Artificial intelligence (AI) technology is rapidly moving from the realm of science fiction to everyday applications. Several leading growth stock experts -- and contributors to MoneyShow.com -- look at a variety of stocks that are poised to benefit from developing trends in artificial intelligence.
Graphic chipmaker Nvidia (NVDA) has a decided advantage in the massively data-hungry tech industries of tomorrow. It has diversified into gaming, data centers, visualization and autonomous driving, all anchored in well-established artificial intelligence computing. It has become the undisputed leader in these markets. Its graphic processing units (GPUs) are expected to increase by 1,000-fold by 2025.
"Isaac" is a recently launched platform to power the next generation of autonomous machines, bringing artificial intelligence to robots for manufacturing, logistics, agriculture, construction and other industries. At the heart of Isaac is Jetson Xavier, the world's first computer designed specifically for robotics. With more than nine billion transistors, it delivers more processing capability than a powerful workstation while using one-third of the energy of a light bulb!
Meanwhile, the company recently revealed its next generation of graphics cards that it calls "Turing." Turing-based graphics cards will become available in the fourth quarter, so we'll soon know if the tactical money is going to embrace this product's potential impact.
The company recently beat Wall Street expectations when it announced record earnings of $4.3 billion in the past year, up 89%. Revenues rose 40% to almost $12 billion. Profit margins rose to 36% and return on equity (ROE) is a mammoth 58%. It has nearly $8 billion in cash, and only $2 billion in long-term debt.
CEO Jensen Huang has stated, "AI is the most powerful technology force of our time. Its first phase will enable new levels of software automation that boost productivity in many industries. Next, AI, in combination with sensors and actuators, will be the brain of a new generation of autonomous machines. Someday, there will be billions of intelligent machines in manufacturing, home delivery, warehouse logistics and much more."
Three important trends have made recent advancements in AI possible: big data collection, reduced computing costs and improvements in algorithms. Data these days is easy to collect and cheap to store, while the advent of cloud computing has made it much more affordable to crunch all of that data.
With organizations becoming much more data-driven, there's a broad movement to speed up the overall analytics process for the average worker so that better business decisions can be made in a speedier manner. Machine learning is already being applied today for things such as fraud detection in banking and optimal route mapping in transportation logistics. Insurance companies deploy predictive risk modeling to gain a competitive edge, while doctors turn to machine learning to help improve patient diagnoses.
Alteryx (AYX) , the latest addition to our Small-Cap portfolio, is expected to benefit from this trend. Its cloud-based, self-serve data prep and analytics platform addresses the needs of more than 30 million citizen data scientists worldwide, representing a total addressable market estimated to be worth $10 billion.
While traditional data analysis tools are slow and may require multiple steps of data prep from the IT department, Alteryx solutions feature intuitive visual workflows and a drop-and-drag interface, which eliminates the need to write any code.
The goal at Alteryx is to become the platform of choice for managing the entire analytics workflow of an organization. The company is involved in all three phases of analytics: (1) data prep and blending; (2) report generation and visualizations; and (3) predictive analysis to help determine the next course of action to take based on all of the data. Organizations can get started on Alteryx for as little as $4,000 to $5,000 a year, representing a solid value proposition.
Alteryx has become a key way to play the artificial intelligence boom. More than half of the company's current customer base has deployed Alteryx's platform to help build predictive models, an essential element of the machine learning piece of AI.
Alteryx's new Promote product (it became generally available in Q1 2018) is a complete data science system for developing, managing and monitoring statistical and predictive models. Workers can deploy and scale models within minutes. Promote can execute 725,000 predictive models within 10 minutes.
Zendesk (ZEN) , a holding in our Small-Cap model portfolio, is one vendor using AI technology for call center optimization, with the goal to help people receive better customer service. In this use case, thousands upon thousands of customer service call transcripts are first loaded into a neural network, resulting in a rich data profile of what kinds of things people are calling in or emailing about on a daily basis.
The data set is formed from various interactions across the entire customer service chain- including live chat, messaging and social media. All of the customer service data is then crunched to come up with a recommendation system.
Going forward, when someone calls in or emails about a basic problem, the system can automatically respond by using an AI-based agent. For more detailed problems, human customer service reps can tap into the AI-powered system to see what the call is likely about and how to best handle the response based on historical and account-specific data.
Cloudera (CLDR) is an exciting company. Look what is happening in cars, health, and virtual reality. Everything is getting connected. This newly created connected world is creating a backdrop for data that is unprecedented. Economists say the world's most valuable resource is now no longer oil, but data.
So where does Cloudera fit in? It helps enterprises enter this new world of machine learning and artificial intelligence. The old days of just working with a database storage provider and some simple analytics are gone. Today, companies turn to Cloudera to build best-in-class artificial intelligence solutions that optimize all the available data out there, not just their own.
Machine learning and artificial intelligence are megatrends. Revenue is expected to explode from $360 million this year to $570 million in two years. We see Cloudera breaking the $1 billion revenue mark possibly as early as 2020. The company is still tiny with a market cap of $2.5 billion. But the company is growing 40% a year. We would expect to see this little gem grow to the $10 billion level at some point and then get plucked up by one of the big boys. And this might even happen sooner than you think.
Box Inc. (BOX) is a business that helps companies manage their data and content in the cloud; it allows customer data to be converted to artificial intelligence (AI) and machine learning solutions available by other providers. A full 70% of the Fortune 500 companies along with 85,000 smaller businesses are already Box clients.
What differentiates Box from other cloud data storage providers is its vendor-neutral solution, which provides a single interface that allows businesses to integrate solutions from any and all other service partners. This is a potential game-changer.
By not building an artificial intelligence system of its own, Box's strategy has positioned the company as an "AI-Neutral" Switzerland of cloud content management that leverages the massive amount of work being done across providers like Google Cloud Platform, Microsoft Azure, IBM Watson, Amazon AWS, and others.
The stock fell sharply on Wednesday (Aug. 29) after the company reported quarterly earnings; this overreaction was superficial on every level, creating an opportunity to build a position below $25. The future is going to be driven by artificial intelligence. Box is a master of this technology. The savvy team of engineers here hasn't even broken ground yet on major projects that will change the future. There is much ahead for this revolutionary company.