The fast pace of technology expansion has given us voice assistants, social media feeds that give us exposure to hot topics, navigation software and targeted ads. These represent a small fraction of the significance of artificial intelligence in our lives. This makes artificial intelligence stocks a hot investing opportunity. We’ve compiled the best artificial intelligence stocks offered on the stock market today.
Quick Look: The Best Artificial Intelligence Stocks
- Alphabet (GOOGL)
- Amazon (AMZN)
- Apple (AAPL)
Overview: What are Artificial Intelligence Stocks?
Artificial intelligence, or AI, stocks are a financial asset which represents a publicly traded company in the area of artificial intelligence. AI stocks are the same as any other stock but are sector-specific. Other examples are cybersecurity stocks, marijuana stocks and banking stocks.
What to Look for in an Artificial Intelligence Stock
Investors analyze AI stocks almost the same way as standard stocks. There are some industry-specific differences to look out for, however.
The price-to-earnings (P/E) ratio of stocks measures its profitability. This index takes into consideration the price per share of the stock and the earnings per share to create the index.
Higher P/E ratios mean that the stock is not that profitable, while the lower P/E ratio indicates that the stock pays relatively high amounts compared to the stock price.
Company projects and research and development announcements are crucial for this sector. Every new project or innovative invention is likely to boost the price of an AI stock.
The beta of stocks measures the correlation of the security to the benchmark index. At the same time, the beta is an indication of price volatility. The beta usually varies between -1 and 1, although in some rare cases you can see the beta go below -1 and above 1.
If the beta is above 0, this means that the stock is more likely correlated to the benchmark index. However, the higher the value, the bigger the volatility.
If the beta is below 0, this means the stock is less correlated to the benchmark index. But the lower the beta, the lower the volatility. Stocks with low beta show smoother price moves.
It’s always good to identify the current technical state of a stock price. It’s always better to hop into an ongoing trend rather than to enter the market on the assumption that a trend is forming.
Since the AI sector has become hotter recently, it is very important to check the continued performance of a stock.
1. Alphabet (GOOGL)
Google is more than just a search engine. Alphabet encompasses other big products like Gmail, YouTube, Maps, Drive, Waymo, and more. All these software use artificial intelligence in its functionality.
- Hot projects: Delivery drones, smart contact lenses, internet beaming hot air balloons and drones
- P/E ratio: 27.19
- Beta: 1.16
- Trend: 17-year bullish
- YTD performance: 9.13%
The chart above shows the movement of GOOGL during the last 3 years. The trend is strongly bullish. The other 2 lines below are NASDAQ in orange and the S&P 500 in red.
The correlation between these 2 indices is very high. Whenever the benchmark indices are trending in bullish direction GOOGL is trending, too.
Whenever the benchmark indices are bearish, the company is bearish too. But GOOGL is obviously more volatile than NASDAQ and the S&P 500. The beta over 1 can be explained by this.
There was a relatively big bearish move from August to December 2018. However, we are now seeing a bullish bounce which reminds of eventual resume of the 17-year bullish trend. At the same time, the benchmark indices are following.
2. Amazon (AMZN)
Amazon, known for everything from fast Prime shipping to their Alexa devices, is making waves in the AI space.
- Hot projects: Domestic robots
- P/E ratio: 95.04
- Beta: 1.83
- Trend: 17-year bullish
- 2018 performance: 64%
One of Amazon’s most notable ventures is their domestic robot which will rely on artificial intelligence to perform tasks. This is a great innovation as it doesn’t have an analog on the market now.
Notice that Amazon also has a very high P/E ratio of 95.04. Nevertheless, the 2018 growth of the AMZN stock is the impressive 64%, These results are a common occurrence for the stock.
The AMZN beta is 1.83, which reminds of a high correlation with the benchmark index, but at the same time, the stock is very volatile.
The Amazon chart above contains the price movement of NASDAQ in orange and the S&P 500 in red. Again, we have a high correlation with the benchmark indices, but the volatility here is even higher. No surprise that the beta much above 1.
The chart is actually almost identical to the one of GOOGL. This is normal as these are 2 of the top 10 tech companies in the world that work around data science and artificial intelligence.
We have the same 4-month drop from August to December 2018. And now we have an attempt for a regain. Same as Google, this might be a relaunch of the overall 17-year trend.
3. Apple (AAPL)
Apple has changed the concept behind so many devices we use daily, most notably with the smartphone. As they use plenty of intuitive software in their products, their Siri virtual assistant is integrated into most Apple products and utilizes AI.
- Hot projects: Artificial intelligence cars
- P/E ratio: 13.17
- Beta: 1.11
- Trend: 1-year bearish
- 2018 performance: -13%
Apple is the pioneer of many technological inventions and are an example of cutting-edge products marketed in the best possible way. Apple is a brand that symbolizes digital innovations and technological growth.
Compared to the other 2 stocks, Apple has a decent P/E ratio. This means that the company is paying out relatively good compared to its price. The beta of the AAPL stock is 1.11, which means that the stock is highly correlated to the benchmark index and at the same time is volatile.
However, Apple accounted for big losses at the end of 2018 due to its reducing exposure in China. This caused the stock to close the year on -13% loss for the first time from many years.
The overall bullish trend is obvious. This trend has been active since 2003. Yet, the drop since October 2018 is significant, which is obvious on the chart.
Although we see that the stock is definitely correlated with NASDAQ in orange and the S&P 500 in red, we should note that the regain attempt is not that clear here. Yet, we still see that there is support around the level of 100, which has a psychological meaning.
If the Apple stabilizes and bounces from the level of 100, we can expect new highs for the AAPL stock. We should not forget that every year Apple releases new products, which pushes the price in a bullish direction.
Where You Can Buy Artificial Intelligence Stocks
You can buy artificial intelligence stocks via every one of the top online brokerage agencies for stock trading. Such brokers are E-Trade, Ally, and TD Ameritrade.
E*TRADE is a United States broker which you can use to trade artificial intelligence stocks.
The broker is subject to one of the highest financial regulations as the company conforms to the domestic laws and regulations. E*TRADE is listed on NASDAQ and it is publicly traded.
The broker has a very competitive price per trade for stocks, $6.95. If you conduct more than 30 deals per quarter, you will access a lower fee of $4.95 per trade.
This pricing places E*TRADE among the top stock trading brokers in the industry.
You can conduct trades online, on your desktop and mobile platform. All of these solutions are suitable for both beginner and advanced traders.
TD Ameritrade is another broker that is suitable to trade AI stocks. They are a U.S.-based broker who complies with high financial regulations as any other U.S. broker.
TD Ameritrade’s rates are also at $6.95 per trade for stock trading, which is standard for the industry. You can also take advantage of broker-assisted stock trades for $44.99 per trade.
They support web-based, desktop, and mobile trading platform. The web-based solution is more suitable for beginners.
The desktop solution Thinkorswim is a more advanced cutting-edge trading platform, which contains a big set of screening and analytical tools.
Ally Invest is a discount stock trading broker situated in the United States.
One of the best benefits of using Ally Invest is their low costs. Ally Invest’s standard pricing is $4.95 per trade for stock trading. For clients that conduct more than 30 trades per quarter, the pricing is even more favorable at $3.95 per trade.
This is extremely low for the sector, which is the reason why Ally Invest qualifies for a discount stock trading broker.
The broker also supports desktop, web, and mobile trading platform, which makes the solution accessible from everywhere. The platforms are suitable for stock trading beginners and for more advanced traders.
Artificial intelligence is what drives the current technology sector toward global progress. Many of the top world corporations like Google, Amazonand Apple develop and integrate artificial intelligence into their products.
This drives the sector toward expansion. And investors attempt to profit from this expansion, which is exactly how the stock market works.
We will see more and more unbelievable products and services released by the big corporations, and these will keep changing our lives the same way as Facebook and Google did.