2 Top AI Stocks Ready for a Bull Run

Artificial Intelligence (AI) is one of the most surprising words in technology right now. Because of the complexity of AI, it is difficult to separate an impostor from a real creator.

The industry is expected to grow 20% annually until 2029 and reach more than $ 1 trillion in annual expenditures worldwide. Leading companies in AI and machine learning can capture this huge expense by helping their businesses grow and direct their stock to generate great returns for shareholders.

Here are two AI stocks that look ready to make a comeback in the next decade.

Alphabet: Many AI machines run in parallel.

Alphabet (GOOG 0.27%) (GOOGL 0.42%) Is the parent company of Google, YouTube and the Google Cloud platform. The tech giant is one of the world’s leading AI companies, using it to help find maps and other functions.

CEO Sundar Pichai has highlighted several Google searches on Alphabet’s recent earnings call, saying the company is using AI to bring “significant improvements to search” and that he Think AI is the next big revolution after mobile.

Here are some examples of how it can work in practice. With billions of pieces of information on Google Search, YouTube, and Google Maps, Alphabet can use AI to dramatically improve search results no matter where customers start their queries.

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This means that if you search Google for a specific tool fix, it will show you YouTube tutorials that you can play to find out what you need to do. As these AI models download more data, they will continue to improve search results, which will improve the Google customer experience.

Through Google Cloud, part of Alphabet’s cloud infrastructure, the company is selling its AI capabilities to other businesses. Companies of all sizes who want to use AI but do not have internal research capabilities (and very few do) can buy Google machine learning products through the cloud. That’s a big reason Google Cloud revenue grew 38% year-on-year last quarter.

With the stock down 34% this year, Alphabet has a market cap of $ 1.2 trillion. In the last 12 months, it generated $ 67 billion in net income, giving the stock a price-to-earnings ratio (P / E) of 17.9, which is lower than the market average. For a company with such an advantage in AI and a huge opportunity to expand its business this decade, now looks like a good time to acquire a stake in Alphabet.

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GOOG Net Income (TTM) Table

GOOG Net Income (TTM); Data by YCharts. TTM = followed by 12 months.

2. Ansys: Promoting innovation through simulation

Alphabet is a leader in AI for the Internet, but there are many companies working on AI for more physical applications such as semiconductors, economics, aerospace, and automotive. Enter Ansis (ANSS -0.51%)Is a global leader in simulation software for the Department of Research and Development.

Ansys has dozens of software products that cover many end markets, but all have one common goal: to simulate the real world in a multi-physical environment. “Multiphysics” is a broad term that means the copying of physical properties of the real world, such as electricity, heat, or stress, loaded on a product but in a simulation.

Together with other engineering software companies, Ansys helps companies such as Tesla And Rocket Laboratory Perform simulations for all their manufactured products in a realistic application environment, saving time and money with their research budget.

Engineering simulations require the massive computing power that Ansys is trying to improve through its AI research and machine learning. The company claims that AI can help with the speed and accuracy of these simulations, which makes sense since machine learning is generally just a big data issue.

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These developments not only help Ansys improve its product for customers, but also differentiate it from any software competitor by protecting it from competition.

Today Ansys has a market capitalization of $ 22 billion. In the last 12 months, it generated net income of $ 469 million, giving the stock a P / E of 47. It is more expensive than Alphabet, but with the huge growth opportunities that Ansys has in sectors such as semiconductors, space economy. And electric cars, I think the stock is still a great buy, even at today’s special prices.

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Suzanne Frey, CEO of Alphabet, is a board member of The Motley Fool. Brett Schafer is not listed in any of the listed stocks. Motley Fool positions and guides the alphabet (stock A), alphabet (stock C) and Tesla. Motley Fool Introduces ANSYS. Motley Fool has a demonstration principle.

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