Artificial intelligence (AI) is becoming more and more a part of our lives … so is it smart to invest in or trade artificial intelligence stocks?
The U.S. economy is evolving at an unprecedented pace as next-generation technology disrupts the large corporations that once dominated industries. Companies that fail to innovate disappear, and companies like the FANG group step in to replace them.
Unlike the tech stocks from the dot-com bubble crash, these stocks have plenty of room to expand and continue to innovate.
One area several companies are heavily investing in is AI.
AI doesn’t always have the best reputation because pop culture movies often portray it as the enemy. Let me assure you … in its current stages, artificial intelligence can’t take over the world.
But, yeah, these companies can make for smart trades — if you do your research. Here’s what to watch for in 2020…
Table of Contents
- 1 Artificial Intelligence Stocks’ Performances in 2019
- 2 What to Expect From Artificial Intelligence Stocks in 2020
- 3 Best Artificial Intelligence Stocks to Watch in 2020
- 4 Artificial Intelligence Stocks Under $10 You Should Watch
- 5 Frequently Asked Questions About Artificial Intelligence Stocks
- 6 Conclusion — Will You Watch AI Stocks in 2020?
Artificial Intelligence Stocks’ Performances in 2019
Artificial intelligence stocks had a great year in 2019. Companies like Apple (NASDAQ: APPL), NVIDIA (NASDAQ: NVDA), and Facebook (NASDAQ: FB) all returned over 50% for investors in 2019 alone.
What’s driving this impressive growth?
Over the last decade, a lot of companies, both big and small, started to integrate software into their business. Automation is huge. And intelligent analysis of consumer data helps increase the efficiency of corporations — sometimes exponentially.
These productive technologies are made possible by advancements in artificial intelligence.
In 2019, we saw cheaper artificial intelligence solutions enter the marketplace. The reduced cost meant more companies could use the technology to improve their processes.
Many of the companies working on AI are only beginning to explore its possibilities. So these companies might be starting a bull run.
What to Expect From Artificial Intelligence Stocks in 2020
I think 2019 was only the beginning of a massive AI revolution. That was the first year we saw companies of all sizes implement it on a massive scale.
Before 2019, AI solutions were primitive and not always helpful to consumers. But tech companies worked to improved AI. They developed applications that can use it to improve businesses and ultimately serve other humans.
In 2020, it’s likely that more companies will adopt AI-powered tools, and that can mean even more growth in this industry. The impressive gains and growth of many tech stocks can reflect that. And it’s likely we’ll see more in the coming years.
I’ll be the first to warn you: AI stocks can be risky. They don’t move slowly like blue-chip stocks.
Best Artificial Intelligence Stocks to Watch in 2020
Not all artificial intelligence companies are equal. Companies tend to work on different versions of AI and target different sectors.
Investing in this technology can be difficult — few publicly traded companies solely focus on AI. The industry is still in its early stages, and as it cements itself into the economy, more companies will become publicly tradable.
Here are a few artificial intelligence stocks to watch in 2020 … Note that I’m watching these stocks. For more on how I build and maintain watchlists, check out my top 5 penny stocks watchlist.
NVIDIA (NASDAQ: NVDA)
Overall, NVIDIA is my favorite AI stock for 2020. Currently, NVIDIA is the leading supplier of graphics cards for computer gaming and AI systems. Its chips specialize in the deep-learning category of AI. That’s key to the entire artificial intelligence process.
Other companies have used NVIDIA chips to analyze large sets of data to train their models. These systems analyze old data to find patterns that can be applied to new data as it enters the system. (Kinda like smart traders do with the markets.)
Overall, NVIDIA is a well-positioned company. Many of the following companies all use NVIDIA graphics cards.
Salesforce (NYSE: CRM)
Salesforce is an impressive growth story on its own, but its venture into AI could pad the company for steady growth for years to come.
Salesforce developed its Einstein tools to improve sales forecasts for companies using the platform. Einstein analyzes a company’s historical account data to predict which deals are most likely to close.
The system isn’t perfect, but you can imagine the immense benefits the Einstein tools can have for businesses of all sizes. If a company knows one deal has a better chance of closing than another, they can more efficiently allocate their resources to maximize profitability.
Microsoft (NASDAQ: MFST)
Microsoft has dominated the business world since its inception. It was one of the few tech stocks to survive the dot-com crash and continues to expand its operations every year.
Recently, Microsoft closed a deal to acquire Canadian AI company Maluuba. Microsoft CEO Satya Nadella stated he wants to bring AI to more industries such as healthcare, education, and manufacturing.
Given Microsoft’s domination of the computer market, the company’s entrance into this industry shouldn’t be taken lightly.
Alphabet (NASDAQ: GOOGL)
Like Microsoft, Alphabet (Google’s parent company) started its AI endeavors by acquiring smaller, nonpublic AI companies. And so far, Alphabet’s acquired more of these companies than any other tech firm.
Google’s CEO has stated on multiple occasions that Google’s future is “AI first.” In other words, Google is deploying all its resources to become a dominant force in the market.
It could be very beneficial for Google and Alphabet. Just imagine how AI could dramatically improve its search engines. And Alphabet owns several companies in the automated driving space, which could benefit massively from breakthroughs in artificial intelligence.
Alphabet has a lot of potential applications here.
Apple (NASDAQ: AAPL)
Apple is the largest company in the world by market capitalization. The corporation has grown rapidly this decade, and CEO Tim Cook continues to invest heavily in research and development.
Apple’s focus on AI has been primarily for its consumer devices — the goal is to enhance the user experience. Most of its new devices have special chips to power the complicated AI engine.
To date, the company has sold over one billion iPhones … That means Apple has the potential to put AI into the hands of over one billion people. That can have a worldwide impact.
Facebook (NASDAQ: FB)
For the last two years, the media scrutinized Facebook for multiple scandals. Even so, the stock is near all-time highs. The company is a cash-flow machine, and there are no signs that its ad revenue will slow down.
Adding AI to FB’s algorithm could increase profitability. That could help to better target ads and entice companies to spend more money on advertisements. Plus it could be a means to entice users to stay on the platform longer through customized content for each user.
Baidu Inc (BIDU)
Baidu is commonly called the ‘Google of China.’ Both companies have similar business models and help consumers navigate the internet. Similar to Alphabet, BIDU is heavily investing in AI because of the technology’s ability to improve its search engine.
Unlike the U.S., China has a more competitive search engine market, and Baidu believes AI can give its search engine a competitive advantage.
Delphi Automotive (DLPH)
Delphi is more speculative than the other stocks listed above. The company is smaller and not as well established as the FANG stocks.
The company is based out of the U.K. and focuses on automotive technology like self-driving cars. Currently, Delphi is working with BMW and Intel (NASDAQ: INTC) to launch self-driving cars by 2021.
Artificial Intelligence Stocks Under $10 You Should Watch
It’s good to see what’s going on at the upper end of the market. That’s where the big money is. But that doesn’t mean there aren’t smaller companies looking to leverage AI in their operations.
As artificial intelligence continues to grow, and more corporations use it in their daily operations, more companies will flood into the industry. Having an understanding of the overall picture can help you be a smarter, self-sufficient trader.
These companies are less established than the ones listed above but have explosive growth potential — if this industry takes off.
Remember: Always do your own research before making any trades. Make a detailed trading plan and stick to it. Never risk more than you can afford. Always be careful when buying any stock online and remember to cut losses quickly.
Cloudera, Inc (NYSE: CLDR)
I know … technically, CLDR is now over $10.
But at the beginning of December 2019, it was still under $10 so I’m adding it to my list.
Cloudera provides data analytics and management products to countries all over the world. Its signature product, Cloudera Enterprise Data Hub, allows companies to run analytical queries on private cloud data centers. CLDR’s tools use AI to enhance its analytics and aid companies with operations.
Cheetah Mobile Inc (NYSE: CMCM)
Cheetah Mobile is in the competitive telecommunication industry that’s dominated by Verizon (NYSE: VZ) and AT&T (NYSE: T).
The company is vying for a competitive edge in the mobile internet segment of this market. The Cheetah Keyboard uses AI to personalize the smartphone experience and increase user satisfaction. Although the company faces fierce competition in the U.S., other countries around the world have less competitive telecommunication markets.
eGain Corporation (NASDAQ: EGAN)
eGain is a U.S.-based software-as-a-service company. The company provides a cloud software solution to automate customer engagement using AI-powered analytics and machine learning.
EGAN provides custom solutions to allow companies to reduce expenses and increase profits by analyzing consumer data. EGAN had an impressive run early in 2019 but leveled off the rest of the year.
Frequently Asked Questions About Artificial Intelligence Stocks
What are Artificial intelligence Stocks?
Artificial intelligence (or AI) stocks are stocks offered by companies that are involved in development of computer programs that perform tasks that would usually require human intelligence — think voice recognition, self-driving cars, etc.
What is the best stock for artificial intelligence?
The most promising stocks will constantly be changing. That’s why it’s important to keep a watchlist so that you can keep track of stocks on the move. Some examples of high-performing Artificial intelligence stocks include Apple (NASDAQ: APPL), NVIDIA (NASDAQ: NVDA), and Facebook (NASDAQ: FB) — all of these stocks returned 50% for investors in 2019 alone.
Is AI stock a good investment?
Depends on the stock and your timing. In 2019, AI stocks showed great promise, but the technology is still in its infancy. There’s still a lot of potential in this sector, so AI stocks are worth following and monitoring on your watchlist.
How do I invest in artificial intelligence?
Trading AI stocks works the same as other sectors: filtering down stocks, creating a watchlist, and having a trading plan ready for if and when they meet your personal trading criteria.
Conclusion — Will You Watch AI Stocks in 2020?
Artificial intelligence is a complicated industry that’s only just started to be useful in the economy. Businesses around the world can apply AI to their supply chain and process to improve efficiency.
2019 was a great start to the AI revolution, but the technology is only in its infant stages. It’s still expensive, and there are always issues with new technology.
But the unlimited potential of AI can shape the global economy for generations. 2020 stands to be a big year for this sector … Are you prepared to take advantage?
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