|5 AI Growth Stocks To Buy & Hold|
Top 5 AI Growth Stocks to Buy & Hold
The AI industry can be a significant source of profit for long-term investors.
Artificial intelligence (AI) and its subfields like machine learning will change the way we do business. Some companies are already using these advanced technologies to perform complex tasks quickly, eliminating countless hours of human input.
But this is just the beginning. Unlike any tool we’ve seen in the past, AI provides predictive capabilities that help organizations predict critical failures in their equipment, software, and overall processes.
The potential market for the AI industry is expected to be $93 billion in 2021, but is expected to grow tenfold annually to $997 billion by 2028. These five stocks could help fuel the AI industry’s explosive growth and boost stock prices.
C3.ai (AI -9.82%) is the first category of enterprise AI companies. It sells standard and custom AI applications to companies that want to get at the edge of technology but may not have the skills to build them from scratch. It currently serves 14 different industries, including oil and gas, financial services, manufacturing and healthcare.
For example, companies in the oil and gas industry use C3.ai applications to predict the failure of expensive equipment and avoid catastrophic production losses. In addition, they use it to increase efficiency and reduce carbon dioxide emissions. Oil giant Shell is currently monitoring more than 10,000 instruments and 23 large assets using C3.ai, generating 1.3 trillion forecasts per month.
Consumer commercial lending hasn’t changed much over the past few decades, and most banks still rely on the 30-year FICO rating system to rate potential borrowers and consider only a few key metrics to determine creditworthiness.
Upstart Holdings (UPST-11.20%) mixed things up, in that instead of examining more than 1,600 data points, it used artificial intelligence to build a more accurate picture of borrowers and make immediate decisions 70% of the time. Upstart says its algorithm scores 75 percent less than traditional scoring methods for the same number of approvals.
The company started with unsecured personal loans but soon expanded into auto loans. As of the end of 2021, the number of dealers using Upstart’s two-in-one sales and loan platform was 410, a 269% increase from the end of 2020. The company’s revenue grew 264% year over year to $849 million. , including earnings per share of 2.37. That’s right – a fast-growing AI company is profitable, too.
Upstart is an interesting proposition, and a Wall Street analyst at Citigroup thinks its shares could rise 198% to $350.
The next AI Growth stock to buy and hold now is Splink (SPLK -3.74%). It is a machine learning powerhouse, providing 92 services to Fortune 100 companies, and underscoring the growing need for advanced technology across all industries.
Splunk customer Domino’s Pizza uses machine learning to monitor over 15 digital distribution channels to collect and analyze data in real time. Provide Splink insights based on this information to predict problems and improve live setups quickly. Similarly, automaker Honda is using insights from Spunk to reduce repair times at its Alabama plant by up to 70 percent and avoid costly downtime due to predictive analytics on Honda’s platform.
Splunk’s company is changing. It provides services in the cloud, making it more accessible and increasing sales. In the company’s recently ended fiscal year 2022, cloud-based revenue grew 70%, while overall revenue grew 19%. Splink’s $943 million in cloud revenue also rose 35% to $2.67 billion, compared to just 24% a year ago.
Splunk attracts big customers. Its 675 customers will spend at least $1 million annually in fiscal 2022, up 32% from fiscal 2021.
A new CEO with experience in the software-as-a-service (SaaS) revenue model has joined the company, which will help propel Splunk into its next phase of growth.
Google by Alphabet is an alias and you accessed this article from a search engine. But that’s why it’s on this list: AI is at the heart of Google’s ability to produce the most accurate results for Internet users.
Search isn’t just about answering questions, it’s about understanding what it really means when a searcher types a phrase into Google. When a user makes a spelling or grammar error, the company’s language model can process 680 million parameters in 3 milliseconds to potentially provide more accurate search terms.
But the presence of Google AI goes a step further. It helps its customers build technology through a range of cloud-based tools, including pre-trained machine learning models, that can reduce the amount of coding required by up to 80 percent. This gives developers a huge advantage when building models for data analysis, image classification, and video detection.
Alphabet is a $1.7 trillion company, with revenues exceeding $257 billion in 2021 and 41% growth in 2020. Of that, $19.2 billion was generated by the Google Cloud business that owns it. The AI category for customers grew 47% year over year.
With numbers like these, this tech giant works well for any portfolio over the long term.
Lemonade (LMND -7.38%) is using AI to dramatically rethink the customer experience in the insurance industry, which has attracted over 1.4 million customers to date, many of whom moved from Lemonade to larger competitors Huh.
At the heart of the AI company is the online bot that powers Maya, which can create an insurance quote in 90 seconds without human intervention. But claims are often the source of the most frustration for customers, and so is Meyer, which is able to review and pay claims in under three minutes.
Lemonade operates five types of insurance, most likely auto insurance. The company, which entered the market in 2021, has acquired AI-powered partner insurance company Metromile, which holds 49 US state licenses and a decade of useful data.
Investing in Lemonade comes with risks as the company is still laying the groundwork for its business. Shares fell 82% during a broad technical sell-off, but this could be a long-term opportunity. While Lemonade lost a whopping $6.246 million in 2021, the auto insurance market could potentially be worth $6.316 billion by 2022, so given enough time, the company could do very well.
In fact, Wall Street firm JMP Securities believes Lemonade’s stock price could rise 357% to $95 per share.
Source: Anthony Di Pizio, The Motley Fool, Direct News 99