5 Artificial Intelligence Growth Stocks to Buy Now and Hold

5 Artificial Intelligence Growth Stocks to Buy Now and Hold

The artificial intelligence industry could be a huge source of upside for investors over the long term.

Artificial intelligence (AI) and its subsectors like machine learning are set to transform the way we do business. Some companies are already leveraging these advanced technologies to carry out complex tasks instantaneously, removing the need for countless hours of human input.

But that’s just the beginning. AI offers predictive capabilities unlike any tools we’ve seen in the past, helping organizations anticipate critical failures in their equipment, software, and overall processes.

The AI industry had an estimated addressable market of $93 billion in 2021, but that’s expected to soar tenfold to $997 billion annually by 2028. These five stocks can help you ride that explosive AI industry growth and turn it into stock price growth. Image source: Getty Images. 1. C3.ai

C3.ai ( AI -9.82% ) is a first-of-its-kind enterprise AI company. It sells both ready-made and custom AI applications to companies that want to access the benefits of the technology, but may not have the expertise to build it from scratch. It currently serves 14 different industries including oil and gas, financial services, manufacturing, and healthcare.

Companies in the oil and gas industry, for example, use C3.ai’s applications to predict costly equipment failures, preventing catastrophic production shutdowns. Additionally, they use it to improve efficiency and reduce carbon emissions. Oil giant Shell currently monitors over 10,000 devices and 23 large-scale assets using C3.ai, making 1.3 trillion predictions per month.

The company just signed a blockbuster deal with the U.S. Department of Defense worth $500 million over five years, and also has expansive collaborative agreements with tech giants like Microsoft and Alphabet ‘s ( GOOG -1.66% )( GOOGL -1.93% ) Google to build advanced artificial intelligence applications.

C3.ai currently trades at a market valuation of just $2.2 billion, with over $1 billion in cash and short-term investments on its balance sheet, meaning investors value its core AI business at just $1 billion. That’s despite $252 million in estimated revenue in fiscal 2022, with $469 million in remaining performance obligations as of the recent fiscal third quarter, a metric that jumped 90% year over year. This stock is looking cheap, and its diverse customer base makes it a great way to play the future of the AI industry . 2. Upstart

The consumer lending business hasn’t changed much in recent decades, with most banks still relying on the 30-year-old FICO scoring system to assess potential borrowers, which only looks at a handful of key metrics to determine creditworthiness.

Upstart Holdings ( UPST -11.20% ) is shaking things up, leveraging artificial intelligence to examine over 1,600 data points instead, generating a more accurate representation of the borrower and delivering an instant decision 70% of the time. Upstart says its algorithm has resulted in 75% fewer defaults for the same rate of approvals, compared to the traditional method of assessment.

The company started out in unsecured personal loans, but has expanded rapidly into automotive lending. At the end of 2021, the number of car dealerships using Upstart’s two-in-one sales and loan origination platform totaled 410, representing 269% growth compared to the end of 2020. The company’s revenue soared by 264% for the year to $849 million, with $2.37 in earnings per share . That’s right — this high-growth artificial intelligence company is also profitable.

Upstart is such an attractive proposition that one Wall Street analyst at Citigroup thinks its stock could soar by 198% to $350 per share. Image source: Getty Images. 3. Splunk

The next artificial intelligence growth stock investors should buy now and hold is Splunk ( SPLK -3.74% ). It’s a machine learning powerhouse that serves 92 of the Fortune 100 companies, highlighting the rising demand for advanced technology across all industries.

One of Splunk’s customers, Domino’s Pizza , uses machine learning to monitor over 15 digital sales channels, harvesting and analyzing data in real-time. Splunk delivers insights based on that information to predict problems and help make rapid improvements in a live setting. Similarly, carmaker Honda leverages Splunk’s insights to cut its Alabama facility’s time-to-repair metric by 70%, preventing costly shutdowns thanks to the platform’s predictive analytics.

Splunk is in the midst of a transition in its business. It’s focusing on offering its services in the cloud, making them far more accessible, and it’s driving a surge in revenue. In the company’s fiscal year 2022 that just ended, cloud-based sales grew by 70%, compared to overall sales which grew 19%. Splunk’s cloud revenue of $943 million also expanded to become 35% of […]

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