Yahoo Finance Profit From the Rise of AI: 4 Stocks to Buy and Hold for the Long Term
Written by Brian Paradza, CFA at The Motley Fool Canada
Artificial intelligence (AI) has taken the investing world by storm since the public debut of OpenAI’s ChatGPT late last year. AI-chip manufacturer Nvidia stock has soared 192% so far this year, reclaiming its all-time highs. However, it’s not just Nvidia that stands to benefit from the rise of AI.
Several other companies could unlock new revenue streams, reduce operating costs, and improve efficiencies by adopting AI, and create more value for their stock investors. Today, we’ll discuss four stocks long-term-oriented investors can buy and hold to profit from the rise of AI.
Kinaxis
Kinaxis (TSX:KXS) is a $5 billion supply chain software vendor that generates growing recurring revenue and positive cash flows from an AI-enhanced platform RapidResponse. The company’s state-of-the-art supply chain analytics platform received new AI capabilities when Kinaxis acquired AI startup Rubikloud back in 2020.
Why buy Kinaxis stock? KXS stock should gain in value, as the company gains traction in several market verticals, as its customers (usually large enterprises with complex supply chains) employ machine learning and AI optimization to drive their digital transformations.
KXS is a debt-free tech growth stock with a proven capacity for generating positive free cash flows. Management guides for a 25-27% year-over-year growth in software-as-a-service (SaaS) revenue in 2023 — a growth rate the company has sustained for several years now.
Kinaxis stock is up 18% in value so far this year.
Advanced Micro Devices
The global AI-chip market could grow at a compound annual growth rate of 29% between 2023 and 2030 to reach the US$304 billion mark. Advanced Micro Devices (NASDAQ:AMD) stock is a nuts-and-bolts play in the bourgeoning AI market.
AI applications demand huge capacities of computing power. Semiconductor manufacturing companies that led the high-end gaming chips market have a leading edge in dominating a fast-growing AI-chip market, and AMD is well placed to give market leader Nvidia a good fight for market share.
AMD stock has soared by 85% year to date, as investors bid up prices for AI-related stocks in 2023. The company’s acquisition of AI-chip designer Xilinx in 2022 added new AI capabilities to AMD’s data centre and automotive semiconductor offerings.
Despite its recent run, AMD stock still trades 26% below its most-recent highs recorded in 2021. Perhaps there’s is more room for AMD stock to run.
EvokAI Creative Labs
Investors bullish on the power of AI to revolutionize the healthcare industry should check out EvokAI Creative Labs (TSXV:OKAI) stock. The $140 million nano-cap stock is a MedTech AI-powered business that promises to develop transformational technologies for the healthcare industry. It uses AI to search for medical data, uncover new insights, enhance patient experiences, and drug development, and provide more accurate diagnoses.
EvokAI stock is a high-risk/high-reward speculative play that shouldn’t comprise a significant weight in a portfolio. However, the company is definitely a must-watch, as it goes on an acquisition spree to consolidate the MedTech AI market. It has since announced or closed three AI startups in the healthcare vertical since its debut on the TSX-Venture Exchange in April 2023.
Open Text: AI could help OTEX stock grow new wings
Open Text (TSX:OTEX) is a $14.9 billion market leader in the enterprise information management market that recently acquired a new AI platform in January 2023. The acquisition extended Open Text’s content capabilities to all data types, offering AI data analytics on more than 1,000 data formats.
Open Text’s acquisition of Micro Focus in January 2023 for $5.8 billion added an advanced AI platform, IDOL, an unstructured data analytics tool for advanced search, knowledge discovery, and analytics to its arsenal. IDOL uses AI and machine learning to leverage key insights stored deep inside unstructured data, including text, audio, video, and images.
OTEX reported a 41% year-over-year growth in quarterly revenue for the quarter ended March 31, 2023. Results included a month of Micro Focus operations. It’s too early to quantify the ultimate impact of added AI capabilities on Open Text’s revenue and earnings given ongoing synergies and cross-selling opportunities. However, new AI capabilities help OTEX retain customers, fortify its client base from ChatGPT and peers, and protect its positive cash flow-generating business that sustain its acquisitions-led growth strategy.
OTEX stock has new AI wings to fly on. Long-term-oriented investors may book positive capital gains on top of a 2.4% annual dividend yield.
The post Profit From the Rise of AI: 4 Stocks to Buy and Hold for the Long Term appeared first on The Motley Fool Canada.
Should You Invest $1,000 In Advanced Micro Devices Inc.?
Before you consider Advanced Micro Devices Inc., you'll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in May 2023... and Advanced Micro Devices Inc. wasn't on the list.
The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 23 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks * Returns as of 5/24/23
More reading
Fool contributor Brian Paradza has positions in Advanced Micro Devices. The Motley Fool recommends Advanced Micro Devices, Kinaxis, and Nvidia. The Motley Fool has a disclosure policy.
2023
