You can't have a conversation about investing in artificial intelligence (AI) without having companies like Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and chipmaker NVIDIA (NASDAQ: NVDA) come up. That's for good reason, since those two stocks rank among the top AI stocks on the market.
But AI investing isn't limited to Alphabet and NVIDIA or other big companies frequently mentioned. I suspect that many investors are overlooking other promising stocks poised to profit from AI. Micron Technology (NASDAQ: MU), Salesforce.com (NYSE: CRM), and Yext (NYSE: YEXT) are three stocks that should also benefit significantly from the AI revolution.
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Micron Technology
Top AI approaches such as machine learning and deep learning involve processing huge amounts of data. That data processing requires a lot of memory. Micron Technology ranks as one of the global leaders in providing the kind of memory chips in the highest demand for AI.
NVIDIA has been using Micron's memory chips for a while now. The company's technology innovations announced this year have deepened its relationship with the AI leader. Micron's innovations have also positioned it to grow revenue as AI-powered autonomous cars hit the market over the coming years. In September, the company introduced new memory chips that provide a foundation for next-generation autonomous vehicles. Micron also announced that it was partnering with leading automotive partners and customers to develop more high-bandwidth memory technology to power fully autonomous vehicles.
While Micron hasn't received the attention from AI investors that NVIDIA has, neither has it been ignored. The stock is up over 90% year to date. Unlike NVIDIA, though, Micron isn't valued at nosebleed levels. Micron shares trade at only six times expected earnings despite the huge gain so far in 2017.
Salesforce.com
Many investors focus largely on companies that provide the hardware used for AI. However, there are also great software picks. In my view, Salesforce.com is one of the best AI-related software stocks. AI is so important for Salesforce that executives stated on the company's third-quarter conference call in November that it's the key for how the company will hold on to its leadership position in the customer relationship management (CRM) market.
Salesforce launched its Einstein AI integration in 2016 and added new capabilities this year. Einstein weaves AI throughout Salesforce's core CRM platform. What does Einstein do? A lot. It uses data mining and machine learning to forecast future sales performance. It informs sales staff when a competitor shows up in the news. It uses AI to identify which deals are most likely to close. It uses natural language processing to pick out the most important emails in sales staff's inbox, and even suggests a response. And there's more.