If there’s one investment theme that’s hot right now, it’s artificial intelligence (AI). Thanks to the global interest in AI-powered chat platform ChatGPT, AI stocks are flying.
I already own a number of AI stocks in my portfolio including Nvidia, Alphabet, and Microsoft. However, there’s space for more. With that in mind, here are three stocks I’m looking at right now.
Oracle
One tech stock I’ve had on my watchlist for quite a while now is Oracle (NYSE: ORCL). It hasn’t received the same level of attention as other tech giants in recent years and I think it’s worth a closer look at present.
Oracle offers a range of AI services including pre-trained models that can be custom trained with an organisation’s own data, machine learning (ML) services that help data scientists build ML models, and AI apps for businesses. These services are used by some big names including credit data powerhouse Experian and the UK’s NHS.
Looking beyond the company’s AI exposure, what excites me here is the growth the company is generating in cloud computing. For the quarter ended 30 November, cloud revenues were up 43% year on year.
One issue to be aware of with Oracle is that it doesn’t have the strongest balance sheet around. At 30 November, it had borrowings of around $82bn. However, this is probably reflected in the valuation. Currently, the stock’s price-to-earnings (P/E) ratio is just 18.
All things considered, I think the stock looks quite interesting at the moment.
UnitedHealth
Another stock I’m looking at currently is American health insurance giant UnitedHealth Group (NYSE: UNH). I’ve noticed that this is a top holding in a number of AI investment funds.
UnitedHealth prides itself on being a leader in its industry when it comes to AI. In recent years, it has developed a centralised data platform that uses artificial intelligence to improve patient outcomes by predicting conditions and decreasing the cost of care. It also uses AI in its virtual assistant platform to collect and classify patient data and improve customer service levels.
UnitedHealth is another stock that looks to offer a bit of value right now. Currently, the forward-looking P/E ratio here is 19. That seems very reasonable to me given the company’s solid growth track record.
One risk, however, is competition. UnitedHealth operates in a very competitive industry.
IBM
Finally, I’m also looking at IBM (NYSE: IBM). It also has a lot of experience in artificial intelligence.
IBM has bought at least five AI companies since mid-2020 including Databand.ai, Turbonomic, and WDG Automation. As a result, it now has expertise in areas such as AI-powered automation, AI-based data analysis, and AI-based risk and compliance management.
One company it has already helped in this regard is Dutch bank ABN Amro. Here, it introduced a conversational AI assistant powered by IBM Watson technology so the bank can understand customer needs in real time.
Now, IBM hasn’t been a great investment over the last decade. That’s because the company has experienced growth challenges.
Analysts do expect the company’s top line to expand going forward, however. So, I’ll be keeping a close eye on the stock. The forward-looking P/E ratio here is just 14, which suggests there could be some value on offer.
