The so-called “AI revolution” has been underway for years, but it wasn’t until OpenAI released ChatGPT, an advanced language model, to the world that the technology really took off. While there are many ways to capitalize on the rise of artificial intelligence (AI), I believe his next three FAANG strains are poised for success.
So, in this article, we use TipRanks’ comparison tool to rack up three FAANG companies that could leverage strong network effects to thrive in the AI space.
No surprises here. Search and cloud king Alphabet is probably the most AI-savvy of his FAANG companies. Google’s generative AI Bard, which aims to duel with rivals ChatGPT and Bing AI, may have had a slow and rocky start. Still, I think Alphabet is one of the top AI companies to own for the long term.
The tech giant may not have the most impressive consumer AI platform at the moment. Still, the company has strong AI capabilities that may go unnoticed until he finally launches his AI product that changes the way people look at the company. For these reasons, I remain bullish.
Alphabet has been working on AI projects for decades. Aside from the AI tech behind popular search engines, the company is also involved in many other areas, such as Waymo’s self-driving technology and AI lab DeepMind, which is working on technology that will help advance AI technology. for years.
Only time will tell if Bard is a product that delivers a sizeable multiple expansion, expanding the price-to-earnings (P/E) multiple from just 23.1x to nearly 30x. Either way, Alphabet has an innovative AI pipeline, but I don’t think it’s getting enough respect from Mr. Market.
What is your target price for GOOGL stock?
Alphabet boasts a strong buy with a unanimous buy rating of 30. An average GOOGL stock price target of $128.60 implies a 23.3% upside potential.
Meta is more than just a social media or metaverse company. This is a company that is leveraging powerful AI technology to gain an edge over its competitors in this space. One could criticize Meta for slowing growth on Facebook, but the company has shown it is willing to reach new horizons to unlock growth. With AI and a seat in the Metaverse show, I see Meta as either the cheapest in the current FAANG basket, or the cheapest underdog he could very well be one of. For this reason, I remain bullish.
The company, which will headline its quarterly results today, has paid a $725 million settlement (related to the Cambridge Analytica scandal) and laid off a number of employees. But don’t let these news events blind you to long-term opportunities. Meta is a strong contender in the AI race and one that may be able to monetize AI better than its rivals.
Back in October, Meta’s CFO said AI would be responsible for most of the company’s increase in capital spending for the year. Part of our investment in AI will drive the growth of advertising on social platforms. But what many may have overlooked is the potential for Facebook to launch AI innovations that will bring millions of users back to Facebook. Indeed, it’s the AI innovations off Meta investors’ radar that could drive the biggest gains to stock prices.
Meta stands out as one of the lowest cost members of the FAANG group with a price/earnings ratio of 25.1x.
What is the target price for META Stock?
Meta shows a moderate buy valuation with 39 buys, 7 holds and 3 sells. An average META share price target of $236.50 implies an upside potential of 11.9%.
Amazon is no longer just an e-commerce or cloud company. Definitely one of the better ways to play autonomous robotics. With an impressive line-up of AI-powered warehouse workers and tapping into the waters of cashierless stores, the company shows that it hasn’t lost its edge in disruptive innovation. AMZN’s stock may still be down 44% from its peak, but it’s well equipped to sustain its disruptive streak thanks to AI. It makes me very bullish.
Amazon recently announced Amazon Bedrock, a service that brings the power of AI to the crowd and puts the power of AI into the palm of your hand. The platform allows users to create generative AI apps using its libraries. Indeed, Bedrock and such services are able to represent ChatGPT as one of many language models. In a few years, GPT may not even be the go-to generative AI that mainstream users flock to.
Either way, Amazon is a strong contender in the AI race. The company is also entering the no-code race with CodeWhisperer, a code generator that touts its ability to build applications quickly and safely.
It’s hard not to be surprised by the recent AI news surrounding Amazon. Technologies like these could drive stocks to new all-time highs, even as a potential recession weighs more heavily on e-commerce sales.
What is your target price for AMZN stock?
Amazon has a strong buy, with 35 buys and 1 hold. The average AMZN stock price target of $135.79 is up 28.3% from here.
Conclusion
FAANG’s three shares may not be pure AI companies, but they can use their size to their advantage. Over time, AI could become a larger and larger proportion of each company’s overall revenue.
For Apple (NASDAQ: AAPL), it was the iPhone that grew steadily until it contributed to the majority of the overall revenue pie, usurping the throne from the Mac and other technologies. As we seek to make progress in this area, looking for new ways to fit our technology into existing businesses, we can do the same with AI-powered technology.
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