Top 5 AI Stocks to Invest in to Profit from the Machine Intelligence Mega-trend Dear Reader, This is part 2 of 2 of my in-depth analysis of the Top 10 AI stocks to invest in to capitalise on the emerging machine intelligence mega-trend that warns to prepare for EVERYTHING to change EXPONENTIALLY when average machine intelligence surpasses average human intelligence following which it will soon be off to the races. And if you've not already done so then watch my following video from November 2016 which illustrates why everything will start to change exponentially by 2021. Machine Intelligence has become a broad church that has fragmented or branched off into a myriad of sectors and the number keeps expanding every year. Many years ago I broke the machine intelligence mega-trend down into 9 key sectors that I have now further fragmented into 10 by basically adding Cyber Security as the following list illustrates, the 10 key machine mega-trend sectors to invest in. For a primer on how to invest in AI Stocks then see my following recent video: Top 10 AI Stocks Part 1 covered stocks 6-10
This analysis covers the Top 5 AI stocks The stocks are ranked in order of priority. Also to further break down the list, I consider the first 5 stocks as PRIMARY i.e. the most important. The next 3 as of SECONDARY importance and finally 2 far more risky TERTIARY stocks. Also note the whole of analysis was first been made available to Patrons who support my work: https://www.patreon.com/posts/top-10-ai-stocks-25779914 So for immediate First Access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat. PRIMARY AI STOCKS 1. ALPHABET (GOOGLE) - GOOG
Google's AI projects include:
Though bare in mind that 85% of goggles revenues are still derived from SEARCH related advertising. Alphabet (Google) Financials
Google's fundamentals are rock solid. A huge cash mountain and strong annual earnings and sales growth. Only thing missing is a dividend yield. (Charts courtesy of stockcharts.com) Trend - Trend matches the S&P quite closely which it beats by nearly 50%. Long-term Investing - Strong and stable long-term returns (148% of S&P). Basically Google's the AI sectors SAFE bell weather stock supported with regular share buyback's makes this a core holding for any stocks portfolio. Conclusion - If your going to own just one AI stock then that stock has got to be GOOGLE! So far it's been an easy gravy train ride, and I don't see any reason why it shouldn't remain so for many more years as it has the best chance of keeping ahead of the competition. 2. AMAZON - AMZN
Whilst on the back end Amazon is increasingly automating it's business, warehouse full of AI controlled robots, picking and packing orders to be shipped ultimately by drones, all geared towards driving down costs. But Amazons going beyond it's online store business branching into servers and cloud based AI computing services such as Amazon Lex, Amazon Polly and Amazon Rekognition. Amazon Financials
Amazons financials are robust, notably strong sales growth. High P/E not as important as it may first appear as illustrated by forward P/E. Though debt ratio looks a bit high. Plenty of cash. Trend - Amazon launched itself into space during 2018! Those who invested several years ago are sitting on a tidy return. However, since the August 2018 peak Amazon has been under performing, and is far more very volatile than the likes of Googie, Basically expect a roller coaster ride when investing in Amazon. In terms of deviation from the S&P, well it does tend to do its own thing. So perhaps keep a closer eye or a smaller position is in order. Long-term Investing - VERY Strong Long-term returns (187% of S&P). Conclusion - Amazon is definitely a stock to accumulate to leverage the machine intelligence mega-trend , Whilst volatility is high, however that shouldn't really matter in terms of the very long-term.
Microsoft may have been a little slow off the mark to incorporate AI into it's business, but this Tek Giant has the history and the means to give Google and Amazon a run for their money. It's definitely a competitor to Google, and given its wide berth of interests it will likely beat Google in at least in some of AI applications such as in medical imaging interpretation. And it should not be forgotten that Microsoft like Google also has an AI driven search engine BING, and an ever expanding range of cloud services built on its existing desktop based businesses such as Office and Cortana. Microsoft founded it's AI Research division in 2016 where one of the objectives is to develop a Microsoft based AI platform, tool kits and services for businesses, Microsoft Financials
Microsoft's financials are robust, even pays a dividend unlike most similar stocks, has a huge cash mountain apparently even larger than Google's, coupled with strong earnings growth. Trend - Microsoft's trend has been surprisingly smooth and powerful these past 3 years, undoubtedly boosted by stock buy backs. Now I have been invested in Microsoft for 2 decades and for most of that time Microsoft tended to be a dead going nowhere stock, under performing the general market. Well something's clearly changed! The stock price is signaling that Microsoft, the Tech sleeping giant has suddenly woken up and that reason could very well be AI! Long-term Investing - Like I said above, my experience is that Microsoft tends to UNDER PERFORM, but for some reason it's been on FIRE these past 3 years as illustrated by its performance against the S&P of 355%! Conclusion - Microsoft appears to be going exponential! Which may be a sign that it is winning the AI war. It's hard to tell. For me this has been an invest and forget stock, where all of my holdings were accrued over 10 years ago. Microsoft should definitely play a part in an AI portfolio as long as people are aware that it has a tendency to go to sleep for many years.
INTEL founded by Gordon Moore and Robert Noyce started the tech ball rolling in 1970 with worlds first microprocessor the 4004 ever since it's been a case of chip processing power doubling every 2 years or. INTEL is the sector leader in microprocessors just as Google is in Search, Just as Amazon is in online sales, just as Microsoft is in operating systems and office software. Where personally on occasion I may have dabbled with computers running on AMD processors, however usually there's been an Intel processor powering my desktop computers. Where AI is concerned, having seen competitors such as GPU maker NVIDIA tweak their products towards AI applications, Intel too is set to announce a new family of AI processors specifically designed to handle machine learning workloads. A market that INTEL could rule just as well as it has ruled the desktop and servers processors market. INTEL Financials
Trend - INTEL's more conservative growth rate has not prevented INTEL from out performing the S&P by 78% as a stock that is firmly embedded in the Machine Intelligence Mega-trend with the stock price up 68% in 3 years. The stock appears to lead the general stock indices to some degree, i.e. topping and bottoming beforehand. So current action suggests the general stock indices will continue to rally. Long-term Investing - Intel in many ways is similar to Microsoft and as is the case with the rest of the AI drivers should experience exponential earnings growth that results in stock price performance such as the 68% rise of the past 3 years. Coupled with the fact that Intel pays a decent dividend that increases most years. Conclusion - INTEL should definitely form part of a long-term machine intelligence investing stocks portfolio. 5. APPLE - AAPL The Apple stock price only really came alive after the financial crisis with its series of pocket super computers, the Iphone's! Since which time it's been off to the races, for those who bought Apple stock during 2009 will today be sitting on a TEN fold increase BEFORE dividends, which illustrates just how far Apple has come from a company that was a small computer / gadgets company on the brink of collapse or being swallowed up by a larger corporation. In fact Apple was saved by Microsoft during the late 1990's from the brink of bankruptcy with a £150 million investment which Microsoft sold before the Apple stock price took off. Apple under Steve Jobs successfully reinvented itself as a highly successful pocket super computer corporation even if personally I think the iPhone's on a price performance basis are inferior to for instance the Samsung galaxy range. Apple Financials
Apple appears to be loaded with a lot of debt despite having a large cash mountain. Net income is good, as is the PE ratio, whilst sales growth has been slowing which means that Apple may be heading for a rough patch, a case of battening down its hatches for a year or so. On the flip side Apple does pay a small dividend that tends to increase most years. Trend - The Apple stock price tracks the S&P quite closely in terms of trend. Recent price action has been one of under performance which is reflective of the general nature of the overly saturated smartphone's market which is likely to persist. The stock is volatile having fallen 40% from its 2018 high of $230 to a low of $140 before recovering to $190. So do expect greater volatility when investing in Apple. Long-term Investing - Even after it's recent sell off Apple is up a 73% over the past 3 years. And as I mentioned earlier up 10 fold over the past 10 years. So definitely worth investing for the long-run if one can stomach the volatility. Conclusion - Apple is is definitely another good AI machine intelligence mega-trend investing stock to hold as long as one is prepared for a potential roller coaster ride that could see gaps of as much as 40% between peaks and troughs as we have witnessed over the past few months. Again the whole of this analysis was first been made available to Patrons who support my work: https://www.patreon.com/posts/top-10-ai-stocks-25779914 So for immediate First Access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat. Including my most recent analysis posted on the 1st of July - Investing to Profit and Benefit from Human Life Extension AI Stocks and Technologies Scheduled Analysis :
Recent Analysis:
Your analyst Nadeem Walayat Copyright © 2005-2019 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved. Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.
You're receiving this Email because you've registered with our website. How to Subscribe Click here to register and get our FREE Newsletter To access the Newsletter archive this link Forward a Message to Someone this link To update your preferences this link How to Unsubscribe - this link
The Market Oracle is a FREE Financial Markets Forecasting & Analysis Newsletter and online publication. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tuesday, 2 July 2019
Top 5 AI Stocks to Invest in to Profit from the Machine Intelligence Mega-trend
You probably better know ALPHABET as Google. Basically Google changed its name but not its stock ticker (GOOG) in recognition of the fact that Google has been expanding beyond it's primary business, its highly popular relevant search and ads, moving into operating systems (Android) and a full spectrum of AI related hardware tech such as Waymo, its self driving cars. However at it's core there is still the Google search algorithm that increasingly tweaks itself for every individual user. Whilst I don't expect this mega-corp 'safe' stock to perform like the much smaller cap stocks would, nevertheless it's likely to got the best chance of getting there first! And who gets there first WINS! 
What's Amazon got to do with AI? EVERYTHING! This monster online retailer that began as a online book store is now responsible for putting high streets and shopping malls out of business right across the western world, and given it's approach towards full spectrum dominance of online sales and expansion into digital media it's definitely got an insatiable appetite towards developing its consumer knowledge based AI systems, targeting consumers with products they want to buy in it's ever expanding inventory of goods and services such as its Alexa voice service.
3. MICROSOFT - MSFT
4. INTEL - INTC
