Investing in Machine Learning Stocks

Machine learning stocks represent companies specializing in a branch of artificial intelligence (AI) that enables computers to emulate how humans learn and adapt by using data and experience. While it may seem like the stuff of science fiction, machine learning is hardly new. Early work began in the late 1950s, and the coining of the term "machine learning" is credited to IBM (IBM +7.98%) scientist Arthur Samuel.

In the early 1960s, a machine learning-equipped computer beat researchers at a game of checkers. Today, machine learning systems are tackling far more complex problems. On a daily basis, you benefit from machine learning when you do an internet search on Alphabet's (GOOGL +2.73%)(GOOG +2.70%) Google or get a recommended television show or movie from Netflix (NFLX -1.70%).

Businesses of all kinds are trying to apply machine learning to their operations. According to researcher Statista, global spending on machine learning will total about $113 billion in 2025 and rise at a compound annual growth rate of almost 35% until 2030, when the market is projected to reach $503 billion. Given those projections, investing in companies with exposure to machine learning could yield rich rewards.

Nvidia's (NVDA +2.26%) hardware made a name for itself in powering high-end video game graphics, but in recent years, the company's bet on AI and machine learning has started to pay off. Machines require massive amounts of information to learn, and Nvidia's graphics processing units (GPUs) are well suited to the task.

There is a changing of the guard in the semiconductor industry, and Nvidia is quickly emerging as the technological leader in the space. It's powering high-end computing with its GPUs that accelerate the production of data centers and training of AI models. In the first quarter of fiscal 2026, Nvidia reported revenue of $39.1 billion for its data center business, a 73% year-over-year increase.

The semiconductor company is also continually researching next-gen circuitry. It provides machine learning and other AI customers with an extensive software library to help with the deployment of their technologies. Its customers include automakers developing self-driving vehicles, biotech researchers searching for cures for diseases, and retailers seeking to improve their supply chains. The company consistently generates operating profit margins well into double-digit percentages while spending billions of dollars every year on research and development. 

2. Tesla

Tesla's (TSLA -3.36%) work on self-driving cars uses machine learning. Although self-driving cars have become controversial, they are one of the most exciting developments in machine learning. Emulating the many split-second decisions a human driver makes is unfathomably complex, but Tesla is steadily improving its Autopilot and Full Self-Driving (which isn't fully self-driving, at least not yet) vehicles. The electric vehicle maker regularly releases updates for its machine-learning-enabled vehicles via cloud-based software. In the fourth quarter of 2024, Tesla launched its training cluster Cortex, which helped facilitate the development of Full Self-Driving version 13, and there's speculation that the company is developing Cortex 2.0 to help train the Optimus humanoid robots as well as Full Self-Driving.

Tesla collects video and data from Tesla owners to continuously improve its machine learning algorithms. Additionally, the company has applied its expertise on the software front to the global power grid, virtually managing and automating storage for use across its own network of charging stations, as well as selling the power to local electric utilities and other businesses that need power.

Further demonstrating its machine learning prowess, Tesla launched its first commercial robotaxi service with paying customers in the second quarter of 2025, and its targeting expanding the service for half the U.S. population before 2025 ends, subject to regulatory approvals.

The stock trades for a steep premium, but investors are betting the EV company will be able to use its lead in AI and machine learning to disrupt the energy and transportation status quo for years to come.

4. ServiceNow

ServiceNow (NOW -1.03%) is a cloud computing platform powered in part by machine learning. As a provider of workflow automation software, the company uses machine learning to help its customers eliminate monotonous and redundant tasks. This ensures that employees are spending more time working rather than discussing how to do work.

ServiceNow's use of machine learning also means that its capabilities are always improving. The longer the platform operates using machine learning, the better the company gets at predicting how workflows can be improved and tasks flagged or prioritized. Although it's not a household name, ServiceNow is deeply engaged with machine learning and is changing work, software development, and customer relationship management.  

ServiceNow is a large software firm at this point, but it's still expanding revenue at a rate that is better than 20% annually. And it's generating strong free cash flow, too. In 2024, ServiceNow reported a 31.5% free cash flow margin, and management projects the figure will expand to 32% in 2025. This applied machine learning company still has a long runway ahead.

AI and machine learning require massive amounts of digital data to be stored and processed. Snowflake's (SNOW +1.88%) cloud-based platform was built for precisely this need as organizations around the world try to figure out how to make the best use of their new cloud computing capabilities.

Snowflake calls its platform the "data cloud." Companies can use the software for a near-endless number of applications, including analytics and machine learning algorithm training. The business has been in hypergrowth mode ever since its 2021 initial public offering (IPO) as it broadens relationships with existing customers, illustrating the attractiveness of its offerings. During its first quarter 2026 financial results, for instance, Snowflake reported a 124% net revenue retention rate.

Despite the company's operational success, the stock has fallen sharply since then, due to an excessive valuation when it went public and the ensuing bear market. However, Snowflake presents an intriguing investment possibility today.

The business is now profitable as measured by free cash flow and expects to continue expanding at a rapid pace for the duration of the 2020s. However, as with any growth investment, Snowflake will likely be a wild ride but has massive potential as AI and machine learning grow in importance.

6. CrowdStrike Holdings

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