Hidden Gems: 3 AI Stocks Flying Under the Radar

Stocks to buy

While the hype may have died down, artificial intelligence (AI) is still the leading catalyst in the technology space.

Grand View Research forecasts that the market for AI will reach nearly $2 trillion by 2030, and nearly every major tech company is racing to integrate generative AI into their products. While its still early, clear winners have emerged in the sector. Stocks that are most closely associated with and exposed to AI have seen share prices explode this year, doubling and even tripling.

However, other options remain available to investors who may have missed the boat on the obvious AI stocks, such as the following three that are flying under the radar.

Amazon (AMZN)

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Amazon (NASDAQ:AMZN) is launching a “smarter and more conversational” version of its popular Alexa voice assistant, powered by AI.

The company has said that it hopes the newly revamped Alexa assistant will boost the its position within the AI sector. AMZN currently lies low compared to rivals such as Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL).

The new AI feature being added to Alexa is called “Let’s Chat”. Amazon says it should be available to consumers before the year-end holidays. Similar to ChatGPT and other generative AI chatbots, Alexa will be able to compose and send emails and other text messages.

Amazon engineers and programmers say they hope to use generative AI to optimize, improve and integrate the company’s suite of smart home products. Those include cameras, alarms, and thermostats. AMZN stock is up 50% year to date (YTD).

Advanced Micro Devices (AMD)

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Microchip and semiconductor company Advanced Micro Devices (NASDAQ:AMD) doesn’t get nearly as much attention for its AI space as its rival Nvidia (NASDAQ:NVDA).

Yet AMD is making aggressive moves to become a leading supplier of the chips and semiconductors that power advanced AI applications. In June of this year, Advanced Micro Devices introduced a new AI microchip called the “MI300X”. It rivals the most advanced chip from Nvidia. AMD plans to begin shipping to customers by year’s end.

The company’s new MI300X chip has been designed specifically for large language models and other generative AI applications. The chip uses up to 192 gigabits of memory, which means it can accommodate bigger AI models than rival chips.

In contrast, Nvidia’s H100 chip supports only 120 gigabits of memory. Advanced Micro Devices is also developing its own software for its AI applications called “ROCm”. Impressively, AMD stock is up 50% YTD.

Adobe (ADBE)

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Adobe’s (NASDAQ:ADBE) recent earnings print was all about the software company’s new suite of generative AI products.

Days prior to its public report, Adobe unveiled several new AI tools and enhancements for its various consumer products. The company shared that its AI products are already helping to bolster its earnings. In fact, the company reports a profit of $4.09 a share for its fiscal third quarter, beating Wall Street expectations of $3.98 a share.

Adobe executives say the company is now looking to raise prices on its AI applications. They plan to increase prices by 8% to 10% for its creative cloud plans starting on November 1.

This past spring, Adobe launched its Firefly suite of AI tools that includes a popular text-to-image feature. During its recent earnings call with analysts and media, Adobe said so far this year, its customers have produced more than two billion images using Firefly products. ADBE stock is up 52% in 2023.

On the date of publication, Joel Baglole held long positions in GOOGL and NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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