Artificial intelligence (AI) is an area that many investors want exposure to, but they also don't want to get caught up in the hype behind the trend. Fortunately, plenty of AI stocks aren't overhyped and will perform fine regardless of how far AI adoption goes.
If you're looking for AI stocks like this, then you should consider Alphabet (GOOG 9.96%) (GOOGL 10.22%), Procore (PCOR 0.39%), and Accenture (ACN -0.32%).
Alphabet
Alphabet is likely the most familiar company on this list, as it's the parent company of Google -- a company that's directly
in the middle of the AI race. Recently, it announced its Gemini generative AI model, which outperforms many of its competitors. With Google Gemini having such an advantage in many areas, it will become one of the top models developers base their generative AI applications on.
Beyond that, Alphabet is still highly exposed to the advertising industry, with 78% of its revenue coming from this focus. This is critical, as Alphabet won't be a flop as an investment, even if AI doesn't have as much of an effect as many people believe. Alphabet is also executing at a high level, with earnings per share (EPS) rising from $1.06 to $1.55 in Q3.
Despite its strong AI offering and recent results, Alphabet only trades at 20 times 2024 earnings, which isn't a bad price to pay considering the upside that could be ahead of Alphabet. Whether you're an AI investor or not, Alphabet looks like a solid buy in December and beyond.
Procore
Procore's construction management software makes life easier for project owners, contractors, and subcontractors. By linking all parties together in one program, Procore creates a single point of truth that allows changes to easily be relayed from an engineer to contractors, has a stakeholder check in on budgets or progress, and prevents mistakes from happening because everyone is working from a single program.
The construction industry hasn't adopted technology like other sectors because technology has just not progressed to the point where mobile internet can handle arduous workloads. With the digital transformation that has revolutionized other industries in mind, investors can turn back the clock by investing in Procore now that the industry has the digital capability.
But how is it an AI investment? Like many other companies, Procore is launching a copilot to improve efficiency. With 18% of project time spent searching for data, Procore's copilot can free up several hours daily by doing this work for them.
Even without an AI adder, Procore is doing fine. Revenue rose 33% year over year in Q3 to $248 million, and the company generated free cash flow of $22 million. But that's only the tip of the iceberg. Procore thinks it's only captured about 12% of U.S. construction volume on its platform and less than 2% globally. With a massive runway ahead, Procore looks like a great stock to buy right now.
Accenture
Everyone wants to implement AI into their systems to improve worker efficiency, but few have the experience needed to do it. That's where a business consultant like Accenture comes in. With its army of experts (Accenture employs more than 700,000 people, making it the fourth-largest global employer), Accenture can guide strategy, develop solutions, and maintain those products throughout its lifecycle.
With 97% of executives saying generative AI will transform their company and industry, management teams are likely discussing how to implement this technology into their businesses. Accenture can assist with developing and implementing large language models for generative AI, identifying and capturing business data, and ensuring that AI usage is responsible.
Accenture has long been a successful business, although its growth slowed in 2023 as its clients preserved resources to improve efficiency. Accenture should see a business influx as the economic outlook improves, although management only projects revenue growth between 2% and 5% for fiscal year 2024 and EPS growth of 6% to 9%. But if a company can grow earnings in the high single digits in a down year, it shows how strong a business it is.
Without Accenture, many companies couldn't integrate AI, as they don't have the expertise. With Accenture filling that crucial gap, it is a great investment now.
