Looking to invest in Artificial Intelligence (AI)? You may immediately think of tech companies. But AI stocks actually are popping up in just about every sector. That's because this powerful technology can be used across industries. For example, it can help e-commerce players become more efficient and better serve customers. And it can help healthcare companies develop superior medicines and devices.
So, if you're seeking stocks that may benefit from AI, you don't have to build a technology-only portfolio. Today, let's take a look at an e-commerce player and two healthcare companies that have been using AI for a while. You'll want to buy them hand over fist right now -- to potentially reap the rewards down the road.
1. Amazon
Amazon (AMZN 3.43%) has been using AI across its business -- from strengthening its supply chain to helping its e-commerce customers make buying decisions. The e-commerce giant uses AI to predict which products may be the most popular, for example. That way, the company can stock the right number of items. It also uses the technology to offer you selections of products you might like, based on your searches and previous purchases.
But Amazon isn't just a user of AI. It's cloud computing business -- Amazon Web Services (AWS) -- helps other businesses advance through AI. AWS offers them AI and machine learning services. The company's SageMaker allows companies to create, train, and launch their own machine learning models. More than 100,000 customers have chosen the AI and machine learning offerings more than any other cloud service, Amazon says.
All of this equals efficiency for Amazon. And that's a pretty big deal when you're a company dealing with stocking and transporting items around the world. So, AI could truly make a difference for Amazon over time -- and we should see that reflected in earnings.
Today, the stock is trading for about 2 times sales. It's generally traded closer to 4 by this measure in recent years. And that looks like a reasonable price for an already growing company that also will benefit from the AI revolution.
AMZN PS Ratio data by YCharts
2. Moderna
Moderna (MRNA 1.69%) is no stranger to AI. The biotech company, known for its blockbuster coronavirus vaccine, already uses the technology to optimize messenger RNA sequence design. This saves researchers a lot of time. It means they don't have to create mRNA sequences from scratch for their experiments. As a result, we're looking at a faster drug development process.
But things may be about to get even speedier. Moderna recently signed an agreement with International Business Machines. The biotech will use IBM's quantum computing and generative AI technologies to advance its research.
For example, Moderna plans on using IBM's MoLFormer to predict the properties of certain molecules. This should help researchers select high-quality candidates early on, and again, shorten the development timeline.
This is important for two reasons. First, it may cut down on failures during the development process. And second, the faster timeline means Moderna could bring products to market more quickly. That equals revenue sooner rather than later.
Moderna has the cash to invest in AI, thanks to the billions of dollars it generated in coronavirus vaccine sales. I wouldn't be surprised if Moderna became one of the first biotechs to benefit from this exciting technology.
MRNA Revenue (Annual) data by YCharts
3. Medtronic
Medtronic (MDT 0.62%) already is improving surgical and patient outcomes thanks to its early focus on AI. The company uses it in various devices.
For example, Medtronic's adaptive spine intelligence technology helps surgeons plan each patient's procedure. It predicts potential outcomes, allowing the surgeon to make the best decisions ahead of time. The company also uses AI in its GI Genius device for endoscopy. This allows doctors to better identify pre-cancerous tissue.
And in a recent development, Medtronic signed an agreement with Nvidia to use its technology in the GI Genius. Now, third-party developers can build AI models that eventually may be integrated into the device. This clearly could increase the capabilities of the GI Genius over time.
Meanwhile, Medtronic has talked about its commitment to AI -- and even said it views the technology as the key to personalized medicine. So far, Medtronic shares haven't benefited from the company's integration of AI into its products. But I wouldn't let that worry me.
Right now, Medtronic is involved in a transformation of its business. This involves streamlining certain processes, spinning off businesses, and investing in products gained through acquisition. Once this progresses, and as Medtronic's devices demonstrate their strength thanks to AI, the market may take notice. And that's why right now, early on, is a great time to scoop up shares of this AI player.
