Artificial intelligence is integrated into so many products and services that we use every day that we hardly notice that it's there. Looking for outdoor furniture on Amazon? AI is helping to show you the most relevant results. Responding to an email from a colleague? AI is there, suggesting the words for a response.
And while these are good examples of AI being used in everyday life, there are a few companies that are tapping into the full potential of artificial intelligence -- and could see big gains during the next bull run. Here are three that should be on your buy list.
Image source: Getty Images.
1. Upstart Holdings
The loan origination business is long overdue for disruption, and Upstart Holdings' (UPST -1.79%) AI-based platform is doing just that. Instead of only using credit scores to determine if a person should receive a loan, the company's AI tool takes a look at multiple layers of borrower information when they apply.
The result is good for both borrowers and lenders. The company says its AI loan orientation system leads to 75% fewer defaults when compared to banks with similar approval rates. And the result for borrowers is personal loans that are, on average, 10% lower than from traditional lending sources.
The company's AI also makes applying for a loan ridiculously easy, with more than 70% of loans being fully automated.
If your eyes are glazing over because the loan origination market doesn't exactly sound like an exciting AI trend, then maybe I can wake you up with these two figures: $635 billion and $84 billion. Those are the huge total addressable markets that Upstart's management says it has in auto lending and personal loan markets, respectively.
Just as impressive as its market size is the fact that Upstart has been profitable for years and its revenue increased 252% in the most recent quarter. All of this indicates that Upstart is poised to continue building on its current AI success.
2. Lemonade
If AI-based loan origination isn't your thing, then how about AI-based insurance? Lemonade (LMND -0.33%) is making the process of filing an insurance claim just a little bit better by using AI chatbots to do the heavy lifting and get claims processed quickly.
The company's AI also helps potential customers find low-cost insurance options as well for a wide variety of products, including renters and homeowners insurance, term life, pet insurance, and (most recently) car insurance.
In the most recent quarter, Lemonade doubled its sales from the year-ago quarter. Its total customer count spiked 43% year over year.
But the company's recent foray into the car insurance market is what investors may really want to focus on because the size of the auto insurance market is a staggering $300 billion -- which is 70 times the size of the renters and pet insurance markets combined, according to eMarketer.
Lemonade is still a young, fast-growing company, which means there will likely be some growing pains, but investors who are looking for a unique company that has the potential to upend the insurance market with its artificial intelligence may want to add Lemonade to their buy list.
3. Nvidia
Semiconductor company Nvidia (NVDA 0.03%) has been long associated with its graphics processors for gaming. But over the past couple of years, Nvidia has benefited from companies adding its processors to data centers.
Nvidia's chips can do a lot of heavy lifting when it comes to AI processing in data centers, and many tech companies have taken notice. For example, Meta Platforms started using Nvidia's DGX A100 product back in January to build an AI supercomputer.
Large tech companies using Nvidia's AI products has resulted in huge growth from the company's data center business. Over the past two years, Nvidia's data center sales have soared 237%. That growth has resulted in Nvidia's data center sales now accounting for 42% of total sales, up from just 31% two years ago.
And it's not just AI that Nvidia will benefit from. The company's gaming sales soared 37% in the most recent quarter, and revenue from its professional visualization business more than doubled over that period.
For investors who are looking for an immensely profitable AI stock, it's hard to beat Nvidia. The tech company generated $9.7 billion in net income for fiscal 2022, up an impressive 125% from 2021.
