potential AI frontrunner in the healthcare domain.
Revitalizing Growth: Intel
Intel (NASDAQ: INTC) initially lagged behind in the AI domain, prompting growth-oriented investors to divert their attention from the chipmaker. While retaining dominance in the central processing unit market, Intel faced setbacks in the graphics processing unit (GPU) segment critical for AI operations.
However, Intel’s strategic realignment underscores its determination to regain momentum. Recent announcements unveiling a new suite of AI-centric products, including a processor range heralding the era of the AI personal computer, indicate Intel’s commitment to AI innovation. Should these products gain traction, they could inject vitality into Intel’s revenue stream, potentially reshaping investor sentiment toward the company.
Furthermore, Intel’s ambitious venture to open up its manufacturing operations, aspiring to become the world’s second-largest foundry by 2030, signifies a bold but calculated move poised to enhance the company’s earnings outlook in the long run. Presently, investors can acquire Intel shares at 27 times forward earnings estimates, signaling an appealing proposition for a prospective AI success story.
As the AI landscape rapidly evolves, astute investors are eyeing these companies primed to harness the transformative potential of AI technology, paving the way for future growth and innovation in their respective sectors.