The concept of artificial intelligence (AI) has been around for the past 50 years, but many Wall Street analysts now feel that we have come to a turning point with the applications and adoptions. The availability of big data, super-high-powered computer capability and advanced algorithms are all making AI faster, and perhaps most importantly, cheaper to implement.
A new and exhaustive JPMorgan research report does a deep dive into AI and shows how it will benefit some of the stocks that the firm covers. Here is their explanation of what AI actually is:
In simple terms, artificial intelligence is the simulation of human intelligence by machines. AI is different from traditional software programs in that it extracts knowledge from data and can alter its behavior (or learns) without being specifically programmed. Traditional software pre-defines the logic, whereas AI discovers the patterns and logic. These ‘self-learning’ systems are impacting nearly every industry Vertical from manufacturing to financial services, giving rise to new business models While making some legacy models obsolete.
The JPMorgan report has a list of companies the firm covers that look to benefit from AI. We screened for the stocks rated Overweight and found four for aggressive accounts to consider.
This high-profile old-school software company has been posting outstanding earnings. Adobe Systems Inc. (NASDAQ: ADBE) operates in three segments. The Digital Media segment provides tools and solutions that enable individuals, small and medium businesses, and enterprises to create, publish, promote and monetize their digital content. The other segments are Digital Marketing and Print and Publishing.
Adobe is also reasonably safe route for investors looking to own a company with marketing automation product, which has become huge. Adobe also a partnership with Microsoft, which Jefferies feels is expanding, and it also has Facebook and Google as partners in the ad cloud.
The analysts see the company benefiting from AI in AI platform, predictive analytics, automation bots, speech recognition and natural language processing (NLP) and image recognition.
The JPMorgan price target for the shares is $185, and the Wall Street consensus target is $183. The stock closed Tuesday at $185.40 a share.
The search giant continues to expand and is even working on a driverless car now. Alphabet Inc. (NASDAQ: GOOGL) is a global technology company focused around key areas, such as search, advertising, operating systems and platforms, enterprise and hardware products. It generates revenue primarily by delivering online advertising and by selling apps and contents on Google Play, as well as hardware products. The company provides its products and services in more than 100 languages and in 190 countries, regions and territories.
Alphabet offers performance and brand advertising services. It operates through Google and Other Bets segments. The Google segment includes principal internet products, such as Search, Ads, Commerce, Maps, YouTube, Apps, Cloud, Android, Chrome and Google Play, as well as technical infrastructure and newer efforts, such as virtual reality.
The search leader also pounded earnings estimates when it delivered upside to revenue, margins and GAAP earnings per share. Website ex-currency growth acceleration was a key positive. While higher distribution traffic acquisition costs rate increase could temper enthusiasm, top analysts feel the profit growth trajectory intact.
The analysts see the company benefiting from AI through search, cloud, home assistants, autonomous vehicles, photos, news feed and numerous other applications.
JPMorgan has a $1,200 price target, which compares with the consensus price objective of $1,173. Shares closed Tuesday at $1063.29.