Though some of the hype has died down, artificial intelligence (AI) is continuing to propel this year’s market rally. After a short-lived pullback in August, technology stocks are once again gathering steam as the growth and adoption of generative AI drives revenues and profits. The market opportunity looks huge. Fortune Business Insights predicts that worldwide revenue in AI will grow to $2 trillion by 2030 from $515 billion this year for a compound annual growth rate (CAGR) of 21%. Of course, a handful of familiar names continue to enjoy outsized gains from the AI-fueled stock market rally. But some lesser-known companies are starting to make significant moves in the AI sector and investors are taking notice. Want to get rich? Here are three game-changing AI stocks to buy right now.
Salesforce (CRM)
Cloud computing giant Salesforce (NYSE:CRM) just issued an across-the-board earnings beat, sending its stock up 4%. Company executives made sure to mention AI multiple times when discussing the latest financial report with analysts and the media. In fact, Salesforce used its second-quarter print as an opportunity to announce the launch of a new “AI Cloud” that will include tools for marketing and data analytics. Executives also said they see AI cloud applications driving future growth.
That was music to the ears of analysts and investors, who have now pushed up CRM stock 65% on the year, making it one of the best performers for 2023. Looking ahead, Salesforce said it expects earnings per share (EPS) of $2.05 to $2.06 on $8.70 billion to $8.72 billion in revenue for the current third quarter. That guidance, which the company raised, is ahead of Wall Street forecasts for Q3 earnings of $1.83 a share on $8.66 billion in revenue. Salesforce is a stock for AI wealth.
Microsoft (MSFT)
While shares of Nvidia (NASDAQ:NVDA) and Alphabet (NASDAQ:GOOG/NASDAQ:GOOGL) continue to rise on their AI involvement, investors seem to have forgotten about Microsoft (NASDAQ:MSFT). The Seattle-based technology giant’s stock declined 3% in August, while GOOGL stock advanced 3% during the month and NVDA stock rose 6%. The pullback is a headscratcher given that Microsoft remains a leader when it comes to developing generative AI tools for consumers to use.
The company is most closely associated with artificial intelligence leader OpenAI, creator of the ChatGPT chatbot and its successor GPT-4. Microsoft pumped $10 billion into the privately-held company and has integrated ChatGPT’s functionality into its Bing search engine. In that regard, Microsoft is ahead of Alphabet and its rival search engine, Google. Plus, MSFT is working to integrate generative AI capabilities into everything from its Xbox video games to its cloud computing offerings, making it a leading AI company.
Adobe (ADBE)
For a dark horse in the AI race that’s now underway among tech companies, look to Adobe (NASDAQ:ADBE). The software company behind popular products such as Illustrator and Photoshop, not to mention PDF files, has been quietly developing its own suite of generative AI tools and working them into existing products. Those include Adobe Firefly, which uses generative AI to boost the company’s creative products — including Photoshop — as well as Adobe Sensei, which works with the company’s cloud computing products.
While it hasn’t gotten nearly as much attention in the AI space as other tech companies, Wall Street is starting to take notice of the ways Adobe is using artificial intelligence. Analysts at Bank of America (NYSE:BAC) recently upgraded ADBE stock to Buy from Neutral, noting the company is fast becoming a leader in the AI space. Bank of America raised its price target on Adobe shares to $630 from $575, implying a nearly 13% upside from current levels.
On the date of publication, Joel Baglole held long positions in MSFT, GOOGL, NVDA and BAC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.