Topic: How To Invest

Here’s how to spot the best artificial intelligence companies to invest in

artificial intelligence

Looking for the top artificial intelligence companies to invest in to boost your portfolio returns? Here’s what to look for—and it’s probably not what you were thinking

The growing commercial use of robots and computers with sophisticated learning and problem-solving skills will change the manufacturing and service sectors over the next decade and beyond.

Robots are machines designed to perform operations without human intervention. New software developments in artificial intelligence (AI) continue to increase the learning and problem-solving capabilities of machines. Together, these technologies are set to revolutionize the way we complete tasks, analyze data and make decisions. Today I am looking at considerations for investors looking at artificial intelligence companies.

How Successful Investors Get RICH

Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' for FREE from The Successful Investor.

How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.

Demographics will drive a lot of the growth of robotics and automation. Worldwide, the number of people over 65 years of age is forecast to triple by 2050 while birth rates will decline. That will shrink labour pools.

To reduce labour costs, many manufacturers in the developed world have outsourced their manufacturing activities to cheaper jurisdictions reducing labour costs by an estimated 65%. However, replacing human labour with intelligent robots has the potential to save 90% of labour costs.

Robots can work faster and often produce better quality products, which increases productivity. The adoption of robotics in places such as Germany, China, Japan and the U.S. is set to boost productivity as much as 30% by 2025.

These industries are leading the growth in artificial intelligence companies to invest in

The global robotics and AI market is developing rapidly with a growing range of applications in almost every area of the economy. Still, select industries are leading the charge:

Manufacturing. Next-generation robots will be increasingly capable, with vision-recognition and motion detection expected to broaden their ability to both think and do. As a result, manufacturing dependent on automation should grow from 10% in 2015 to an estimated 25% by 2025.

Military, Security, Emergency Response, Surveillance. Drones and robots will increasingly replace soldiers in conflict zones. They already lead search and rescue efforts, along with reconnaissance missions. The commercial use of drones should grow rapidly—not only for parcel delivery, and crop and pipeline inspections, but also power plant management and troubleshooting. By 2021, commercial use of drones will be an estimated 10 times that of 2016 levels.

Medicine. Robots and artificial intelligence continue to make headway in administering patient procedures and diagnosing illnesses. The medical robots market is set to grow at a rate of 20% annually over the next few years.

Transportation. Engineers are now testing autonomous cars on North American streets. Alphabet’s self-driving technology operation, Waymo, has covered more than 32 million kilometres, with improving safety results. By 2030, autonomous cars will potentially comprise 15% of all passenger vehicles.

Agriculture. Drones and satellite-based sensors help farmers analyze crop yields, water saturation and soil fertility. Robotic farming equipment can plow fields, and sow and harvest crops. The agricultural robots market is expected to grow at a rate of over 20% for the next few years.

Know the advantages and disadvantages of artificial intelligence companies to invest in so you can boost your portfolio returns

In real life, human intelligence has the advantage. After all, human intelligence works with analogies as well as digits. Human accomplishment rises out of learning the rules in a variety of situations, over the course of decades, then applying those rules in different situations, often totally unrelated. Much of this learning takes place subconsciously, but it’s there when you need it. For that matter, high IQ alone is no guarantee of achievement (although it helps if you want to excel at chess). Human achievement also requires emotional intelligence and intuition. Science has a long, long way to go before we reach the proverbial singularity—when AI catches up with human intelligence. Before that happens, we suspect we’ll be breeding dogs that talk.

This is obviously our opinion, and nobody can predict the future. However, one reliable sign that an investment idea is overblown is that its fans treat it as a sure thing. That’s where AI stands today. AI fans don’t exhibit a shred of doubt that singularity-level AI is coming soon. They feel it’s a waste of effort to question its inevitability.

Our view is that if AI-verging-on-human-intelligence is coming, it will appear gradually, and in stages. Some of today’s AI start-ups may evolve into profitable companies. But the biggest winners from AI will be those companies, now in the middle of the risk spectrum, who use AI to find better ways to serve their human customers.

Discover some lower-risk ways you can find artificial intelligence companies to invest in

We think that the one of the best ways to invest in AI is through companies that already have a sound base of profitable business. Here are five companies that are taking the lead in AI today:

Microsoft (symbol MSFT on Nasdaq), for example, is putting to use the biggest library of AI patents in the world.

Cisco (symbol CSCO on Nasdaq) keeps improving its voice recognition AI that works across all apps and devices; the tech company has also developed AI-protected network security.

AI chips by Intel (symbol INTC on Nasdaq) already power Google’s self-driving cars.

The Watson supercomputer by IBM (symbol IBM on New York) can analyze the vast amounts of data needed for even the most complex AI.

NortonLifeLock (symbol NLOK on Nasdaq) is a global pioneer in AI to ferret out potential cyberattacks from a maze of Internet traffic.

Use our three-part Successful Investor approach to build a sound portfolio—including the top artificial intelligence companies to invest in

  1. Hold mostly high-quality, dividend-paying stocks.
  2. Spread your money out across most if not all of the five main economic sectors: Manufacturing & Industry, Resources & Commodities, Consumer, Finance and Utilities.
  3. Downplay or stay out of stocks in the broker/media limelight.

Where do you think artificial intelligence is headed? Will it become an important area to invest in?


Tell Us What YOU Think

You must be logged in to post a comment.

Please be respectful with your comments and help us keep this an area that everyone can enjoy. If you believe a comment is abusive or otherwise violates our Terms of Use, please click here to report it to the administrator.