Three AI Stocks to Consider for Potential Investment Growth
ICARO Media Group
With the increasing prevalence of artificial intelligence (AI) in various industries, investors are advised to consider adding exposure to this trend. While there are numerous AI companies to choose from, it may be worth exploring established players in the market that have demonstrated their potential for growth. Here are three stocks to consider for investors looking to gain exposure to the AI sector.
One notable tech investing firm that has made successful picks is Cathie Wood's Ark Invest. Among its successful investments is UiPath, a company specializing in robotic process automation (RPA). Though RPA is not AI in itself, UiPath integrates AI into its platform to enhance its versatility by extracting information and automating tasks. UiPath's strong performance is evident in its third-quarter fiscal results of 2024, with annual recurring revenue (ARR) increasing by 24% to $1.38 billion. Moreover, UiPath is attractively valued at just 11 times sales, making it an appealing investment opportunity.
Adobe, a mature company known for its creative design suite and e-commerce tools, is also venturing into the realm of AI. Its product, Adobe Firefly, utilizes generative AI to generate images based on simple text inputs. This technology allows for quick image modifications, enabling more targeted advertisements or fresh website content. In the fourth quarter of fiscal 2023, Adobe reported a 12% year-over-year growth in revenue to $5.1 billion and a 29% rise in earnings per share. Despite trading at 34 times forward earnings, Adobe has consistently delivered market-beating returns, making it an attractive long-term investment.
Formerly known as Facebook, Meta Platforms is seeking to diversify its revenue streams beyond advertising by exploring AI concepts. One of its notable AI applications involves seamless language translation, enabling users to understand conversations from anywhere in the world. Additionally, Meta is developing a mixed-reality product that utilizes AI to assist in training individuals for new tasks. Although it remains primarily an advertising company, Meta's revenue in the third quarter of 2024 increased by 23% year over year, accompanied by a significant 168% growth in earnings per share to $4.39. Despite its trailing price-to-earnings (P/E) ratio looking relatively high, Meta's forward P/E of 22 presents a fair valuation for a company with promising potential.
Investors interested in AI stocks with growth potential can consider adding UiPath, Adobe, and Meta Platforms to their portfolios. While the success of their AI technologies is not a prerequisite for delivering substantial returns, these companies have established positions in their respective industries and offer promising prospects for investors seeking exposure to the AI trend.
Please note that the information provided is based on the opinions expressed in the article and does not necessarily reflect The Motley Fool's Premium Investing Services.