Artificial intelligence (AI) stocks represent one of the fastest growing sectors on the market.
Buoyed by ChatGPT and other AI-focused chatbots and applications, investors everywhere are looking to take advantage of AI's meteoric rise.
However, AI is still very much in its early days in Australia. While several tech companies are involved in AI projects, there are very few pure-play AI stocks on the ASX.
From a global perspective, technology giants from the US are dominating the AI sector even if not all of these are solely dedicated to AI.
What are AI stocks?
AI stocks are public companies that are heavily involved in artificial intelligence-related projects. This might be through hardware manufacturing of key components like computer chips, research facilities or the distribution of AI tech.
AI stocks aren't necessarily solely dedicated to AI or even primarily focused on it. There are only a handful of pure-play AI stocks globally, and many of these are small or micro-cap start ups.
You'll notice that many of the big names in artificial intelligence are household name technology stocks. This is because these tech giants are investing in AI by partnering with smaller dedicated start ups or developing its uses within their products and services.
For instance, Microsoft is now recognised as a leading AI stock after it partnered with ChatGPT's parent company OpenAI.
ASX AI stocks
Australia has few tech stocks compared to other markets such as the US, and fewer still that are dedicated to artificial intelligence or machine learning.
The following are some tech stocks listed on the ASX that are working on AI projects.
One of Australia's most well known tech stocks, Appen provides data for machine learning and artificial intelligence.
Its partners and collaborators include NVIDIA, Salesforce and Microsoft Azure. It is also working on several key AI projects such as a new suite of language model data products and a partnership with new AI company Reka AI to combine Appen's data services with Reka's proprietary language models.
BrainChip Holdings might be the most pureplay AI stock on the ASX.
It develops both software and hardware for artificial intelligence (AI) and machine learning applications for companies globally.
The company primarily focuses on the development of the Akida Neuromorphic Processor to provide ultra-low power and fast AI Edge Network for vision, audio, olfactory, and smart transducer applications.
Dubber is an Australian company that provides call recording and voice intelligence cloud solutions worldwide.
It offers several applications including Dubber You, a tool to search, play, edit, organise, and share conversations from any device. It also offers Dubber Compliance for compliance teams and managers and Voice Intelligence Cloud platform.
Dubber's clients include enterprises, small and medium businesses, financial services, government, education, healthcare, and legal sectors, as well as for service and solution providers.
Crowd Media Holdings sells information, entertainment, and content and utility services for mobile phones and tablets in Australasia, Europe, Latin America, and internationally.
Crowd Media’s AI-driven Q&A technology is unique in that it combines answers from both AI and real humans.
Global AI stocks
These are some of the most well-known global companies that are making big moves in artificial intelligence.
Of course, you'll have heard of Amazon. It powers the Alexa-enabled devices in your home that turns on your lights, sets your alarms and notifies you of what's being delivered. It's more sophisticated than many even understand as it can recognise who it's talking to and even if you're whispering.
On the Amazon site, AI determines what adverts to show you and what products you may be interested in based on your previous purchases (although it believes that my slow cooker was the first in a collection of slow cookers).
There's little doubt that Amazon will grow its artificial intelligence even further beyond where it is now.
Microsoft has appeared as a major player in the AI space thanks to its partnership with OpenAI, the firm behind AI chatbot ChatGPT.
Using ChatGPT technology, the tech giant has launched its own chatbot Bing Chat and is integrating AI in several projects, including its Microsoft 365 Azure cloud and other software applications.
You probably know Alphabet by its child's name, Google. Of course, Google is an amazing and revolutionary search engine that's even been turned into a verb (a rare accomplishment also awarded to FaceTime and Hoover).
Alphabet is aiming to make its AI systems accessible to everyone under an open-source licence. It is building AI into its search function as well as its advertising system. Autonomous-driving-technology company Waymo is a subsidiary of Alphabet.
NVIDIA has been a way for investors to get access to AI for quite some time. It creates technology that is central to AI. Its graphics processing unit (GPU) helps to power autonomous vehicles, cloud computing and high-performance gaming. These are areas that require deep learning.
NVIDIA is partnered with Sony, and in January 2020, it unveiled a car at the Consumer Electronics Show in Las Vegas.
International Business Machines (IBM) sells AI tool kits for healthcare, cybersecurity, financial services, supply chain, video and customer services. It's well known for its chess computer "Deep Blue" beating chess grandmaster Garry Kasparov at a game of chess in 1997.
It aims to infuse AI into everything we do to help make more accurate predictions, automate decisions and processes and optimise employee time. It's got "Watson", which brings AI tools and apps together with data. There are loads of pre-built Watson applications such as the Watson assistant and Watson Discovery, or you can use Watson APIs such as visual recognition, text to speech or personality insights.
Apple has a ton of AI stuff going on. We've been asking Siri to send texts, do quick maths sums and set our alarms for years. This feature makes use of machine learning and is the most obvious use of AI, but there are loads of examples of AI in the background.
Say you're drawing with the Apple Pencil and you lean your palm against the screen. Machine learning is what lets the iPad knows not to scribble in the area where your palm is rested.
Then, in the photos app, the iPhone sorts your photos into categories and can recognise faces in photographs and sort them. Assign your niece's name to a photograph of her and you'll be able to search the name in the app to find every photo you've got of her.
Pure-play AI stocks
Some stocks that are dedicated to artificial intelligence include:
C3.ai (NYSE: AI)
BrainChip (ASX: BRN)
BigBear.ai (NYSE: BBAI)
SoundHound (NASDAQ: SOUN)
AI ETFs on the ASX
If you'd prefer to invest in a whole portfolio of companies involved in artificial intelligence, you could invest in an AI themed ETF.
This is a safer choice than investing in 1 or 2 companies because if any company fails they're supported by others in the portfolio. Here are 3 ASX ETFs that have exposure to artificial intelligence:
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Kylie Purcell is the senior investments editor and analyst at Finder. She has completed a Certificate of Securities and Managed Investments (RG146) and specialises in investment products including online brokers, robo-advisors, stocks and ETFs.
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