By Conor MacNeil  |  Published July 7, 2023  ✔️Reviewed by Rob Koyfman

AI companies are revolutionizing the tech scene. They’re transforming everything from businesses to global markets. Bridget Engle from The Bank of New York Mellon Corporation captured the excitement. Speaking at a Morgan Stanley event, she compared today’s AI breakthroughs, like ChatGPT, to the early days of the internet. She said, “Its impact might be as huge as the internet’s, especially for finance and markets.” Interested in AI stocks? Check out the list of the best AI stocks by Koyfin.

There is an abundance of options for investors looking to find opportunities in AI, making it a potential goldmine for those scouting the best AI stocks. These range from investing in companies leading the charge in AI hardware innovation to those focused on creating wide-ranging AI-driven solutions. Alternatively, you could consider businesses that harness AI to enhance their products, marketing strategies, or operational efficiencies. Each avenue offers distinct opportunities in the fast-evolving AI market.

*Data as of August 11, 2023.

Microsoft is diving deep into AI, as CEO Satya Nadella pointed out in the Q3 2023 earnings call. They’re seeing growth with Azure OpenAI Service, which includes models like ChatGPT and GPT-4, now serving over 2,500 customers. Nadella emphasized the company’s AI advancements, saying every app now has AI at its core. Looking ahead, he noted the company’s plan to roll out unique AI features.

In a special call on June 13, 2023, Natasha Crampton expressed Microsoft’s strong footing in AI, remarking, “Microsoft is poised to lead in AI. We’ve invested time and resources to build and use AI responsibly.” Amy Hood added to the optimism, suggesting their AI business could be the fastest to hit $10 billion in the company’s history.

Microsoft recognizes a massive opportunity in AI and is strategically investing in it, as reflected in its capital expenditures (CapEx). In 2022, the company’s CapEx rose by 15.8% to reach $23.8B, while R&D expenses amounted to $24.5B, marking an 18.32% increase from 2021. James Scott further underscored this sentiment, stating, “we feel like there’s such a gigantic opportunity ahead of us, and that there’s going to be such a big return on that invested capital.”

Key Investment Insights for Microsoft Corp. (MSFT):

Google, part of Alphabet Inc., is advancing its search capabilities with the new AI feature, the Search Generative Experience (SGE). Unlike models like ChatGPT or Bard, SGE offers straightforward answers from various sources. CFO Ruth Porat mentioned in Alphabet’s Q1 2023 Earnings Call that they are “deeply invested in” another AI project, DeepMind.

Sundar Pichai, an Alphabet executive, emphasized during the call: “As we continue to bring AI to our products, our AI principles and the highest standards of information integrity remain at the core of all our work.” This focus on AI has significant financial implications.

In 2022, Alphabet’s R&D expenses reached $39.5B, a 25.15% jump from 2021. Their CapEx also grew by 28% to $31.5B. Porat predicts that 2023’s capital spending will be “modestly higher,” showcasing their continued AI investment.

Key Investment Insights for Alphabet Inc. (GOOGL):

Amazon.com, Inc. is a dominant force in AI, especially through its cloud service, Amazon Web Services (AWS). AWS has a market share nearly matching the combined shares of its closest competitors, Microsoft’s Azure and Google Cloud. One of Amazon’s notable AI projects is CodeWhisperer. It turns natural language into code. During the Q1 2023 Earnings Call, Amazon’s Executive, Andrew Jassy, said this about it: “how much more productive developers are going to be and what they’re going to spend their time on instead of rewriting code…I think it’s a big deal.” Amazon also creates AI chips, like the Inferentia chip, powering Alexa and cutting dependence on Nvidia.

Regarding their AI investment, another Amazon Executive, Brian Olsavsky, mentioned on the same call: “continuing to invest in infrastructure to support AWS customer needs, including investments to support LLMs and generative AI”. Financially, Amazon’s 2022 CapEx grew by 5.3% to $58.3B, and R&D expenses jumped by 30.62% to $73.2B.

Key Investment Insights for Amazon.com, Inc. (AMZN):

NVIDIA, renowned for its cutting-edge GPUs, is expanding its offerings to power more AI platforms. As NVIDIA’s Ian Buck said at Rosenblatt’s Technology Summit, “We build CPUs, GPUs, DPUs and work on InfiniBand and Ethernet.”

One standout project is InfiniBand, a rapid data transfer tech essential for large-scale AI. Gilad Shainer mentioned at a Piper Sandler Webinar that InfiniBand is the “gold standard for large-scale AI,” noting that its revenue tripled.

On the financial side, CEO Jensen Huang announced that the company’s CapEx, which surged by 88.8% to reach $1.8 billion in 2022, ‘will increasingly focus on generative AI and accelerated computing infrastructure.’ R&D expenses also jumped to $5.3 billion, a 34.25% rise from 2021.

Key Investment Insights for NVIDIA Corp. (NVDA):

Meta Platforms, Inc. (META) is a leader in AI innovation, not just a user. CEO Mark Zuckerberg, in the Q1 2023 Earnings Call, pointed out two key trends: “a huge AI wave today, and a building Metaverse wave for the future.”

Currently, Meta’s efforts are twofold. They’re honing recommendation systems that influence features like Reels, ads, and discovery engines. Zuckerberg noted that AI suggests over 20% of content on Facebook and Instagram, leading to increased monetization. Additionally, they’re diving into Generative AI, a technology poised to reshape their apps and services.

Their 2022 CapEx hit $31B, a jump of 68% from 2021, and R&D expenses reached $35B, up by 43%. For Meta, this focus on AI is a ‘major investment’.

Key Investment Insights for Meta Platforms, Inc. (META):

Adobe, a forefront digital innovator, is dedicated to creating unique digital experiences. Their lineup includes Adobe Express, Firefly, Photoshop, and Illustrator.

During the Q2 Earnings Call, Shantanu Narayen emphasized Adobe’s dedication to AI, proclaiming, “Every disruptive technology has presented exciting opportunities for Adobe… especially in areas like cloud computing, mobile, and AI.” “Firefly” has hit 0.5 billion generations, showcasing their fast growth in AI. Features like Photoshop’s Neural Filters and Acrobat’s Liquid Mode, powered by Adobe Sensei, highlight Adobe’s top spot in AI-integrated tech.

Adobe invested $3B in AI R&D in 2022, up by 17.6% from the previous year. This boost sped up “Firefly” development, aiming to make their products even more appealing. Additionally, their 2022 CapEx jumped to $442M, a 27% increase.

Key Investment Insights for Adobe (ADBE):

Issuer Direct specializes in advanced communication tools, aiming to enhance interactions between businesses, stakeholders, and the public.

Recently, they launched AImee, an AI tool for writing and recommendations. CEO Brian Balbirnie shared that nearly 20% of customers used AImee within its initial weeks. Beyond refining content tone, AImee will soon integrate into other offerings, starting with a pitching platform, emphasizing its role in modernizing traditional PR methods.

Financially, Issuer Direct is pushing boundaries in AI, evident by their 1.3M investment in R&D for 2022, a rise from 1.1M in 2021. With a 6.45% increase in 2022 CapEx, the company’s goal, as expressed by Balbirnie, is to rapidly advance and market their AI solutions.

Key Investment Insights for Issuer Direct (ISDR):

Looking to diversify your investments? Try our screener to track important stocks, including those mentioned in our 10 Best Dividend Stocks and 8 Best Money Market Funds blog posts.

Our insights are derived solely from historical information and analyst predictions, employing an impartial approach. Please note that our articles do not serve as financial guidance.