Our Top 3 Artificial Intelligence & ML StocksSep 23, 2021
Lately we've been getting a ton of questions regarding what we think about Artificial Intelligence/ Machine Learning (AI/ML) and which stocks in this sector are poised to benefit. Before we answer which companies are truly innovating, we'd like to give you a brief overview of these buzzwords and what they truly mean as well as our stance on it. Then we can dive into which stocks are most exciting within this sector!
While AI & ML have been hot topics as of late, this technology has actually existed for decades! Dating back to the 1950's, we see basic computer programs being built that were the precursor for what is still being innovated on today! Back then the definition for AI was described as, "any task performed by a machine that would have previously been considered to require human intelligence." And while this term is extremely broad it has begun to change as time has gone on. More recently the head of AI at Google said, " Artificial intelligence is the efficiency with which you acquire new skills at tasks you didn't previously prepare for. Intelligence is not skill itself, it's not what you can do, it's how well and how efficiently you can learn new things." While the definition has changed, what hopes to be accomplished hasn't.
Long story short, humans are looking to create technology that can mimic and replace many monotonous actions humans do today.
So with that definition, let's discuss how we actually feel about the topic. While we do not think it can be debated as to the importance of this type of technology, we think a lot of companies out there are not really using "AI/ML" as rapidly as they so claim. Today many young companies are saying they're deploying these advanced models mostly to do 1 of 2 things. Either:
- Attract investors in order to raise capital
- Raise awareness/PR in order to increase adoption/revenue
And while there are legitimate companies, doing extraordinary things, we adamantly want to warn you that just because companies employ these buzzwords, does not mean they actually are doing anything so advanced. So as an investor, what do you need to do? You need to understand essentially what is real and what is fake before deciding to make any investment decisions for companies that could very well turn out to be selling snake oil.
Top 3 AI/ML Stocks:
And with that context, let's now discuss which stocks within this broad sector we not only like from an investment standpoint, but are also truly innovating and can change AI/ML! While companies like Tesla are obviously missing from the below list, we wanted to some other include companies that aren't as "mainstream" in the AI/ML buzzwords that you may already own!
1) Roku (ROKU):
Roku is a brand of hardware digital media players. They offer access to streaming media content from various online services. The first Roku model, developed in collaboration with Netflix, was introduced in May 2008.
Roku uses advanced AI/ML models to deliver personalized content to its users. They also use this advanced technology to sell users data to advertisers in return for revenue!
This revenue is mostly based in the the US, with less than 10% coming from international markets. Roku also earns a majority of its revenue from their platform segment. The company controls the price of its Roku player devices so that it can maximize the number of active accounts. Roku has also stated that it focuses on generating revenue from platform activities where it can earn healthy margins. But now Roku is looking to expand internationally and take market share from a segment it has historically not touched. With that in play and the precision of their AI models, Roku is a stock that we've loved for years and now love even more. Even in the face of tough macro head winds, we think Roku can emerge a winner over the long term. This is a long term hold but our price target is $490 in a year from now.