The hype around artificial intelligence (AI) has grown tremendously over the past year. Wall Street can sometimes get ahead of itself, but there are legitimate uses for AI, and identifying the leaders now can power your stock portfolio returns over the coming years.

You've probably heard about ChatGPT and Google Bard, AI chatbots powered by Microsoft (MSFT -1.33%) and Alphabet (GOOG -1.55%) (GOOGL -1.58%), respectively. Those companies seem positioned to play prominent roles in AI but don't overlook emerging companies like Upstart (UPST -3.29%), SentinelOne (S -3.56%), and Lemonade (LMND 2.35%).

Below is a short pitch on why each of these five AI stocks can transform your portfolio for long-term growth.

1. Microsoft

Microsoft has successfully evolved as a technology company, starting with enterprise software and adding the cloud platform Azure just over a decade ago. Now, the company is again pivoting to integrate artificial intelligence into its business model. The company has a long-running partnership with OpenAI, the company behind ChatGPT. This AI chatbot provides information in a language-based format instead of pages of links like a search engine.

ChatGPT is being integrated into Bing Search, Azure, and Microsoft also gets exclusive rights to commercialize OpenAI's workloads via Azure. OpenAI has become the presumed leader in AI applications, picking up 100 million users just a few months after launching ChatGPT. Time will tell how it all shakes out. Still, Microsoft has an opportunity for exposure to anything OpenAI's software is used for, which is a potential catalyst for growth moving forward.

2. Alphabet

Some suggest that Alphabet's search engine dominance is under siege due to ChatGPT and Bing, but that's a pretty high mountain to climb. Alphabet's flagship business, Google Search, is the world's dominant search engine, with a staggering 93% market share of searches. Additionally, Alphabet has a ChatGPT competitor in development called Google Bard. Investors should never assume and always verify the facts, but it's probably a bit early to call for Google's demise.

Shares are down 30% from their high, which could be an excellent opportunity to buy shares of one of the world's most powerful companies. Alphabet's top two internet products, Google Search and YouTube, are the world's most trafficked sites by a country mile. Additionally, Alphabet has a balance sheet flush with $100 billion in net cash. If Alphabet can offer a competitive alternative to ChatGPT and integrate it into Google, investors could wish they had bought shares during this dip.

3. Upstart

Artificial intelligence goes beyond language models. Upstart is using AI to disrupt the financial sector. The lending technology company uses AI to approve consumer loans in place of the traditional credit score that banks rely on. Upstart claims it can better identify risk than a credit score, which helps extend credit to minorities and other qualified borrowers that a credit score might overlook.

However, Upstart's stock is far riskier than Microsoft or Alphabet. The business has struggled since interest rates began climbing in 2022, creating a situation where Upstart has been left holding loans it originated on its balance sheet. It has derailed growth and left management scrambling to pursue committed funding from institutional buyers who purchase loans. Upstart's technology seems promising, but use caution as the stock remains highly speculative until Upstart's business is more consistent.

4. SentinelOne

Cybersecurity is in high demand; a data breach can cost a U.S. enterprise more than $9 million in damages. SentinelOne potentially represents the next generation of technology in the industry. The company's Singularity Platform uses AI to autonomously identify and address threats. This has traditionally been done by human analysts or antivirus software, which can't identify threats it has never seen.

SentinelOne grew revenue by 106% year over year in its fiscal year ending Jan. 31, 2023, a sign that it is rapidly taking business from competitors selling antiquated solutions. The company already serves some of the world's largest companies, including three Fortune 10 corporations. The stock went public with a ton of hype, initially trading at a price-to-sales (P/S) ratio as high as 106. However, SentinelOne's stock is much more attractive now, sitting at a P/S ratio of 12 after a market bubble burst in 2022.

5. Lemonade

Insurance is the oldest industry on this list, but that hasn't stopped Lemonade from making its presence known. Lemonade is an insurance technology company that has replaced the traditional agent network with AI chatbots that handle customer service and process claims through a smartphone app. GEICO used to claim that 15 minutes could save you money, but Lemonade can insure you in 90 seconds and process your claim in three minutes.

The company's customer base has grown to 1.8 million and it offers renters, auto, homeowners, and life insurance products. However, Lemonade is still very young. Its risk underwriting algorithms need more time and data to improve, and Lemonade operates as a tiny player in a multitrillion-dollar industry with ruthless competition. The company's market cap is less than a billion today, so this speculative stock could become an eventual home-run investment if Lemonade can establish itself as a long-term competitor.