Machine learning is closely related to artificial intelligence. It is a branch thereof which enables computers to emulate human learning. The scientific field arose in the 1950s but has largely remained non-influential in the stock market until very recently.
Artificial intelligence has come to the fore over the past year making machine learning stocks incredibly valuable. Of course, when anything rises as rapidly as machine learning has, concerns of a bubble naturally arise.
Yet, the market is expected to grow from $26 billion in 2023 to $225 billion by 2030. That should provide enough evidence for investors who worry that the bubble could have burst at any moment. Instead, we’ve entered a new period in civilization that is impossible to fully grasp. Well that can seem scary at times, one thing is for sure: machine learning stocks continue to represent an excellent investment.
SoundHound AI (SOUN)
SoundHound AI (NASDAQ:SOUN) has emerged in 2024 as one of the most-known machine learning/AI stocks. It has also gone up and down following Nvidia’s earlier announcement that it had invested in the company.
Nvidia’s announcement that it had invested in SoundHound AI suddenly thrust the company into the spotlight. Share prices exploded and investors wondered what was the secret sauce behind its ascendance. The answer was that the company is a leader in speech and sound recognition with wide applicability from restaurants to in-car navigation.
It seemed like the company was destined to continue rising. The company’s growth is very impressive. Yet, its continues to produce losses. Questions about its valuation naturally arose in relation to a halo effect from Nvidia. Share prices fell as a result. Then, a few weeks ago, the company announced that it would undertake a stock sale aiming to raise $55 million.
The markets perceived that as an admission of weakness at the time. However, concerns have dissipated. Perhaps the markets understand that the company is young and requires cash to continue growing. The capital raise is by no means a death sentence.
Nvidia (NVDA)
The reason that Nvidia (NASDAQ:NVDA) stock has done so well over the past 12 months is demand. Sky-high demand for its chips have allowed the company to charge high prices resulting in rapid growth and incredible profits.
The higher demand is from major firms, the better. There’s strong news on that front which is the primary reason investors should believe in Nvidia at the moment. That news came in the form of a Meta Platforms (NASDAQ:META) announcement that it would increase capital expenditures this year to between $35 to $40 billion.
The company is ramping up its AI investment. Lower earnings expectations are a consequence due to the increased expenditures. While that has caused a temporary dip in META prices it is a boon to NVDA shares. Firstly, Meta is certain to invest heavily in Nvidia chips necessary for that buildout. That could cause competitors to increase their AI spend spiking demand for the machine learning giant’s stock yet again.
Palantir (PLTR)
Palantir (NYSE:PLTR) is one of the most noteworthy and deserving winners as AI stocks have grown rapidly. I say noteworthy because the company garners a lot of headline space. I say deserving because the firm has proven profitable much quicker than anticipated. The company has consistently proven to be profitable over the previous five quarters. It represents a rare mix of quick profitability, machine learning/AI exposure, and investor returns that is enviable.
For all of those reasons Palantir is a machine learning stock to double down on. But what exactly does machine learning look like at Palantir?
Any company that wishes to can set up a machine learning project through Palantir’s Foundry data platform. Technically-minded people who are interested in what that looks like can check out this link.
For investors worried that Palantir is overvalued, consider that its P/E ratio is actually lower now than it has been historically. Again, the company is now solidly profitable providing more reason to believe that investors should continue to be willing to pay ever higher amounts for those earnings.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) stock is extraordinarily well positioned at the moment. The company has a legitimate chance to become a dominant, if not the dominant, force in machine learning and artificial intelligence.
The primary reason to believe so is Amazon’s strong relationship with Anthropic. Anthropic is an exceptionally well regarded AI startup. Amazon just concluded its $4 billion investment into Anthropic.
Amazon is now the primary cloud provider of Anthropic. In return for the investment, Anthropic will use its machine learning models to train Amazon’s Trainium and Inferentia chips. Meanwhile, Amazon is spending $150 billion on a data center build out over the next 15 years. The combination of that AI investment and its strong relationship with Anthropic in machine learning positions Amazon to thrive as AI continues growing rapidly.
Amazon, like all the major tech firms, is investing heavily to build its own in-house AI chips. Don’t be surprised if in the future those chips become better suited to the needs of those companies than chips from providers such as Nvidia and AMD, for example.
Snowflake (SNOW)
Snowflake (NASDAQ:SNOW) currently contends that its artificial intelligence and machine learning model is better suited to large enterprises than those of its rivals.
It’s no secret that there’s an ongoing war to build the best large language model (LLM) for enterprise applications. The company just launched Snowflake Arctic. The company notes that the model is optimized for enterprise AI applications and contains no consumer-facing chatbot versions. The implication is that Snowflake Arctic’s pure play dedication to Enterprise AI will not suffer as resources are dedicated to consumers.
That’s one reason to believe in the machine learning firm and its stock. The other obvious factor is that Snowflake continues to boast impressive growth metrics. However, those strong growth metrics are overshadowed by continuing losses. Those continuing losses are particularly Troublesome given the current rate environment and waning hope for Fed rate cuts anytime soon.
While I don’t expect SNOW shares to spike upward anytime soon, there’s a great narrative in investing at the moment. Share prices are muted and have a strong chance to rebound in the future.
Microsoft (MSFT)
Any investor who pays attention to machine learning is well aware that Microsoft (NASDAQ:MSFT) stock is one of the best to own.
Microsoft is one of the biggest winners in the AI boom. Its early investment in OpenAI positions the company for long term success. The evidence continues to pile up suggesting exactly that. Microsoft has invested heavily in integrating artificial intelligence and machine learning across its Tech stack. It has manifested as growth in Cloud revenues at 23% in fiscal year 2024 quarter 3.
Microsoft offers enterprise scale machine learning models to companies of all sizes. The company also markets those machine learning models as being fully capable of supporting the life cycle of a given product and associated AI needs. In short, MSFT shares continue to be a strong choice for machine learning and artificial intelligence.
The recent earnings report provides evidence that now is the time to double down again even as broader questions about the future of AI monetization cause concern.
Google (GOOG,GOOGL)
Google (NASDAQ:GOOG, NASDAQ:GOOGL) is no different than the other big tech companies in that it offers full life cycle machine learning resources at enterprise scale. The company also offers machine learning curricula for developers, like its rivals. Those factors don’t necessarily differentiate it as a stock to invest in vis-a-vis its rivals.
However, Google’s recent earnings just might.
Cloud computing, YouTube, and internet search segments were all particularly strong for Google. The result was that revenues reached $80.5 billion in the quarter, beating expectations handedly.
Google ads were responsible for approximately 75% of those revenues. That’s particularly strong news as it suggests broad economic strength. The news sent Google’s shares higher by 12%.
Google has struggled in relation to artificial intelligence and machine learning from the perspective that it has been something of a laggard. However, the company has also ramped up its investments in AI and the most recent results suggest that it is working. It looks as though Google is back and those results alone are reason enough to double down on its shares.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.