Artificial intelligence (AI) stocks have been some of the best investments to be holding in recent years. But you may wonder about the next big trend in AI, and which stocks might be poised to benefit the most from it.
Chipmaker Nvidia is at the forefront of all things AI these days. Its chips are used to help power the AI revolution. And the one trend that Nvidia sees emerging this year is "AI agents." Nvidia CEO Jensen Huang believes this is the year when agents will be deployed at significant scale. Agents can follow directions and do things like move a cursor and fill out a form, automating many simple tasks for users.
Three stocks which allow customers to utilize AI agents today include Microsoft (MSFT 0.34%), Salesforce (CRM 2.89%), and ServiceNow (NOW 7.97%). Here's a closer why they could benefit from this trend and why you might want to consider investing in these stocks right now.
NASDAQ: MSFT
Key Data Points
Microsoft
Tech giant Microsoft is already a big AI stock and one of the most valuable companies in the world, with a valuation north of $3 trillion. But its opportunities in AI are just getting warmed up.
Microsoft has already launched its AI assistant, Copilot, which is available in popular Office applications such as Word, Outlook, and Excel. And the company promises that you don't even have to be a developer to create your own agents through its Copilot Studio. The big advantage Microsoft has here is that its Office applications are used by businesses around the world, and this is a huge opportunity for the company to upsell its customers.
AI represents a promising growth opportunity for Microsoft, and CEO Satya Nadella says that the company is well on track to surpassing the $10 billion annual revenue run rate it expects from its AI business. And if that happens, it'll be the quickest that any of its businesses has hit that milestone.
While Microsoft's stock is trading at 35 times trailing earnings, it can still be a good buy for the long haul as the business looks poised to be a leader in AI.
NYSE: CRM
Key Data Points
Salesforce
Another company that's focusing heavily on agents is Salesforce. Its "Agentforce" can help provide support to both employees and customers. It can assist with booking meetings for sales reps and the agents can assist with answering product-related questions. Similar to Microsoft, it allows its users to create their own agents with a "low-code builder" or they can use pre-built agents.
Companies already have a lot of their data on Salesforce's customer relationship management software, making it a potentially smooth option to use Agentforce to tap into that existing information and to automate processes. The company's sales haven't been taking off and growth remains in the single digits, but AI agents could unlock a promising opportunity for Salesforce in the future.
At over 50 times earnings, this is a pricey stock to own, but that multiple comes down to 29 when looking at estimates for next year's profits. And in the longer run, the company may be an even better buy if demand for its AI agents takes off.
NYSE: NOW
Key Data Points
ServiceNow
Rounding out this list is ServiceNow, which is a tech company that helps businesses automate business processes, with AI agents being a natural extension of that. Through its Now platform, its AI agents can help collaborate and solve problems across a company's entire operations. Whereas Salesforce is primarily focused on sales and marketing, ServiceNow is focused more on IT service management.
CEO Bill McDermott sees a huge opportunity ahead for the company, noting in the company's October earnings release that, "the mandate to put AI to work for people represents a generational technology shift."
ServiceNow has been growing at a fast rate of more than 20% (best on this list) but investors will have to pay more of a premium for the growth stock -- it trades at a hefty 64 times next year's estimated earnings. But if the opportunity in AI agents proves to the big catalyst management expects it to be, the stock can still make for a great buy despite its high price tag.
