The stocks of many artificial intelligence (AI) companies are skyrocketing this year. The emergence of powerful and user-friendly chatbots such as Google Bard and OpenAI ChatGPT has captivated the world, and now everyone wants to try them out. The share prices of some of the leading companies in this field have doubled or tripled in recent months.
However, shares in embedded artificial intelligence specialist NXP Semiconductors are up just 17 per cent in 2023, while technology sector veteran International Business Machines is actually down a couple of per cent. As The Motley Fool writes, both of these lagging AI stocks appear to be great buys at reasonable prices right now.
IBM is a veteran in the AI sector
As the piece notes, most investors don’t consider IBM a pioneer in artificial intelligence. The company developed world-class machine learning systems decades ago. The first high-profile success of these efforts was seen in 1997, when the Deep Blue chess computer became the first machine to beat reigning world champion Garry Kasparov.
And the company has never stopped harnessing the power of artificial intelligence. IBM’s patent portfolio in the AI sector totals tens of thousands of applications, with thousands more being added every year. You are unlikely to succeed in AI without taking advantage of a few IBM patents, innovations and revenue-generating business ideas, say the authors of the material.
These ideas focus on enterprise-grade artificial intelligence services. Big Blue’s artificial intelligence platform for business, known as watsonx, may be less user-friendly than ChatGPT. However, it was built from the ground up to help companies manage, develop and maintain their business operations. The platform provides robust data protection, the ability to work with a business owner’s own data, and deep integration with existing computing systems in the company.
“Of course, the focus on business-class customers is slowing the initial growth trajectory. These buyers run each new software tool through quality control tests, security, interoperability and more. Purchases must be approved, perhaps by multiple directors and managers. So IBM’s artificial intelligence sales are now in a slow decline, fuelled by excitement about ChatGPT and leading to a fundamental change in how business is done. The game-changing growth is there, but the effect is not immediate,” the piece adds.
Still, IBM can achieve many big wins in artificial intelligence – over many years, not necessarily immediately. These long-term prospects are not yet factored into IBM stock.
NXP is the dark horse in the race
Artificial intelligence functions are certain to expand over the next few years. Much of the hard work behind embedded AI tools will be done by powerful servers that will collect real data and train AI server systems. But the hardware will have to do the other half of the transaction, processing requests and commands in real time.
And that’s where NXP Semiconductors comes to the rescue. NXP is a leading provider of edge computing solutions with a market-leading position. NXP already produces artificial intelligence-focused microprocessors for automotive and industrial applications. The company’s management sees artificial intelligence-related growth stories in many areas of its business. From industrial control systems to automotive security sensors and payment authentication, nearly every part of NXP Semiconductors’ business is tied to AI-focused edge computing.
But investors have yet to appreciate this company’s prospects in artificial intelligence. The stock has risen this year, but it’s not a price jump driven by artificial intelligence, just a correction after an excessive drop last year. Overall, NXP’s stock chart in recent years has been tightly tied to the broader market. Its two-year results, for example, are almost perfectly aligned with the S&P 500 index.
“That gives astute investors an advantage. If Wall Street as a whole hasn’t yet realised how big the artificial intelligence market will be for NXP, now is the time to take advantage of that mistake and buy up the stock on the cheap. In an area where many companies are making big bets based on future promises, NXP offers a solid technology that is already in use, making it an opportunity that should not be overlooked,” the authors of the piece suggest.