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Two "Artificial Intelligence" Stocks You Should Buy Right Now
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After decades of existing solely in science-fiction stories, artificial intelligence technology is finally making a real, everyday impact on the world. Whether we realize it or not, AI is now powering the devices and platforms that we know and love. And this budding technology is only just getting started.
Over the coming years, artificial intelligence has the potential to change the course of humanity forever. Self-driving cars with embedded machine learning will soon hit the streets. Industrial automation will begin improving exponentially, and in-home robotics will become commonplace. But this is only part of the equation.
Indeed, our perception of artificial intelligence’s capabilities probably does not even scratch the surface right now. As AI systems continue to be deployed, the technology itself will learn and adapt—creating possibilities we previously could not imagine.
So how should investors prepare for this next generation of technology? What types of investing strategies are most likely to pay off? To answer these questions, we will look at two buy-ranked stocks that are poised to benefit from AI in their own ways.
Nvidia designs graphics processing units (GPUs) and system on a chip units (SoCs). The Santa Clara, California-based firm’s traditional business focuses on delivering GPUs to the gaming market and SoCs to the mobile computing market.
But Nvidia has exploded over the past two years thanks to the adoption of its technology in several booming new tech industries. In fact, Nvidia is now considered a leading supplier for “smart” vehicles, datacenters, cryptocurrency mining, artificial intelligence, and autonomous driving.
Nvidia is one of the purest ways to play the AI revolution. The company’s auto-focused SoCs should make it a leader in autonomous driving, which will be one of the first new major AI-powered markets. Meanwhile, Nvidia-produced chips will likely emerge as the go-to hardware for machine learning platforms.
We are already starting to see this pay off for Nvidia. For example, the company’s main growth catalyst over the past year or so has been its Datacenter segment, which includes its DGX and Tesla products—both of which offer top-of-the-line AI computing power. In its most recent quarter, Nvidia reported Datacenter revenues of $606 million, up about 105% year over year.
Nvidia is currently a Zacks Rank #1 (Strong Buy), thanks in part to a strong outlook that led to numerous positive earnings estimate revisions. We now expect the company to witness EPS and revenue growth of 29% in its current fiscal year.
But the Zacks Rank is a one-to-three-month indicator, while Nvidia’s AI focus looks years down the road. Investors should also note that NVDA is expected to improve its bottom line at an annualized rate of 10.3% over the next three to five years.
Nvidia is definitely the flashiest and most-direct route for investing in artificial intelligence, but Micron presents an opportunity that some investors might not be focusing on right now. Remember, the deployment of AI technology is going to produce massive amounts of data, and all of that new information needs to be stored somewhere. This is where memory specialist like Micron come in.
Micron is already targeting the self-driving car industry with a high-end memory solution that it began shipping last year. The company’s new low-power DDR4 (LPDDR4) product is an automotive-grade storage unit that runs at the highest grade allowed by the LPDDR4 classification.
On top of this new solution, Micron is apparently working to repurpose its GDDR6 memory products, which are typically used in game consoles and graphics cards, for use in autonomous vehicles. Micron’s management believes that it can help car companies achieve the 300GB per second data transfer rate that it expects fully-autonomous cars to need.
MU is currently sporting a Zacks Rank #2 (Buy). The stock also holds “A” grades in every category of our Style Scores system, including Value and Growth. Micron is trading at just 5x forward earnings, and the company is expected to improve its earnings at an annualized rate of 10% over the next three to five years.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeneyon Twitter!
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Two "Artificial Intelligence" Stocks You Should Buy Right Now
After decades of existing solely in science-fiction stories, artificial intelligence technology is finally making a real, everyday impact on the world. Whether we realize it or not, AI is now powering the devices and platforms that we know and love. And this budding technology is only just getting started.
Over the coming years, artificial intelligence has the potential to change the course of humanity forever. Self-driving cars with embedded machine learning will soon hit the streets. Industrial automation will begin improving exponentially, and in-home robotics will become commonplace. But this is only part of the equation.
Indeed, our perception of artificial intelligence’s capabilities probably does not even scratch the surface right now. As AI systems continue to be deployed, the technology itself will learn and adapt—creating possibilities we previously could not imagine.
So how should investors prepare for this next generation of technology? What types of investing strategies are most likely to pay off? To answer these questions, we will look at two buy-ranked stocks that are poised to benefit from AI in their own ways.
Nvidia Corporation (NVDA - Free Report)
Nvidia designs graphics processing units (GPUs) and system on a chip units (SoCs). The Santa Clara, California-based firm’s traditional business focuses on delivering GPUs to the gaming market and SoCs to the mobile computing market.
But Nvidia has exploded over the past two years thanks to the adoption of its technology in several booming new tech industries. In fact, Nvidia is now considered a leading supplier for “smart” vehicles, datacenters, cryptocurrency mining, artificial intelligence, and autonomous driving.
Nvidia is one of the purest ways to play the AI revolution. The company’s auto-focused SoCs should make it a leader in autonomous driving, which will be one of the first new major AI-powered markets. Meanwhile, Nvidia-produced chips will likely emerge as the go-to hardware for machine learning platforms.
We are already starting to see this pay off for Nvidia. For example, the company’s main growth catalyst over the past year or so has been its Datacenter segment, which includes its DGX and Tesla products—both of which offer top-of-the-line AI computing power. In its most recent quarter, Nvidia reported Datacenter revenues of $606 million, up about 105% year over year.
Nvidia is currently a Zacks Rank #1 (Strong Buy), thanks in part to a strong outlook that led to numerous positive earnings estimate revisions. We now expect the company to witness EPS and revenue growth of 29% in its current fiscal year.
But the Zacks Rank is a one-to-three-month indicator, while Nvidia’s AI focus looks years down the road. Investors should also note that NVDA is expected to improve its bottom line at an annualized rate of 10.3% over the next three to five years.
Micron Technology (MU - Free Report)
Nvidia is definitely the flashiest and most-direct route for investing in artificial intelligence, but Micron presents an opportunity that some investors might not be focusing on right now. Remember, the deployment of AI technology is going to produce massive amounts of data, and all of that new information needs to be stored somewhere. This is where memory specialist like Micron come in.
Micron is already targeting the self-driving car industry with a high-end memory solution that it began shipping last year. The company’s new low-power DDR4 (LPDDR4) product is an automotive-grade storage unit that runs at the highest grade allowed by the LPDDR4 classification.
On top of this new solution, Micron is apparently working to repurpose its GDDR6 memory products, which are typically used in game consoles and graphics cards, for use in autonomous vehicles. Micron’s management believes that it can help car companies achieve the 300GB per second data transfer rate that it expects fully-autonomous cars to need.
MU is currently sporting a Zacks Rank #2 (Buy). The stock also holds “A” grades in every category of our Style Scores system, including Value and Growth. Micron is trading at just 5x forward earnings, and the company is expected to improve its earnings at an annualized rate of 10% over the next three to five years.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>