Cloud AI combines the power of artificial intelligence with the power of cloud computing. That combination offers significant benefits to businesses of all sizes. Those competitive advantages make cloud AI stocks potentially much more valuable.
Better, research firms believe that compound annual growth rates over the next 5 years will approach 40% for cloud AI. Those projections are a strong signal there is much more growth to come. That being said, here are some of the top AI tech stocks to consider.
IBM (IBM)
One of the top AI tech stocks to consider is IBM (NYSE:IBM), which many investors believe is an underappreciated AI stock. That was the market perception of the company’s earnings release at the end of January.
The reason the markets responded so positively in late January was simple: IBM reported that its book of business for AI workloads grew substantially. In fact, its book of business doubled on a sequential basis signaling that those who had previously ignored it should continue to do so at their own peril.
Further, IBM projected that revenue would grow at a rate that is potentially double what Wall Street had been expecting. The company is flush with cash that will allow it to pursue that growth and other avenues. Investors should consider IBM for its newfound positioning as a formidable AI name but also for the income it provides through its dividend. It’s a potent mix of growth potential and income.
Palantir (PLTR)
Palantir (NYSE:PLTR) just recorded its fifth consecutive quarter of GAAP profitability. Palantir is arguably known more for its public side business than its commercial business. While government revenues continue to make up the majority of the company’s business, its commercial side is quickly closing the gap. Palantir’s government revenues reached $324 million in Q4, growing by 11%. Commercial revenues weren’t far behind – at $284 million – and grew by 32%.
The company continues to show the market that it is much more than a right leaning company destined to derive its business from the government primarily. Instead, Palantir is proving that it is every bit as capable as other AI firms in serving the commercial side.
Alibaba (BABA)
Now is the time for bottom fishers to consider Alibaba (NYSE:BABA), another one of the top AI tech stocks to own.
Alibaba’s recent performance is not as bad as it may appear. Yes, competitors including PDD Holdings (NASDAQ:PDD) continue to threaten Alibaba. And yes, 5% sales growth in the December quarter was slightly lower than expected. Net income also dropped precipitously. However, Alibaba is sending signals of confidence overall regarding its cash positioning. The company concurrently announced a $25 billion share repurchase program.
So, there are plenty of positive signals for investors willing to take a contrarian position at the moment. Beyond that, investors also need to consider that Alibaba Remains the dominant competitor in China’s cloud market. The company maintains a near 40% market share that dwarfs its next closest competitors.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) is the leader in the cloud space thanks to its dominant Amazon web services (AWS). However, when it comes to cloud AI, Amazon continues to be a step behind its competition. However, analysts believe that Amazon is roughly six months behind its competitors.
With regards to earnings, Amazon’s revenues and operating margins beat consensus estimates by a wider margin than either of those chief competitors. Many pundits continue to worry that Amazon will watch its massive AI Cloud opportunity slip through its fingers resulting in a weaker performance. That simply hasn’t been the case thus far.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) released its Bard AI chatbot shortly after Microsoft released its chatbot. Better, the company continues to invest heavily into AI to improve search, YouTube, and Cloud. Plus, the company continues to grow, as seen with its double-digit growth on a top-line basis in Q4.
Cisco (CSCO)
Cisco (NASDAQ:CSCO) will continue to be one of the better stocks to invest in for those concerned with security and stability.
The company is continuing to invest heavily in building for the AI Cloud cybersecurity era. Enterprises of all sizes are worried about the security risk that AI poses to their businesses. Thus, they continue to invest heavily in securing their networks. That is one of the areas in which Cisco Systems excels. it’s also going to continue to be an ongoing area of opportunity for growth.Cisco Systems is one of the most established It networking firms overall.
The company continues to release products and services tailored to that opportunity. In early February Cisco Systems unveiled its ‘Identity Intelligence’ product.
It’s clear that Cisco Systems seeks to grow that opportunity and will continue to be a strong player in the cyber security area. Beyond that, Cisco Systems stock is a stable choice overall for investors. It includes a respectable dividend yielding 3.1%. The income it provides is yet another reason to consider investing.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) has taken advantage of the emergence of artificial intelligence as much as any other firm. The company continues to invest heavily in the application of AI to its Azure Cloud business.
It also beat earnings expectations, with its cloud segment accounting for $33.7 billion in revenues during the most recent quarter. Those revenues were $1.5 billion higher than anticipated, another indication that its AI Cloud is very strong.
Microsoft is applying AI throughout its business. One of the major concerns at this point is that of a.com era style collapse. investors worry that valuations have gotten out of control yet Microsoft is proving that it can monetize AI. There are some concerns that enterprises remain unwilling to spend $30 per head for its CoPilot AI Integrations in its Office products. Microsoft isn’t perfect but I’d argue that the company has done just about as good as anyone could expect in regard to its adoption of AI at this point.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.