Artificial intelligence (AI) is a fast-growing technology. The researcher IDC expects global spending on AI hardware and software to exceed $300 billion in 2024, doubling from what was spent in 2020. This is a top trend to be invested in through the next decade.  

AI is already here and a big part of everyday life. Three companies worth buying in March with a hand in the development of the AI economy are NVIDIA (NVDA 4.00%), Lam Research (LRCX 4.61%), and Stitch Fix (SFIX -0.62%).

1. NVIDIA: Powering a smarter, more efficient world

NVIDIA is best known for its GPUs (graphics processing units) for high-end video game graphics. But the GPU pioneer has expanded at a rapid pace in recent years and is a crucial part of modern computing. AI in particular is a promising arena for the semiconductor designer.

Illustrated icons of devices and digital services pictured inside honeycomb shaped cells.

Image source: Getty Images.

Data centers and the cloud computing services they support are handling the heavy AI lifting these days, and GPUs are in the early stages of being adopted here as computing accelerators. They're also more energy efficient than their more general-purpose CPU counterparts. NVIDIA thinks it has a very long runway ahead in data centers and cloud computing. 

But its ambitions extend beyond data centers. Part of the rationale behind its pending acquisition of Arm Holdings is to extend its AI know-how into other areas of the global networking infrastructure, and locally into devices themselves. An entire world powered by and made more efficient by AI is the vision. Since Arm-based chips are already used by an estimated 70% of the world's population, this could be another game-changer for NVIDIA that keeps its growth momentum going for years. 

Speaking of momentum, NVIDIA posted fourth-quarter revenue growth of 61% year over year to $5 billion, and it expects first-quarter revenue to increase 71% year over year to $5.3 billion. Shares have taken a breather as of late, and I think it's great timing to add to an existing position in the company or start one if you haven't yet. The next decade looks promising for the AI industry, and NVIDIA is poised to benefit from the movement in an outsize way.

2. Lam Research: A pick-and-shovel play on AI chips

Along with some of its peers, semiconductor equipment company Lam Research could be in store for a run higher this year. Next-gen chips for AI and 5G mobile networks are in high demand right now. And a confluence of events from the U.S.-China trade war (which is still technically ongoing) and the pandemic last year has led to a global supply shortage. Manufacturers are scrambling to ramp up production to meet all of the new demand.

That bodes well for Lam since it sells the machinery chipmakers need to expand their capacity, including complex systems to build advanced memory and transistor architecture for chips handling AI computing. Lots of new equipment will need to be purchased to support manufacturing. Governments, including here in the U.S., are also increasing spending in support of semiconductor manufacturing as a new digital era dawns.  

Thus, Lam stock looks like a pretty good value trading for 27 times trailing-12-month earnings. Revenue rose 34% during the fourth quarter of 2020 to $3.46 billion, and the company expects $3.7 billion in sales in the first quarter of 2021, up 48% from last year. If this momentum continues through the year (and it appears that it will), Lam looks like a timely addition to your AI portfolio.

As a part of the manufacturing sector, semiconductors are cyclical companies tied to changes in global demand, which in turn often correspond to advances in technology. It can be a bumpy ride, but a new chip demand cycle is getting underway driven by AI and other high-end computing. Lam is a way to play the whole industry because it meets the machinery and engineering-support needs of its customers as they ramp up production.

3. Stitch Fix: An apparel service powered by AI

Up to this point, I've discussed hardware and related equipment for AI. But it's really about creating more-efficient operations and improving software users' digital experience. So investing in AI is also about finding companies making the best use of the technology.

I think Stitch Fix is one of those companies. On the surface, the business is pretty simple: Stitch Fix curates and ships boxes of clothing and accessories to its customers. Last year, it added the ability for shoppers to peruse and buy the company's ensembles online without the help of a stylist. Working behind the scenes, though, is Stitch Fix's machine learning (a branch of AI) that gathers data from customers, manages its supply chain, and matches orders with a best-fit stylist.

It's more than apparel e-commerce. It's next-gen clothes shopping powered by AI to create an ideal experience for shoppers and an efficient business for Stitch Fix.  

Additionally, Stitch Fix could benefit as the economy gradually recovers from the pandemic. Clothing purchases were put on hold last year, but eventually, some new threads will be needed. And returning to work, vacations, and other activities could be what prompts a rally in apparel retail. Stitch Fix thinks so, too, and is forecasting an acceleration in its growth in 2021.  

But this isn't a simple rebounding-economy stock. The company never stopped growing even during the worst of the pandemic last year. Clearly, its AI-powered retail is onto something and picking up plenty of new customers. Management expects full-year sales to increase at least 20% in 2021. Stitch Fix doesn't turn much of a profit yet, but it could be a steal at just 4.3 times trailing-12-month sales for an investor who can hold for at least a few years. I'm a buyer here.