Following the viral release of the AI-powered chatbot ChatGPT, AI plays have received extensive interest from users and investors.
To give you an indication of how successful the launch was, ChatGPT is now the fastest consumer app to reach 100 million active users, having done it in just two months.
As a result of the company’s spectacular ascent to fame, privately held ChatGPT inventor OpenAI has received more than $10 billion in funding from Microsoft MSFT.
For years, companies like Amazon have been deploying AI behind the scenes. Amazon, for example, uses AI on its back end to boost sales on its e-commerce platform (if you add a table to your shopping cart, it will suggest chairs). Microsoft isn’t the only publicly traded corporation making big bets in artificial intelligence to compensate.
ChatGPT’s rise has demonstrated not only the power and diversity of AI technology, but also its threat to current tech giants.
AI technology has the potential to not only disrupt technology, but also to affect investments.
The sudden awakening has prompted internet giants such as Alphabet, to take notice and react. Alphabet announced a $300 million investment in AI start-up Anthropic on Friday. Meanwhile, International Business Machines IBM has been on a buying binge of its own, attempting to expand the firm’s AI presence in recent months by acquiring a handful of small AI-centric startups.
Can Artificial Intelligence Move the Needle?
Though the new investments by the dominant tech players are significant in terms of dollars, they are unlikely to move the needle in the short term for a company like Alphabet, which has a market capitalization of more than $1 trillion, or Microsoft, which has a market capitalization of nearly $2 trillion.
Because technological developments in the sector are still relatively new, and many companies are privately held and tiny in size, investors have few options for AI stocks. Fortunately, three public firms that have recently IPOed, and are pure plays on developing technologies are:
C3.ai is a corporate AI software supplier with the goal of developing, deploying and operating large-scale AI, predictive analytics, and IoT applications. The stock’s performance has been abysmal since it went public.
AI peaked at $180 on its third week of trading in 2020, only to plummet below $10 the following year.
However, recent AI buzz, increased revenue, and a narrower-than-expected loss in the company’s most recent earnings report has pushed shares upward and changed the stock’s character. On tremendous volume, the stock has increased by more than 100% in the last three months.
Surprisingly, more shares changed hands last week than during the IPO week.
Though C3 has yet to make a profit as a public business, its income has been increasing for several quarters, and the company has signed up some significant clients, including the United States Air Force, utility big Consolidated Edison Inc, and Koch Industries.
At the moment, avoid C3 shares since they are overpriced. Nonetheless, investors should monitor the stock in the coming months. C3 is one of the few AI plays available to public investors, and recent share buying implies that investors are expecting a recovery.
Veritone is a company that operates a cloud-based digital asset management platform focusing on leveraging AI technology and its benefits for clients in the media, politics, legal, and law enforcement industries.
Veritone’s expertise in digital asset management has drawn several notable clients, including the Los Angeles Chargers sports team.
The Chargers have video content dating back more than 60 years. Organizing such a large volume of content can be difficult and expensive, requiring multiple people and a large budget.
That is until they used the Veritone platform. Veritone’s solution, like Google, organizes, saves, and makes content searchable.
Veritone, like C3, has taken investors on a wild journey since going public in 2017. Having said that, the stock has been on the rise and has piqued the interest of investors looking for ai plays in recent weeks.
Bigbear AI Holdings, Inc.
BBAI is an artificial intelligence, machine learning, cloud-based analytics, and cyber engineering solutions provider.
Bigbear intends to use AI to provide its clients with a better understanding of their present data, greater predictability of future events, and “pathways to manage shifting conditions.”
BBAI, like Veritone and C3, earns money from a variety of businesses, including government (intelligence analysis), healthcare, and manufacturing. BBAI shares have risen dramatically in recent weeks, rising from a low of $0.58 to a high of about $6.
However, the company is small, unprofitable, and could be very volatile.
For the time being, the present AI craze resembles the “blockchain mania” of a few years ago. During this time, every firm with the word “blockchain” in its name skyrocketed as Wall Street’s speculative juices began to flow.
To capitalize on the excitement, Long Island Iced Tea Corp changed their name to “Long Blockchain Corp” in 2017.
In the end, current earnings power and future earnings runway became more important with blockchain stocks.
The above-mentioned equities are likely to have benefited from hype, minor floats, and speculation in recent weeks.
Nonetheless, it never hurts to start investigating a young, inventive field like AI. Patience is essential for pure ai plays.
Secondary beneficiaries like Nvidia NVDA and Advanced Micro Devices AMD presently offer better reward-to-risk ratios.
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