The Biggest AI Stocks to Trade Right Now

With all the hype, you might be wondering which are the best AI stocks right now. Only two months after its debut, OpenAI's highly popular chatbot ‘ChatGPT’ has reached 100 million active monthly users, according to a study by UBS. As AI chatbots continue to advance and become better equipped to handle large numbers of inquiries, the costs associated with them will decrease, making widespread adoption possible for a range of sectors and tasks. Equally, as people find more uses for AI and investor sentiment gathers momentum it's hard not to take notice when players like Microsoft are investing $10 billion sums into the fledgling sector.

In this article, we will unpack AI stock forecasts overall, the biggest AI companies in the news right now and how to invest in AI stocks.

The General AI Stock Forecast

Artificial intelligence is an extremely rapid growing market with a predicted market size of $1.5 trillion by 2030 according to pwc. The market is expected to grow with a CAGR of 38.1% from 2022 to 2030. In particular, the Asia Pacific region is predicted to grow at the fastest rate with massive investments in AI coming from China. Deep learning has dominated the technology sector with 39% market share in 2022, while the software segment has captured over 41% of the market share in 2022.

AI is expected to drive greater product variety and personalisation, making products more attractive and affordable through efficiency gains on both the consumer and producer end. PwC also predicted that China will experience a 26% boost to its GDP by 2030 due to AI, while North America is expected to experience a 14.5% boost, equivalent to a total of $10.7 trillion in growth from efficiency alone. AI is here and it is here to stay – making things faster and smarter across the entire economy. We are seeing the biggest waves being made in the chatbot space right now, but it seems that that we are only scratching the surface of the benefits that AI can provide to worldwide business and as a result, potential upside for investors as well.

Clash of the Titans: Microsoft and Google

When it comes to the biggest AI companies right now, the big boys are certainly out to play. The AI arms race between Microsoft and Google is on and this is only the beginning. With ChatGPT threatening Google’s over 20-year dominance in the search engine space, AI is creating an unprecedented threat to a historically uncompetitive sector. Microsoft's investment in ChatGPT technology is expected to massively boost its ability to compete against Google, but the race is far from over. Both companies are investing heavily in AI technology, and the competition between them will continue to drive innovation and improvements in the field.

Microsoft has been making significant investments in artificial intelligence. The most recent being $10 billion into chatbot software with the intention to overhaul its search engine ‘Bing’. New updates will apparently incorporate OpenAI's ChatGPT technology into the search engine to create new holistically generated results. Microsoft CEO, Satya Nadella, has said that this technology will reshape almost every software category on the market and has the potential to revolutionise the nature of online searches completely. Upon update, Bing will now respond to search queries with more detailed answers and users will be able to chat with the bot to tailor their queries to more effectively deliver information.

Elsewhere, Google recently revealed its own AI-powered chatbot, Bard, which is based on a large language AI model that is fed vast amounts of text from the internet to generate responses to text-based prompts. However, the release of Bard got off to an embarrassing start when the chatbot gave a wrong answer in a promotional video, causing investors to sell off over $100bn from the value of Google's parent company, Alphabet. As Alphabet defends against the threat of ChatGPT, we can only expect the cost of doing so to be increasingly substantial.

Even so, if it is successful in protecting itself against Microsoft with revenue far beyond the industry average the stock should still bounce back. Currently Alphabet is a cheaper buy than Microsoft for investors, with a price-to-earnings ratio of 22 compared to Microsoft's 28. The difference in the price-to-earnings ratios appears to reflect the declining revenue growth and reduced profits of Alphabet, as macroeconomic challenges have impacted advertising demand. It's anyone’s game now, but with Microsoft's diversified portfolio of products it is far less susceptible to disruption and competition compared to Alphabet if it were to lose its search engine stranglehold.

Smaller AI Players to Look Out For

Baidu

One company making smaller waves is a Chinese company called Baidu. Baidu saw a significant rise in its stock price with an increase of 13.48% in early February. This surge came after the company announced its plans to launch its own artificial intelligence chatbot named "Ernie bot" or "Wenxin Yiyan" in Chinese. The internal testing of the chatbot is expected to be completed in March before its public launch. The stock reached its highest level since mid-February 2022, hitting HKD 159.80 per share. Baidu's AI chatbot project comes in the wake of the rising popularity of Microsoft-backed ChatGPT and Google's recently announced Bard A.I. "Ernie" stands for "Enhanced Representation through Knowledge Integration" and is described as a large language model that integrates extensive knowledge with massive data to produce exceptional understanding and generation capabilities.

C3.ai

Another company to look out for in the AI space is C3.ai. C3.ai stands out as one of the stock market's most exciting pure-play AI companies with AI being its focus, unlike other tech giants or chip makers that have some AI involvement. As a SaaS company, C3.ai offers software that enables companies to deploy AI applications, aiming to speed up software development, minimize cost and risk, and provide versatile applications. For instance, the US Air Force uses C3 AI for predicting aircraft system failures, finding spare parts, and boosting mission capability, while Engie, a European utility firm, uses it for analysing energy consumption and cutting energy expenses.

C3.ai positions itself as the first mover in its industry and claims to have no direct competition in the end-to-end enterprise AI development platform space. This exclusive positioning could prove to be a long-term benefit, although the AI SaaS market is continually evolving and may draw competition from big cloud providers such as Amazon or Microsoft in the future.

How to Invest in AI Stocks

As AI dominates the news, stocks related to artificial intelligence and its applications are becoming attractive opportunities for investors. However, as with all financial decisions traders should exercise careful consideration and research before making trading decisions. Traders can invest in AI through either individual AI stocks or exchange-traded funds (ETFs) that focus on companies involved in AI and technology. AI based stocks can be researched and purchased on stock market platforms such as markets.com who supports stock CFDs trading along with the offering of live news and insights as you trade. It's important to consider performance indicators such as a company's financial performance, market trends, and future growth potential before making an investment. Keeping up with industry news and developments can also provide valuable insights into the AI market.