Artificial intelligence (AI) is one of the hottest topics of 2023. ChatGPT burst onto the scene, showcasing the power of AI, and it's causing a mad rush as companies and investors pour billions of dollars into the space.
While AI could be the next big investment trend, given the current frenzy, I'd be hesitant to follow the crowd into some of the most popular names. However, three AI-powered stocks I would buy without hesitation are CrowdStrike (CRWD 2.03%), Bill.com Holdings (BILL 3.21%), and Intuit (INTU 1.62%). All three companies are harnessing the power of AI to improve outcomes for their customers, which could help continue driving outsized growth into the future. Meanwhile, their shares are well off their peaks as they have yet to get drawn into the AI-driven hype, making them look like attractive opportunities to invest in AI right now.
A vast untapped market opportunity
CrowdStrike is a cybersecurity company that leverages the power of the cloud and AI to identify and stop security breaches. The company's Falcon platform collects two trillion data points every day, helping its advanced AI technology grow smarter as it encounters new anomalies. This approach enables it to detect threats and stop data breaches.
Customers are flocking to the company's AI-powered platform. Crowdstrike added 1,460 net new subscription customers in its fiscal third quarter, a 44% year-over-year increase. That helped drive revenue up 53% to $580.9 million in the quarter.
And the company is only scratching the surface of its potential. CrowdStrike estimates its total addressable market (TAM) opportunity is $76.1 billion this year, which it sees growing to $97.8 billion by 2025. However, with its annual recurring revenue run rate at $2.34 billion, it has a lot of running room. Despite that upside, shares are down almost 55% from their peak. That beaten-down price makes it look more attractive, especially given its AI-powered growth potential.
Enormous potential
Bill.com is a leader in financial automation software for small and midsized businesses (SMBs). The company leverages the power of AI to help SMBs save time and money. Its business payments platform uses AI to read data from an invoice and automatically enter it into the payments system. It cuts customers' bill-paying time in half while reducing costly errors.
The company currently has 436,000 businesses using its solutions, up 17% year over year. It processed 21 million transactions for its customers last quarter (up 34%), while payment volume grew 15% to $67 billion. That helped grow core revenue (subscriptions and transactions) by 49% to $231 million. Despite that growth, Bill.com's stock has shed more than 60% of its value since its peak, making it look like a screaming buy.
Bill.com still has a tremendous opportunity to bring its AI-powered solution to more customers, as there are over 70 million SMBs and sole proprietors worldwide. Meanwhile, global SMB software spending is $239 billion, and business-to-business payment volume is around $125 trillion.
Leading in the AI age
Intuit operates a global financial technology platform featuring the TurboTax, Credit Karma, QuickBooks, and Mailchimp brands. These products help customers with their most important financial challenges. One of the ways it does that is through AI, with its goal to become an AI-driven expert platform. For example, Mailchimp clients can use AI marketing to analyze data and improve their returns on investment.
The company's revenue grew 29% in its fiscal first quarter to $2.6 billion. CEO Sasan Goodarzi stated in the earnings release: "We had a strong first quarter as we innovated and delivered on our strategy to be the global AI-driven expert platform powering prosperity for consumers and small businesses. We continue to see proof that the benefits of our financial technology platform are more mission-critical than ever to our customers in an uncertain macro environment." That uncertainty is why shares are down almost 30% from their recent peak.
Intuit believes it has an enormous TAM. It sees a core market opportunity of $81 billion for its existing products and a global opportunity of up to $312 billion as it works to connect its growing ecosystem and expand internationally. The company believes its focus on AI can enable it to capitalize on this tremendous opportunity to leverage that technology's power to help more customers solve their most challenging financial problems.
Great ways to capitalize on AI
Early adopters CrowdStrike, Bill.com, and Intuit have been using AI to enhance their capabilities. It's giving them a technological edge and helping drive accelerated revenue growth. However, they're still in the early innings of capturing their total market potential. I wouldn't hesitate to buy any of these stocks nowadays. They offer lots of AI-powered upside without the current hype pumping their stock prices up to unreasonable levels.
