Reliable, pure-play artificial intelligence stocks are tough to find in this day and age.
Plenty of blue-chip companies understand how vital AI will be in the future, but because it's such a nascent area, other parts of their business are still the real moneymakers. That's OK, though. While the following 10 companies might not be pure AI plays, many of them may be close to that level in just a few years as machine learning and deep learning become more sophisticated, useful, and impactful.
Each following company is betting big on AI, and many of them are relying on artificial intelligence in important parts of their business already.
Facebook (ticker: FB). Facebook aims to build the "best AI lab in the world," where today's top tech talent can solve the most challenging issues in the field. Its research has already paid off – Facebook has an AI-powered personal assistant, M, and facial recognition features that can sort, recognize, and tag entire groups of friends. M, offered within Facebook Messenger, can already perform a number of useful tasks like booking flights and contesting cable bills, as well as some not-so-useful ones like drawing amateur "artistic" sketches. Still, Facebook, which began in a Harvard dorm room in 2004, is now without a doubt one of the top artificial intelligence stocks in the world.
Amazon.com (AMZN). Amazon might traditionally be considered a hybrid between a retail and tech stock, but in time, "AI company" may be the most honest descriptor. Amazon's Echo home speaker comes equipped with Alexa, an AI-powered virtual assistant that can recognize and answer questions, read news stories, read audiobooks, report the weather forecast, play music from Amazon Prime Music, Spotify, and Pandora (P), and of course order a lot of Amazon products. Alexa gets smarter every day, too – through late February 2017, 10,000 new features and skills had been added to the platform – up from 1,000 just eight months before. With millions of Echos in circulation, it's one of the most successful consumer-facing AI products on the planet.
Alphabet (GOOG, GOOGL). Alphabet is in many ways a quintessential AI company: Google search itself is partially powered by RankBrain, a deep learning technology that helps Google better understand queries and deliver relevant responses.On top of that, Google now has its own answer to the Amazon Echo, dubbed Google Home; its driverless car technology is powered by machine learning, and a Google-owned machine named AlphaGo beat the world champion in Go, an ancient, complex Chinese strategic board game, in 2016. AlphaGo's win was a victory for artificial intelligence as monumental (if not more monumental) than IBM's 1997 chess triumph over Garry Kasparov.
Apple (AAPL). Apple's Siri virtual assistant software can do quite a lot: It can tweet and text on command, set a timer or alarm clock, make reservations, calculate one's caloric intake, and, even hail an Uber. Considering Apple may be working on its own electric, autonomous vehicle – and that it could decide to put those cars on the streets to look for fares – there's a chance this seamless integration with Uber will be temporary. On Apple's flagship product, the iPhone, some modest AI is already going on behind the scenes: Facial recognition in photos and suggested responses to texts are two examples – besides Siri – of in-phone AI.
Microsoft Corp. (
MSFT). Microsoft also acknowledges the value of artificial intelligence – and is betting on it accordingly. In 2016, MSFT acquired SwiftKey, which analyzes data to predict what a user is typing and what they'll type next, for a reported $250 million. Since SwiftKey uses AI to do this,
Microsoft also bought SwiftKey's intellectual property and expertise. Microsoft is also wagering on a future heavy on chatbots, which will understand natural language and should dramatically increase the utility and functionality of mobile devices. There's still a lot to learn, though: In March 2016, Microsoft's Twitter (
TWTR) chatbot Tay famously had to be taken down – after less than a day online – after it began imitating hate speech users directed its way.
Nvidia Corp. (
NVDA). In many ways, Nvidia is the most pure-play artificial intelligence company on this list. The chipmaker decided early in the game to invest heavily in advancing the AI field by building chips tailor-made for deep learning. One of its prominent AI-centric chips, the Tesla P100 GPU, cost $2 billion to develop and can work 12 times faster than Nvidia's previous top-of-the-line model. That's a major investment for a company with $6.9 billion in revenue over the last year, but if it continues building out its lead and forces larger rivals like Intel Corp. (
INTC) to play catch-up, it may reap huge rewards for shareholders.
International Business Corp. (
IBM). IBM's Watson is one of the most recognizable names in artificial intelligence. Walloping two of the best "Jeopardy!" players of all time put Watson on the map, but IBM has much more practical – and profitable – plans for how to make the best of Watson's deft data skills. Watson can read 40 million documents in 15 seconds, understanding grammar and context throughout, and can then answer multi-part questions on the material. It can help businesses analyze vast amounts of data, determine if there are problems, how to solve them, and where opportunities lie. In health care, IBM says Watson can see previously hidden data, improving quality and efficiency.
