Three Best AI Stocks to Monitor in July 2019
Whatever the next big technology trend will be - VR, driverless vehicles, delivery drones, etc. - it will almost certainly incorporate artificial intelligence on a large level. In fact, AI is estimated to grow the global economy by $13 trillion USD by the year 2030, according to the McKinsey Global Institute.
Bearing this in mind, three Motley Fool contributors picked three companies that they believe will reap the most benefit from this growth: Amazon (NASDAQ:AMZN), Okta (NASDAQ:OKTA) and Accenture (NYSE:ACN).
There are three main reasons you should watch Amazon closely.
Firstly, Amazon’s Alexa voice assistant is letting the firm learn more information about its customers than was previously possible using AI. Each time a user asks Alexa to play a song, order Chinese, or buy more toilet paper, Amazon learns more about what they want and can use that data to sell more goods and services on its website.
Secondly, Amazon has integrated AI services, such as facial recognition and speech/text translation, into Amazon Web Services (AWS), which is the number one cloud computing platform and Amazon’s biggest cash cow. Thus, as AI services become more significant to developers, Amazon will likely reap a large benefit.
Thirdly, Amazon uses machine learning (a type of AI) to assist in deciding what deals to offer, what products to promote and the quantity of demand for a product.
For these reasons, an investor betting on AI from multiple points of view should have Amazon at the top of their list.
The expansion of AI will need a significant increase in computing and storage ability. Due to this, firms that provide cloud computing and access services will significantly gain from this development.
Okta provides identity management services for internal and third-party applications, allowing firms to control who is on their networks. In doing so, the company has found an enthusiastic reception. In Quarter 1, the firm announced a 50% year-on-year revenue increase (of which 94% is highly sticky subscription revenue). It remains unprofitable under generally accepted accounting principles, but free cash flow grew to $13.2 million USD last quarter, from a $1.6 million USD loss in the previous year’s quarter.
Perhaps more important is how Okta is growing its revenue. In the first quarter, it revealed its net follar retention for the trailing 12-month period was 119% (i.e. it grew revenue from existing customers through upgrades more than it lost through downgrades and cancellations). This means once firms get the service, they are more likely to upgrade than leave, which means Okta is posed to deepen present relationships while adding new customers while the AI wave takes hold.
The consulting and outsourcing titan Accenture is implementing AI into nearly everything it does, from customer experience customisation to inventory management. It is even building frameworks to guide other firms in using AI technologies in a responsible fashion.
It’s difficult to locate another firm in the consulting sector that is on par with Accenture’s sales and cash flow growth over the previous five years. Thus, it’s not surprising to find it demolishing its closest competitors with a 146% stock price increase in five years. It announced great third-quarter results at the conclusion of June 2019, laying the groundwork for rapid sales increases and solid earnings in the fourth-quarter. It is likely that Accenture’s will share far more popular opinion in the near future; thus, now may be the perfect time to buy stock in this quietly booming rocket.