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Three Top AI Stocks to Buy That Aren't Nvidia
Here are three top AI stocks to add to your portfolio today...
Investing Insider Team
December 14, 2023
The AI industry is on the brink of a transformative era, characterized by its unparalleled capabilities and potential to reshape every industry and profession significantly.
With rapid advancements in AI, exemplified by groundbreaking innovations like ChatGPT, the landscape of the global economy, job market, and productivity is set for a radical overhaul.
The demand for sophisticated AI models is driving substantial growth in the semiconductor industry, which is pivotal in developing AI technologies. Companies are increasingly integrating AI into their organizational frameworks at an early stage, a strategy that has been shown to boost productivity significantly.
As AI evolves, its far-reaching and sometimes unforeseen effects across various sectors present challenges and opportunities, especially for investors seeking to capitalize on the potential economic impacts of AI's widespread integration.
With Nvidia already multiplying in value several fold over the past couple years, three top AI stocks to buy today include Microsoft (Ticker: MSFT), Symbotic (Ticker: SYM), and C3 AI (Ticker: AI).
Why We Think Microsoft is a Top AI Stock:
Microsoft Corporation continues to demonstrate robust growth and innovation, especially in the AI sector, with their recent launch of the "Copilot." This tool represents a significant advancement in AI and natural language processing, enhancing Microsoft's product suite across various applications.
Microsoft also recently announced a new multiyear investment in the artificial intelligence lab OpenAI. The investment is in its third phase, following Microsoft’s previous investments in 2019 and 2021. Microsoft said the renewed partnership will accelerate breakthroughs in AI and help both companies commercialize advanced technologies.
Microsoft's strong financial performance and its strategic focus on AI make it a compelling investment choice in the technology sector. Furthermore, the company's diversified revenue streams across cloud services, Office products, and consumer segments contribute to its resilience and growth potential in a rapidly evolving tech landscape.
Latest Results:
Microsoft's revenue has consistently increased over the last five quarters, from $50.12 billion to $56.51 billion, averaging a growth of 2.9% per quarter. The company's net profit has shown significant improvement in the last four quarters, rising from $16.42 billion to $22.29 billion, averaging an increase of 9.7% per quarter.
Investing Insider Growth Catalysts:
AI "Copilot" Launch: Microsoft's recent introduction of the AI "Copilot" signifies a significant step forward in AI application, merging the most advanced AI models with natural language interfaces. This innovation is expected to revolutionize user experience and enhance productivity across Microsoft's product range, opening new avenues for growth and market leadership in AI.
Strong Cloud and Office Services Growth: Microsoft's Intelligent Cloud segment, including Azure and other cloud services, showed substantial revenue growth, indicating robust demand for cloud-based solutions. The consistent increase in Office Commercial products and cloud services, including Office 365 and Dynamics 365, reflects Microsoft's strong position in business productivity solutions.
Diverse Revenue Streams and Consumer Growth: The company's various revenue sources, such as LinkedIn and Xbox content, provide stability and multiple growth channels. Additionally, the growth in Microsoft 365 Consumer subscribers illustrates Microsoft's expanding footprint in the consumer market.
Commitment to Shareholders: Microsoft's return of $9.7 billion to shareholders through share repurchases and dividends in the third quarter of fiscal year 2023 showcases its commitment to delivering shareholder value and confidence in sustained financial performance.
Why We Think Symbotic is a Top Stock:
Symbotic Inc. is an automation technology re-imagining the supply chain with its end-to-end, A.I.-powered robotic and software platform.
The company, specializing in deploying AI-enabled robotics for supply chains, stands at the forefront of technological innovation in a vital industry. The company’s consistent revenue growth, strategic joint ventures, and advanced technology integration suggest strong potential for continued expansion and profitability.
Latest Results:
Symbotic has consistently increased its revenue over the last four quarters, from $206.31 million to $391.88 million, marking an impressive average quarterly growth of 19.2%.
The company's improved margins in 2023 highlight its operational success and market receptivity. This increase is a result of accelerated deployments, highlighting the company's expanding market reach and operational success.
Investing Insider Growth Catalysts:
Operational Expansion and Efficiency: Symbotic's rapid expansion, including the initiation of six new system deployments and the completion of one system in Q3 FY 2023, showcases its operational efficiency and scalability. This expansion is key to maintaining growth momentum in a competitive market.
Strategic Joint Ventures: The GreenBox joint venture significantly broadens Symbotic’s total addressable market. Additionally, new contracts, like the one with GreenBox, have increased Symbotic’s contracted backlog to approximately $23 billion, reflecting robust demand for its solutions.
Innovative Technology Integration and Market Adaptation: Symbotic's focus on integrating AI and robotics into its supply chain solutions not only provides a competitive edge but also positions it well to adapt to and lead market trends in automation and supply chain efficiency.
Expanding Addressable Market and Strong Customer Demand: The confidence in Symbotic's platform scalability and the burgeoning demand for warehouse-as-a-service capabilities highlight the company's strong market positioning. The strategic move to add warehouse-as-a-service capability through partnerships like with SoftBank reflects foresight and adaptability.
Why We Think C3.ai is a Top Stock:
C3.ai is another important enterprise in the Software-as-a-service (SaaS) AI applications market, offering innovative AI solutions to large clients.
The company has developed dozens of different software applications used throughout industries, ranging from supply chain production schedule management to property appraisals, and energy management. By collaborating with companies and organizing their data, these SaaS products provide insights that may have previously gone unnoticed.
The company's commitment to advancing AI technology, particularly in generative AI, positions it well to capitalize on the rapidly growing demand for AI solutions across various industries.
Latest Results:
C3.ai reported stable revenue figures, with total revenue for the quarter at $72.4 million, nearly consistent with the previous quarter's revenue.
Despite challenging market conditions, this stability in income demonstrates the company's resilient business model. The company showed an improvement in net profit, indicating an increase of 0.9% over the last two quarters. The reported net loss per share was $(0.56), suggesting a slight uptick in financial performance.
Investing Insider Growth Catalysts:
Expansion in Enterprise AI and Generative AI: C3.ai's focus on enterprise AI, especially its C3 Generative AI, shows promising potential. The company has closed several agreements in diverse industries, indicating a growing demand for AI solutions. The development of 28 new domain-specific generative AI solutions represents a significant leap in its product offerings.
Strategic Partnerships and Client Base Growth: The company's expanding partner ecosystem, including collaborations with major cloud providers and other industry leaders, is a significant growth catalyst. Their federal business, particularly with the U.S. Department of Defense, is showing considerable strength, further diversifying their client base.
Technological Innovation and Market Leadership: C3.ai's innovative approach to integrating large language models (LLMs) with their AI platform for deterministic and traceable outputs places them at a competitive advantage. Their focus on minimizing cybersecurity risks and IP liability issues associated with LLMs underscores their commitment to providing secure and reliable AI solutions.
Final Thoughts:
The fundamental and technical aspects of the above-given equities reveal a promising and extended trajectory for growth.
It's important to recognize that AI is not a fleeting phenomenon but a mega-trend, one with the potential to span years, perhaps even decades. This trend in AI is likely to persist and evolve, often outlasting initial expectations.
The industry's current state, marked by rapid advancements and increasing integration across sectors, indicates that we are just at the beginning of what could be a long and transformative journey, offering numerous opportunities for those engaged in this dynamic field.
Take a look at MSFT, SYM and AI today.
Sincerely,
The Investing Insider Team
InvestingInsider.com
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