Artificial intelligence (AI) is one of the most promising and disruptive technologies of the 21st century. It has the potential to transform various industries, such as healthcare, finance, education, and entertainment. AI also offers lucrative opportunities for investors who want to capitalize on the growth of this sector.
However, not all AI stocks are created equal. Some may have more competitive advantages, innovative products, or loyal customers than others. Therefore, it is important to do some research and analysis before investing in any AI stock.
Here are three AI stocks that may be worth a bet right now for a five-year hold. These companies have strong AI capabilities, solid financial performance, and attractive growth prospects.
Upstart Holdings (UPST)
Upstart Holdings (NASDAQ:UPST) is a leading online lending platform that uses AI to automate and optimize the loan approval process. The company claims that its AI models can reduce the default rate by 75% and increase the approval rate by 173% compared to traditional methods.
Upstart has been growing rapidly in the past few years, thanks to its diversified product portfolio, expanding partner network, and increasing borrower base. In the second quarter of 2023, the company reported a revenue of $194 million, up 1,018% year-over-year. It also achieved a positive net income of $37.3 million, compared to a net loss of $6 million in the same period last year.
Upstart’s stock has soared more than 600% since its IPO in December 2020, making it one of the best-performing IPOs of last year. The company has a market capitalization of about $12 billion as of September 12, 2023.
Upstart is well-positioned to benefit from the growing demand for online lending, especially in the post-pandemic era. The company expects to generate a revenue of $750 million in 2023, representing a growth of 258% from 2022. It also plans to expand into new markets, such as auto loans, mortgages, and personal loans.
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) is a leading semiconductor company that produces processors, graphics cards, and chipsets for various applications, such as gaming, cloud computing, and AI. The company has been gaining market share from its rivals, such as Intel and Nvidia, due to its superior product quality, performance, and innovation.
AMD is also making a big push into the AI chip market, which is expected to grow at a compound annual growth rate (CAGR) of 40% from 2020 to 2027. The company recently announced its MI300X AI chip, which is designed for large language models and generative AI. The chip boasts 192 gigabits of memory, surpassing Nvidia’s H100 with 120 gigabits.
AMD’s stock has risen more than 50% year-to-date, outperforming the S&P 500 index by a wide margin. The company has a market capitalization of about $130 billion as of September 12, 2023.
AMD is expected to continue its strong growth momentum in the coming years, driven by its robust product pipeline, increasing demand for its chips across various segments, and strategic acquisitions. The company expects to generate a revenue of $16.5 billion in 2023, representing a growth of 37% from 2022. It also expects to achieve a gross margin of 48%, an operating margin of 25%, and an earnings per share (EPS) of $2.80 in 2023.
C3.ai (AI)
C3.ai (NYSE:AI) is a leading provider of enterprise AI software that enables organizations to build, deploy, and operate AI applications at scale. The company’s software platform supports various use cases, such as predictive maintenance, fraud detection, customer engagement, and energy management.
C3.ai has been growing steadily in the past few years, thanks to its diversified customer base, strategic partnerships, and product innovation. In the fiscal year 2023, which ended on April 30th, the company reported a revenue of $183.1 million, up 17% year-over-year. It also reported an adjusted EBITDA of $13 million, compared to an adjusted EBITDA loss of $25.7 million in the previous fiscal year.
C3.ai’s stock has declined more than 60% since its IPO in December 2020, due to the high valuation expectations and the competitive pressure from other AI players. The company has a market capitalization of about $6 billion as of September 12th.
C3.ai is still an attractive investment opportunity for long-term investors who believe in the potential of enterprise AI. The company expects to generate a revenue of $235 million to $240 million in the fiscal year 2024, representing a growth of 28% to 31% from the fiscal year 2023. It also expects to achieve a positive free cash flow in the fiscal year 2024.