Investing in artificial intelligence (AI) has become a hot topic in recent years, with interest in the technology skyrocketing. According to Google Trends data, the term “artificial intelligence” reached its peak popularity in 2023. This surge in interest, combined with the incredible utility of AI, has led to a massive increase in investment in the industry. In fact, worldwide private investment in AI jumped from $48 billion in 2020 to over $90 billion in 2021, with projections to reach $110 billion in 2023.
Large tech companies like Nvidia, Meta Platforms, Amazon, Microsoft, Apple, and Alphabet have been at the forefront of AI investment. Nvidia, in particular, dominates the AI semiconductor chips space and has seen remarkable returns, but its high valuation may give investors pause. This article delves deeper into the AI landscape and identifies three other AI stocks that offer more reasonable valuations.
One promising AI stock is Nice Ltd., a global enterprise software provider based in Israel. Nice specializes in customer interaction solutions and financial crime and compliance solutions. It is known for its pioneering work in chatbots and offers an advanced customer experience platform called CXone. Nice has strong partnerships with Microsoft and Amazon, positioning it for continued growth in the AI and cloud space. With a current stock price trading near its 52-week low and a relatively low price-to-earnings ratio, Nice presents an attractive long-term investment opportunity.
Another AI stock to consider is C3.ai, a California-based AI software provider. The company offers enterprise-scale AI applications and is led by billionaire businessman and technologist Thomas Seibel. C3.ai has experienced significant growth in its AI applications revenue, driven by industries like defense and oil. Although the company is not yet profitable, it has a solid balance sheet and promising prospects. Its stock has gained over 120% in the past year, making it an intriguing option for high-risk, high-reward investors.
Oracle, a well-established tech giant, is also making significant strides in AI. The company’s cloud offering, Oracle Cloud Infrastructure (OCI), has been infused with AI applications, opening up new avenues of growth. Oracle has invested in generative AI technology and offers solutions in industries ranging from healthcare to customer service. With a reasonable price-to-earnings ratio and analysts' consensus price target indicating potential upside, Oracle stock presents a favorable entry point for AI investors.
While these three AI stocks offer attractive opportunities, investors looking for a more diversified exposure to the AI industry may consider AI exchange-traded funds (ETFs) such as Global X Robotics & Artificial Intelligence ETF and First Trust Nasdaq Artificial Intelligence & Robotics ETF.
Investing in AI stocks carries higher risks compared to mature industries, but the increasing demand for AI and its potential for market growth make it a compelling investment option. Selective investments in AI stocks or diversified ETFs can help mitigate risk while tapping into the revolutionary potential of AI in various industries.
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