These days, you can hardly turn on the TV or read the newspaper without reading about artificial intelligence. From smartphones to self-driving cars to virtual reality and the metaverse, AI is already changing the world we live in, and more is likely to happen. AI clearly offers huge benefits, but the question is, what is the right choice for retail investors?
Much of the AI discussion has centered around so-called “FAANG” stocks, also known as Facebook (now Meta), Apple, Amazon, Netflix, and Google (now Alphabet). Each of these companies is exposed to AI in different ways, so which one should you buy? Here’s your chance to learn more so you can make an informed decision.
alphabet
If you are a value investor, Alphabet may be your best option to get AI money among the FAANG giants. Compare Alphabet’s 28x P/E to Apple’s 30x earnings and off-chart Amazon’s 289x earnings. Given the technology-focused nature of the entire company, this alone makes Alphabet a relative value compared to his two other companies.
As the world’s largest search engine, Alphabet’s main product line is entirely focused on AI. Better AI capabilities will ultimately lead to happier customers, which in turn will boost Alphabet’s bottom line. One of the things AI and machine learning do best is collecting and analyzing data to improve user experience, which is especially useful for his three main services: search, advertising and YouTube.
AI is also powering the company’s Google Cloud division, providing customers with easy-to-manage machine learning capabilities to help protect against cyberthreats.
Alphabet’s Future AI Initiatives
Alphabet’s most direct approach to AI in recent months was the announcement of an experimental conversational AI service called Bard. The concept behind the technology is to leverage Google’s vast search knowledge and large language model to provide “fresh, high-quality answers” to questions (in the company’s own words). palce).
Essentially, Bard is the ChatGPT alternative created by Alphabet that has dominated the world’s headlines in recent months. Unfortunately for Alphabet, Bard didn’t make a big impression when it was first revealed to the world, as it gave the wrong answer during a very public demo. The gaffe was so unexpected that investors sent the stock down a whopping 8% the next day.
Nonetheless, it’s almost certain that the company’s developers are working overtime to make sure something like this doesn’t happen again, and Bard could be the world-changing conversational AI that makes headlines for good reason. Sex is enough.
Amazon
Amazon is one of the pioneers in artificial intelligence and is aggressively expanding its reach. Consider how over the years Amazon has evolved from being just an online bookseller to being the world’s largest e-commerce company and the world’s second largest retailer.
How many times have you added an item to your cart on Amazon.com, only to find that Amazon’s recommendations made you want to buy more? played a major role. AI also plays a role in the company’s chatbots and customer service platform.
But the company is also a big player in the cloud computing world with its Amazon Web Services division.
Amazon’s future AI-related efforts
Going forward, Amazon is already exploring new ways for AI to transform its own and customer experiences. More efficient order processing and warehouse management have always been a focus at Amazon, and its new Bedrock AI platform could transform the cloud computing side of the company.
This so-called “generative AI” platform helps customers build efficiency-focused applications, from customized search engines to chatbots to image and text generators. But the key to Amazon’s version of this AI is that rather than creating its own brand new language, it integrates AI models from a number of well-known third parties.
This should give us an edge over competitors that offer large language models that cost much more and require more training for customers to learn.
Which AI companies are Amazon, Microsoft, and Alphabet partnering with?
All three companies work with C3.ai, an AI application development platform.
microsoft
For decades, Microsoft was primarily known for its ubiquitous Windows software. Since then, Microsoft has also made a name for itself in the cloud computing and AI sectors, even though Windows remains the world’s most dominant operating system. Microsoft’s AI platform, called Azure, is the foundation for countless applications designed for productivity and creativity.
According to the company itself, its AI platform will make it easier for businesses to “get the right enterprise-grade privacy, security, and responsible AI protection that Azure offers at scale.” The company plans to build Azure into a “supercomputer for the world,” backed by partnerships with the world’s fastest GPUs and platforms like OpenAI.
Microsoft’s future AI commitments
Like most of its competitors, Microsoft is also developing generative AI that can compete with programs like ChatGPT. In fact, by publishing a disclaimer on its own service, Bing, after competitor Alphabet’s initial failure with its generated AI Bard, Microsoft said, “Bing is powered by AI, so surprises and mistakes don’t happen.” It can happen, so be sure to check the facts and share your feedback to learn and improve.”
One of the unique aspects of Microsoft’s AI development is its ‘AI for Good’ initiative, which works in the areas of ‘Accessibility, Digital Literacy and Equity, Sustainability and Climate Change, Human Rights and Resilience, and Health’. We provide funding and technology to help individuals and nonprofits. Inequality, food insecurity, cybersecurity and more. This initiative is a glimpse into the power of AI to bring about lasting, positive change across the world.
What are the best stocks for artificial intelligence?
Apple, Microsoft and Alphabet are all good buys. No company has cornered the market with artificial intelligence. In fact, Apple, Microsoft, and Alphabet have all made similar progress in this area to some extent, and this competition could produce bigger and better things from each of them.
As an investor, it’s important to remember that even big AI companies like these three are huge businesses with a wide variety of products and services, not just AI. In other words, the AI these companies are developing could enhance the businesses they already operate.
In that case, you should pick what you already like based on valuations, growth rates, management, and other traditional stock valuation methods.
