From planning your holiday itinerary to giving you functional lines of code, the artificial intelligence (AI) sector is gaining unprecedented attention thanks to the runaway success that is OpenAI's ChatGPT. Thanks to Microsoft's US$10 billion investment in OpenAI, it's safe to say that the investment is paying off as ChatGPT is slowly becoming a household name for maximising efficiency and making once impossible tasks possible.
Suppose you're keen to get on the AI bandwagon but don't want to participate in the overcrowded trade of buying into Microsoft. In that case, don't fret -- our guide to investing in artificial intelligence stocks besides Microsoft will inform you about alternative top AI companies that rival the ChatGPT giant. From the up-and-coming Google Bard to foreign competitors like Alibaba, here are our picks for the biggest and best AI stocks to add to your artificial intelligence stocks watchlist.
What is AI?
As initially coined by Stanford Professor John McCarthy in 1955, Artificial Intelligence is defined as the science and engineering of making intelligent machines. This is done with the eventual goal of getting devices to perform complex and cognitive tasks.
Contrary to popular belief, the world's fascination with artificial intelligence dates back to 1950 with the introduction of the Turing test and Alan Turing's famous "Can Machines think?" question. Such introspection helped shape the foundations of artificial intelligence and its philosophy. Fast forward to today, and we once again see artificial intelligence take centre stage in the rapidly progressing world of technology. This is thanks to OpenAI's public showings of its AI technology that showcase the prowess of machine learning. These include dominating human opponents in DOTA 2 in 2017 and releasing ChatGPT to the public in 2022.
Now that we know how AI came to be let's move on to understand its importance in today's tech industry. According to an industry analysis report by Grand View Research, the global AI market size is expected to reach US$733.7 billion by 2027, expanding at a compound annual growth rate of 37.3% from 2023 to 2030. Given OpenAI's established lead in the sector, it's likely that Microsoft is the crowd favourite for pocketing the lion's share of the growth.
The Dangers of an Overcrowded Trade
However, investors may want to take note of the dangers when participating in a crowded trade. For example, if OpenAI revealed that its learned language model is flawed during a public demonstration like what happened with Google's Bard, it could lead to a significant dip in share prices as everyone rushes to exit their positions. Ultimately, it's why investors are always encouraged to stay diversified, especially in an emerging sector full of unknowns.
Fortunately, for those keen on investing in artificial intelligence, plenty of other big names in the AI sector could be just as lucrative. Here are some of the top AI companies ranked according to their market capitalisation as of 7th August 2023.
Best AI Stocks - Mega Caps (>US$200B)
1. Alphabet (NASDAQ: GOOGL)
Market Cap: US$1.618T
We can't talk about the best AI stocks without including the second most popular AI model in the space today. While it has had a rough start, Alphabet's Bard AI technology is a promising contender in the artificial intelligence space, with the potential to become a serious rival to OpenAI's ChatGPT. Developed by Google Brain and Project Magenta, Bard is an open-source language model that can generate text from prompts and is powered by Google's Language Model for Dialogue Applications. By leveraging machine learning, Bard has been trained on large datasets such as books and Wikipedia articles to learn how human language works, making it capable of understanding complex concepts like emotions, relationships between words and even humour. With its impressive capabilities, many believe that Bard could eventually overtake the current king of AI - ChatGPT - if given enough time to refine its models further.
2. Nvidia (NASDAQ: NVDA)
Market Cap: US$1.104T
Nvidia is one of the top AI companies on the market today because their graphics cards have made the artificial intelligence revolution possible. The company's graphics cards are popular among gamers and professionals alike for their high-end performance capabilities, but they also have an essential role to play in powering artificial intelligence and machine learning. Nvidia GPUs offer unparalleled computational power that can be harnessed for advanced AI tasks such as deep learning, natural language processing, and more. With their powerful processors and massive memory bandwidths, Nvidia's graphics cards are essential components in powering the rapidly advancing technology of artificial intelligence today and for running complex AI algorithms quickly and efficiently. Thanks to its industry-leading processing technology, Nvidia has helped the AI sector to make breakneck progress as we increasingly see more developments in the artificial intelligence world. This has also been reflected in its stock price as NVDA shares have been on a tear since the introduction of AI chatbots like ChatGPT to the public.
3. Tesla (NASDAQ: TSLA)
Market Cap: US$805.75B
Tesla is one of the top AI companies today and achieves this praise for good reason. Tesla's full self-driving beta had become a significant breakthrough in the field of artificial intelligence, utilising end-to-end AI from images to enhance its self-driving system. By doing so, Tesla's cars are able to detect objects such as other cars and pedestrians, as well as analyse changes in lighting and terrain. Additionally, the AI can recognise traffic signals and road markings, allowing it to make decisions about when to brake or accelerate accordingly. Furthermore, by leveraging sophisticated machine learning algorithms, Tesla's autonomous vehicles can learn from their experiences on the road and adjust their behaviour accordingly for improved performance. This powerful combination of artificial intelligence and deep learning has enabled Tesla's vehicles to achieve levels of autonomy previously thought impossible.
Besides gaining full autonomy when driving, Tesla is also working on a prototype Tesla robotic humanoid. Named the Tesla Bot, Tesla is designing its ambitious robotics project to be highly efficient and able to perform complex tasks quickly and accurately. Once in full swing, the Tesla Bots can autonomously navigate their environment, detect obstacles, identify objects, and pick up items with precision. By leveraging these capabilities, Tesla's AI robots help streamline production processes, ensuring accuracy and efficiency. Additionally, they can potentially reduce costs associated with labour by taking on more challenging tasks that would otherwise require manual intervention from humans. This could lead to a significant increase in productivity for any company utilising this cutting-edge technology.
4. Oracle (NYSE: ORCL)
Market Cap: US$310.62B
Oracle has established itself as a strong player in the AI technology sector by investing heavily in AI and machine learning technologies. This is done to enhance Oracle's services towards cloud computing, enterprise-related predictive insights, automation and advanced analytics capabilities. Oracle's Autonomous Database, for instance, leverages AI to automate management tasks, leading to cost reductions and improved efficiency. Another example of Oracle's foray into AI would be Oracle Cloud Infrastructure (OCI) AI Services. It's a collection of services with prebuilt machine learning models that make applying AI to applications and business operations easier for developers. The models can then be custom-tuned for more accurate and quantifiable business results. Ultimately, OCI AI Services allows developers to easily add machine learning to apps without slowing down application development. By applying these apps in business processes, Oracle promises plenty of potential growth as businesses transform their procedures for the better. This makes Oracle a promising pick for investors looking to gain exposure to AI stocks, as Oracle's solid commitment to innovating and integrating AI across its product offerings signals potential for long-term growth.
5. Alibaba (NYSE: BABA)
Market Cap: US$248.10B
Alibaba's ChatGPT rival, Tongyi Qianwen, is a powerful artificial intelligence platform that can understand and respond to human conversations in real time. The technology developed by Alibaba’s AI Lab leverages natural language processing (NLP) algorithms to enable users to interact with digital services via voice commands or text messages. It also has advanced capabilities such as sentiment analysis and intent detection, allowing it to interpret user input and accurately provide personalised responses. Also, Tongyi Qianwen uses machine learning models that improve their accuracy over time to understand user queries better, even when they are expressed using different words or phrases. This makes it an ideal solution for powering chatbots and virtual assistants and providing more intuitive experiences for customers interacting with AI-enabled services today. Currently, Alibaba has stated that they're working on integrating Tongyi Qianwen across all business applications in Alibaba's ecosystem. From summarising meeting notes and writing emails to drafting business proposals and promoting campaign plans through simple prompts, Tongyi Qianwen looks to be a do-it-all AI tool that excels at maximising business efficiency.
6. Salesforce (NYSE: CRM)
Market Cap: US$209.01B
Salesforce is also one of the top AI companies, having significantly contributed significantly by introducing Einstein and SlackGPT. The AI-powered platform Einstein has been developed to help businesses quickly respond to customer needs by leveraging natural language processing algorithms. This allows it to understand user input better and provide real-time personalised responses. Recently, Salesforce also introduced SlackGPT. It's a powerful generative artificial intelligence tool that can accurately interpret conversations between team members and automate mundane tasks related to communication management. Such productivity-enhancing duties include drafting meeting minutes and crafting emails. With these two significant innovations, Salesforce has become a pioneer in the customer relationship management sector for being the first to leverage artificial intelligence's untapped power.
Best AI Stocks - Large Caps (>US$10B)
7. AMD (NASDAQ: AMD)
Market Cap: US$187.12B
Advanced Micro Devices (AMD) is making significant strides in artificial intelligence, establishing itself as one of the leading AI stocks to consider. While it might be playing second fiddle to Nvidia, AMD remains at the forefront of developing high-performance computing and graphics solutions for both the consumer and commercial markets. Their state-of-the-art processors and graphics cards are integral to the functioning of AI technology, processing vast amounts of data at lightning speed. Recently, AMD announced the potential of its MI300, a dedicated flagship AI chip, by the end of 2023. This may have investors excited about the prospect of AMD's growth in the productivity space as the chip can go head-to-head against Nvidia's advanced H100 AI chips. Furthermore, AMD is investing heavily in machine learning technologies, striving to enhance the capabilities of data centres that form the backbone of AI applications. By doing so, AMD is fortifying its position in the semiconductor industry and contributing significantly to the evolutionary wave of artificial intelligence.
8. Baidu (NASDAQ: BIDU)
Market Cap: US$52.88B
Baidu initially created a stir in the tech world when it introduced its proprietary AI, the Enhanced Representation through Knowledge Integration Bot or, in short, Ernie Bot. With the media claiming it as the ChatGPT of China, Baidu's Ernie Bot certainly has big shoes to fill. Thankfully, Ernie Bot has one of the top tech companies behind it and is definitely up to the challenge of one-upping its competition. By leveraging natural language processing algorithms, Ernie Bot can accurately interpret user input and provide real-time personalised responses, thanks to its advanced capabilities like sentiment analysis and intent detection. Although Ernie Bot sounds like a ChatGPT copy, it does have some areas where it outperforms Microsoft's generative AI tech. In a recent test by SCMP, Ernie Bot showed that it could offer more accurate reports of current events and generate images from text prompts. However, it chose to avoid political queries. While we've yet to see the full capabilities of Ernie Bot, it'll be exciting to observe how Baidu intends to bring the most out of its generative AI tech.
9. Palantir (NYSE: PLTR)
Market Cap: US$38.56B
If you're a frequent reader of tech headlines, you'll likely have encountered Palantir striking a deal with the government and securing a contract. As one of the top AI companies in the world, Palantir is a leader in developing cutting-edge artificial intelligence technology. Founded by Peter Thiel, this software company specialises in data analysis solutions that aid organisations in gaining valuable insights from their data as efficiently as possible. Their flagship product, Palantir Gotham, uses advanced algorithms to automate manual processes such as data integration and analytics so businesses can focus on making informed decisions based on accurate information. They also offer an AI platform called Palantir Foundry, which leverages natural language processing algorithms to help users interact with digital services via voice commands or text messages. With powerful tools like these at its disposal, Palantir is helping shape the future of business operations today through artificial intelligence.
Best AI Stocks - Mid Caps (>US$2B)
10. UiPath (PATH)
Market Cap: US$9.02B
UiPath is one of the world's leading AI companies thanks to how its AI Centre technology is revolutionising how businesses operate. UiPath's AI Centre is an end-to-end automation platform that leverages machine learning and artificial intelligence to automate mundane business tasks. By using its powerful analytics capabilities, UiPath helps businesses optimise workflows and streamline resources, so employees have more bandwidth to focus on more strategic activities. The technology also enables natural language processing (NLP) algorithms so users can interact with digital services via voice commands or text messages. Additionally, UiPath includes a robotic process automation (RPA) layer, which helps automate document processing and improves business processes while reducing the amount of manual labour required. UiPath's AI Centre also helps organisations gain insights from data quickly and accurately, allowing them to make informed decisions faster than ever before.
11. C3 AI (AI)
Market Cap: US$4.24B
C3 AI is one of the top AI companies and a leader in developing cutting-edge artificial intelligence technology. This software company, founded by Tom Siebel, specialises in providing enterprise solutions that leverage machine learning and predictive analytics to help organisations gain valuable insights from their data quickly and easily. The C3 AI Suite provides users with powerful tools such as natural language processing algorithms, robotic process automation, advanced analytics capabilities and more. This suite of products makes it easier for businesses to make informed decisions based on accurate information while maximising efficiency. Additionally, C3 AI's platform can automate mundane tasks so employees can focus on more strategic activities - making it an invaluable tool for any organisation looking to stay ahead of the competition in today’s rapidly changing business landscape.
The Bottom Line
The potential of a fully developed artificial intelligence sector is immense as more competitors rise to challenge ChatGPT. With the emergence of Ernie Bot, Einstein and more, we see more businesses strive to equip themselves with the latest AI technology that leverages machine learning and predictive analytics to make informed decisions faster than ever. As we move forward into an increasingly digital world where data has never been more valuable or accessible, investing in the best AI stocks today could be wise for those looking to capitalise on this fast-growing industry.
Disclaimer: CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.
