Artificial intelligence (or AI) gets a lot of attention these days because the technology is being implemented into so many parts of our lives, from smart speakers to apps. And as AI expands, the opportunity for investors is enormous. Over the next four years, AI spending is estimated to double and reach $110 billion by 2024, according to research firm IDC.
For investors looking to tap into this enthusiasm for AI, there are a handful of companies pushing artificial intelligence forward. Here's why NVIDIA (NVDA -0.74%), Amazon.com (AMZN -4.03%), and Appian (APPN -1.83%) should be on your AI stock buy list.
For many years NVIDIA's core business came from selling graphics processors for gaming. But as data centers have become more complex, many companies have looked to NVIDIA's GPUs for their artificial intelligence data centers.
This shift has helped NVIDIA's data center revenue grow quickly and back in August the segment outpaced gaming revenue for the first time. In NVIDIA's most recent quarter, data center sales spiked 162% to $1.9 billion. Not all of the data center sales came from AI, but as more companies aim to boost their AI data center capabilities, many of them will look to NVIDIA's GPUs to help them do so.
NVIDIA is also pursuing new AI opportunities through its pending $40 billion acquisition of Arm Holdings. NVIDIA CEO Jensen Huang says the deal "will create a company fabulously positioned for the age of AI," as NVIDIA combines its artificial intelligence platform with Arm's CPU designs.
NVIDIA is already a leader in AI and when the company closes its acquisition of Arm Holdings, expected in the first quarter of 2022, the company's AI prospects appear even brighter.
Amazon may be best known as an e-commerce company but the company is also making big bets on artificial intelligence. Amazon Web Services (AWS), the company's cloud computing business, is not only a leader in the cloud infrastructure market, but it also offers a long list of AI tools for its customers.
AWS' voice recognition and speech-to-text tools use AI to help developers create their own services. But Amazon doesn't just use AI for its AWS business, it also integrates it into many of its companywide systems.
Amazon CEO Jeff Bezos explained the importance of machine learning, a type of AI, a few years ago when he said: "Machine learning drives our algorithms for demand forecasting, product search ranking, product and deals recommendations, merchandising placements, fraud detection, translations, and much more. Though less visible, much of the impact of machine learning will be of this type -- quietly but meaningfully improving core operations."
And of course, Amazon uses AI in its popular Alexa smart assistant, as well as in its Amazon Go grocery stores. All of which means that Amazon is not just making AI tools for others to use, but is implementing them into its own businesses as well.
Appian makes a low-code software development platform that allows companies to easily create apps, without having to know much about writing code. The beauty of the company's product is that it integrates AI services and tools into its platform, making it easier than ever for companies to tap into the power of artificial intelligence.
Appian doesn't create the AI services itself, but instead, it utilizes many of Alphabet's Google AI tools, including Google Translate and Google Vision. But the company also allows its users to use Amazon's and Microsoft's cloud-based AI services as well.
Appian says that this easy AI integration into its platform has helped it attract customers and Appian CEO Matt Calkins said on the company's third-quarter earnings call that it won a deal with a major digital marketing services provider, "because we provide a one-stop shop for their automation needs."
As more companies look for quick ways to create apps and with easy automation processes, Appian's low-code software development platform should benefit.
Remember this about investing in AI companies
Investors should know that artificial intelligence investments should be treated like any other stocks -- buy these companies and hold onto them for years, not quarters. The companies listed above will have their ups and downs like every other company, but buying and holding these companies for several years should help investors build wealth over the long term.