With how widespread artificial intelligence (AI) is becoming, every investor needs some exposure to the trend. This doesn't necessarily mean buying the newest or hottest AI company on the block, since several mature companies are big players in this space.
While none of these companies will make you a millionaire on their own (unless you invest a massive lump sum into one of them), they are likely to accelerate your path to becoming a millionaire by beating the market by a few percentage points each year.
So, if you want to add some AI exposure, look at these three stocks.
1. UiPath
One of the more popular tech investing firms is Cathie Wood's Ark Invest. It might have missed some investments, but it has nailed it on others.
UiPath (PATH 0.26%) is one of the picks they got right, and with the stock making up nearly 6% of Ark's total holdings (its third-largest position overall), it has been a great pick.
UiPath specializes in robotic process automation (RPA) -- software that allows users to automate repetitive tasks. While this technology isn't AI in its own right, the company incorporates AI to make its platform more versatile by mining information from communications or other processes. It even has an AI product that monitors tasks to pinpoint what other processes can be automated.
This software is very popular, and UiPath's annual recurring revenue (ARR) rose 24% to $1.38 billion in the third quarter of fiscal 2024 (ending Oct. 31).
And it should only get much bigger. Polaris Market Research set the global RPA opportunity at $2.7 billion in 2022 and projected it to rise to $66.1 billion by 2032. UiPath is poised to capture that significant market expansion.
But this doesn't mean the stock comes at a steep price. It can be bought for just 11 times sales, far cheaper than many AI software companies.
If you're looking for an AI company with plenty of growth potential that can be purchased at a reasonable price, UiPath is your stock.
2. Adobe
Adobe (ADBE 0.87%) is much more mature, but that doesn't stop it from innovating. It is known for its creative design suite and e-commerce tools, but it's also starting to get into generative AI.
Its most notable product is Adobe Firefly, which generates AI images with a simple text input. This allows quick image modification, which can tailor an ad to a specific target or keep a website fresh.
Revenue in the fourth quarter of fiscal 2023 (ending Dec. 1) grew 12% year over year to $5.1 billion, and earnings per share rose 29% thanks to share buybacks.
It isn't the cheapest stock around, trading for 34 times forward earnings, but it's a proven company that has delivered market-beating returns year after year.
I feel comfortable adding Adobe to my portfolio as an AI stock that doesn't necessarily need AI to work as an investment.
3. Meta Platforms
Meta Platforms (META 0.43%), formerly Facebook, has been trying to diversify its revenue stream from just advertising (the primary form of revenue from its social media sites Facebook, Instagram, Messenger, WhatsApp, and Threads).
This led it to venture into the metaverse. This hasn't worked out yet, but some of its AI concepts could.
Meta is a leader in using AI to seamlessly translate languages, allowing anyone to understand what someone anywhere in the world is saying.
It's also working on a mixed-reality product that would allow AI to help train people to do new tasks. Some examples Meta gives are learning how to cook, play tennis, or create pottery. An application like this would have widespread uses and could be the holy grail the company sought in its Reality Labs division.
But Meta is still just an advertising company. Fortunately, this industry is looking to recover throughout 2024, and the third quarter was already a sign of that. Revenue rose 23% year over year, powering earnings-per-share growth of 168% to $4.39.
The stock might look somewhat expensive from a trailing price-to-earnings (P/E) basis, but its forward P/E is quite cheap.
META PE ratio (forward) data by YCharts.
A forward P/E of 22 is a great price for a company with the upside of Meta, and like UiPath and Adobe, it doesn't need its AI technologies to work out to be a great investment.
