Writing about stocks to buy related to artificial intelligence (AI) falls into two categories.
The first includes companies whose products help you utilize AI. These are software companies, etc. The second is AI-driven businesses. These are companies that employ the first group’s products to grow. They often have little to do with technology but use it to separate themselves from the competition.
Of course, there are also hybrid companies such as Uber Technologies (NYSE:UBER). It’s both a developer of technology and services. It fits into both categories.
I’m interested in businesses that fall exclusively in the second group. They use AI to improve their businesses, not because they love technology. They existed before the advent of AI and machine learning, and they will exist long after.
Examples of AI-driven industries include healthcare, e-commerce and financial services. Of course, every industry is using AI to some extent. It’s just a matter of finding the ones leaning in to gain a leg up.
I like these three AI-driven stocks.
Netflix (NFLX)
How long has Netflix (NASDAQ:NFLX) been streaming movies and TV shows? The video streaming platform turned 25 in August 2023, so the correct answer would be 26 years.
How long has AI existed? In some form since the early 1940s. However, the human rights organization Council of Europe suggests that the actual launch of AI began in 2010 as computer graphics card processors became more efficient.
What has Netflix done with AI since 2010? Plenty.
For starters, it uses AI and machine learning to analyze all the data from customer viewing habits to create personalized movie and TV show suggestions.
Not only does it have your viewing habits, but it has the data of more than 247 million subscribers, so Netflix can tell you which movies and shows you like are also liked by others. That’s how it comes up with its always-changing list of the top 10 shows and movies.
Without the high-speed ability to evaluate all this data on the fly, the recommendations would become stale rather quickly. This alone helps it stay ahead of the crowd.
Following on from the movie recommendations, it uses AI to select the perfect thumbnail picture to include when it’s suggesting a movie you might like. As you watch the recommendations, it’s building a deeper understanding of what drives you.
AI was made for businesses like Netflix.
And it doesn’t hurt that the company’s service with ads hit 15 million global monthly active users one year after launching the plan. The ad revenues are rolling in.
Walmart (WMT)
Walmart (NYSE:WMT) is the world’s largest retailer. As you can imagine, the number of tasks it has each day is mind-boggling. AI can certainly help to automate many of these.
“Walmart is in the process of implementing automation in its regional [distribution center], building four next-generation fulfillment centers and scaling its market fulfillment centers,” Yahoo Finance reported Jefferies analyst Corey Tarlowe commented in October.
“We believe the additional capacity and efficiency is key to growing Walmart Fulfillment Services and its [online] marketplace.”
That’s all driven by AI and machine learning in combination with fulfillment robots and such to ensure the proper inventory gets to the right stores. It’s the difference between a good holiday season and a great one.
Technology, in conjunction with its massive store network, provides the company with the tools to provide same-day delivery across the country.
As a result, profits are not an issue.
Walmart expects 2024 revenues to increase by 4.25% at the midpoint of its guidance, generating a 7.25% increase in operating income.
LVMH (LVMUY)
LVMH (OTCMKTS:LVMUY) is one of my favorite companies. Unfortunately, the markets have not been good to it recently. Its shares are down 23% in the past six months on concerns spending for luxury brands has slowed considerably.
The problem with the argument that spending has slowed because LVMH shares have lost more than 20% in the past six months ignores the fact that in the six months before that, its shares rose by nearly 62%, pushing its American Depositary Receipts above $200 and an all-time high.
The valuation had a little something to do with the 20% decline in share prices since then. But I digress. This is an article about AI.
The company’s Tech Playground section of its website reminds readers that LVMH uses AI to create the perfect grapes for its Moët & Chandon champagne.
“Optical sorting technology reinforced with computer vision algorithms offers accurate detection and isolation of grapes affected by diseases like Botrytis. The results are exceptional, with high-quality grapes and impressive grades reported by oenologists,” states Axel de Goursac, Group Head of Data Science at LVMH.
LVMH has worked with Google (NASDAQ:GOOG, NASDAQ:GOOGL) since June 2021 to improve every aspect of the business, from the customer experience in the stores to the supply behind the scenes and everywhere in between.
Any dip in the share price is an opportunity to own stock in one of the best-operated companies in the world. AI will only enhance its ability to grow its business in the future.
Five years from now, when AI and machine learning are seamlessly integrated into every aspect of its business, you’ll be kicking yourself that you didn’t buy.
— Will Ashworth
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Source: Investor Place