You Already Know the Names of the Biggest AI Stocks. These 3 Have Superior Growth Potential.
Artificial intelligence (AI) is one of the fastest-growing markets in the world, with global revenues zooming from $3.22 billion in 2016 to an estimated $11.28 billion this year. AI sales are expected to more than double again by 2021, and rise to nearly $90 billion by 2025. Given that growth, it makes sense to invest in artificial intelligence stocks.
But you can’t just invest in the usual suspects. Those include the likes of Alphabet (GOOG), Microsoft (MSFT), IBM (IBM), Salesforce.com (CRM) and Nvidia (NVDA). Don’t get me wrong—those are all fine companies and some are solid investments (to varying degrees). But they’re not artificial intelligence stocks, per se; in other words, they’re large and diversified enough companies that AI is just one segment—albeit a fast-growing one—of what they do.
The purer artificial intelligence plays are less diversified, and highly levered to the AI boom. As the artificial intelligence industry has exploded in the last couple years, the following three stocks have all more than doubled the market. And all three are coming off of huge starts to 2019, despite the sharp downturn in the past week.
We’ve identified a stock that’s pretty darn near perfect and one of the easiest doubles we’ve seen this year. However, 9 out of 10 investors have never heard of it and will miss out on this locked-in opportunity. Find out the full story and why it’s our No. 1 Stock.
We’ve identified a stock that’s pretty darn near perfect and one of the easiest doubles we’ve seen this year.
However, 9 out of 10 investors have never heard of it and will miss out on this locked-in opportunity.
Find out the full story and why it’s our No. 1 Stock.For details, click here.
As the global AI boom gains steam in the coming years, these artificial intelligence stocks (or AI stocks, for short) should continue to outperform.
3 Artificial Intelligence Stocks to Buy
Artificial Intelligence Stock #1: Splunk (SPLK)
Splunk specializes in something called “machine learning”—a form of artificial intelligence. Specifically, Splunk provides artificial intelligence for information technology (IT) operations, enabling organizations to reduce costs by automating normal IT functions (without having to hire an entire IT department).
Splunk’s sales have risen double-digits every year this decade, and are expected to increase another 37% this year. Meanwhile, the company has turned profitable, with EPS expected to grow this year and next.
As for the stock, SPLK is up 21% despite a massive dip at the end of May and another one in the past week. Despite that dip, it’s still well clear of support at 109.
Artificial Intelligence Stock #2: Tencent Holdings (TCEHY)
Chinese stocks have been out of favor for the better part of a year, and got roughed up big time on Monday after devaluing its yuan to a decade-low. But Tencent Holdings stock has held up well.
China’s biggest social media company—inventors of the WeChat app—Tencent recently built an artificial intelligence lab in Seattle, with the intent of expanding its voice-to-text and virtual assistant offerings. TCEHY stock (an over-the-counter Chinese ADR) is coming off a brutal nosedive in May (falling from 50 to 40), and after stabilizing in June and July is back down to 42 after the recent sell-off. But thanks to its new AI efforts, the long-term potential remains, and the stock is still up more than 8% year to date.
Artificial Intelligence Stock #3: Twilio (TWLO)
Twilio has been a favorite of our resident growth investing expert Mike Cintolo. So, to “sell” you on the stock, I’ll defer to him. Here’s what Mike recently told his Cabot Growth Investor subscribers about the stock:
“Fundamentally, we’ve mentioned before that we like the pervasiveness of the firm’s communications platform, which works for voice, messaging and now email; just about any size organization is a potential customer. But that doesn’t mean big enterprises aren’t beating a path to the firm’s door—one Fortune 100 retailer said that it sees a future where Twilio is the foundation of their customer engagement platform across all channels, and we’re sure others are thinking the same. Analysts see revenues up 66% this year, and even that figure could prove conservative if management makes the right moves.”
Meanwhile, despite some recent wobbles, Twilio’s stock chart looks good; it’s up 45% already this year, and is currently holding above support in the 123-124 range.
To learn what other growth stocks Mike likes, click here to become a Cabot Growth Investor subscriber.
In the meantime, it’s worth considering adding these three top AI stocks to your portfolio, though you may want to wait for them re-establish an uptrend before doing so. Bigger picture, the AI trend has been a boon for these stocks the last couple years, and could be even better in the coming years as the global AI marketplace becomes increasingly mainstream.
Investment analyst and Chief Analyst of Cabot Wealth Daily, Chris Preston brings you all the latest from the investing world. Sign up to get updates and breaking news delivered FREE to your inbox. Get unlimited access to our library of complimentary investing reports.Sign up now!
Note: This post has been updated from an original version.