- A number of products have been launched in the artificial intelligence (AI) space that are considered game changers (ChatGPT for example).
- While the year was filled with innovations in the AI space, we can’t ignore that many stocks in this industry saw shares drop in value due to macroeconomic factors.
- Companies like Lemonade and C3.ai have seen shares plummet, but they could come back in 2023 if the economy avoids a recession.
Many would describe 2022 as a breakthrough year for artificial intelligence stocks. We saw new technology that allows you to create AI-generated art from a text prompt. You can have AI create a poem for you or write up a summary of any topic under the sun.
With that said, artificial intelligence stocks suffered in 2022 as the economy went through a challenging period marked by soaring inflation and aggressive rate hikes meant to counter it.
2022 also saw a rash of tech layoffs and witnessed some of the biggest companies in the world drop significantly in value. We’re going to look at artificial intelligence stocks to determine if they can bounce back in 2023.
What’s happening with artificial intelligence?
We recently wrote about ChatGPT and DALL-E 2, two innovative launches that have been considered revolutionary for consumer AI. This will impact numerous industries in 2023 as we figure out how to best proceed with these new tools from legal and business perspectives.
It almost feels like you can’t run a successful business without utilizing some AI-related technology. While there have been many breakthroughs in the AI field, the tech industry as a whole has struggled.
Will AI stocks bounce back in 2023?
As we’ve seen, 2022 was a turbulent and challenging year for many tech companies. We saw some of the biggest companies in the world drop in value. There are a few factors to consider when it comes to AI stocks.
The fears of a recession
We can’t ignore the impact of soaring inflation and the fears of a recession due to the constant rate hikes that are making the cost of money more expensive in the economy. These macroeconomic forces have even impacted companies that announced strong financial results in 2022. If there’s a recession officially declared in 2023, then it would be difficult for companies in the AI space to turn business around.
The industry of the company
There aren’t any publicly traded companies that only focus on innovations in AI like Google focuses on search engines or Tesla does with electric vehicles. Various companies are investing in the space and deploying AI throughout their business operations. For most companies, AI is a substrate within a larger tech stack.
Industries that have relied on AI range from oil companies to financial services, so your returns from investing in AI will depend on which industry you put your money in, as you can’t ignore the importance of machine learning in every space.
It will be fascinating to see how the power of AI technology will be used in our daily lives moving forward. Luckily, there are many different ways that you can invest in AI. According to Zion Market Research, the global AI industry should grow to $422.37 billion by 2028, up from $59.67 billion in 2021.
Top companies in AI
Here are some leading businesses that have made strides using AI technology. These five companies are involved in other industries, but they’ve utilized AI to grow their respective businesses. We’re going to look at the stock prices as of closing on Dec. 28, 2022 to see how these companies have performed this year.
Microsoft Corp. (MSFT)
Microsoft recently launched Microsoft Designer, a graphic design app that uses AI to create graphics and social media images. Microsoft also runs Azure, which is a portfolio of AI-related services. The company has even announced a partnership with Meta to provide the workplace of the future. Shares of Microsoft are trading at $234.53, down about 28% for the year.
The parent company of Google and YouTube uses AI in pretty much every aspect of its business. Alphabet also owns DeepMind, which is working on many spectacular innovations that could even read your mind one day.
We see the power of Alphabet in our daily lives, from the Google Home smart speaker to navigation maps to how precisely our photos get organized on our phones. Shares of Alphabet are currently trading at $86.02, down around 39% for the year.
You can’t write about investing in AI without discussing the company that has its own annual AI Day designed to attract the top talent in the industry. With promises of a humanoid robot and a robot taxi service, the electric vehicle maker is going all in on AI. Tesla shares are currently priced at $112.71, down 69% for the year.
Nvidia Corporation (NVDA)
This technology company, based out of Santa Clara, California, is one of the leading AI platform firms as their new Volta technology is designed for deep learning. Major tech companies like Google and Meta are using Nvidia’s GPUs. Shares of NVDA are currently trading at $140.36, down around 52% for the year.
Amazon.com, Inc. (AMZN)
The power of AI technology can be seen in all aspects of Amazon’s business, from the customized shopping experience to the Alexa speaker that many folks have in their homes. Amazon shares are currently trading at $81.82, almost down 52% for the year.
Artificial Intelligence Stocks To Invest In For 2023
There are stocks in the AI field that are worth investing in or keeping an eye out for as we enter the new year. These companies heavily invest in the space of AI, but they’ve seen share prices drop during this turbulent year in the markets.
Lemonade is the first insurance company that’s almost fully powered by AI. While insurance companies have been traditionally known for slow processes filing claims and every other process, Lemonade relies on AI for everything from customer service to claims processing. The company has rigorously trained the AI to improve the customer experience.
Shares of Lemonade are currently trading at $12.91, with the stock price being down about 69% for the year. However, according to the financial results for the third quarter, the company has over 1.77 million customers with an average premium per customer of $343. This company is worth keeping an eye on because regardless of what happens in the economy, people still need insurance.
C3.ai Inc. (AI)
C3.ai offers enterprise AI in the form of done-for-you and customized applications for clients looking to complete digital transformations. The company has essentially created a new industry by offering custom solutions across different industries. They make money by creating AI-based solutions and software for businesses looking to go digital or to improve any aspect of the business. For example, Shell has introduced over 100 AI applications from C3.ai into production every single year. The power of AI has helped Shell with predictive monitoring so they can accurately determine when to fix certain parts.
Shares of C3.ai are currently trading at $10.26, with the stock price being down about 68% for 2022. However, major tech companies like Amazon and Alphabet have partnered with C3.ai to boost cloud services. The company is also switching to a consumption-based model to generate revenue to accelerate growth.
Upstart Holdings Inc. (UPST)
Upstart uses AI to analyze potential borrowers to determine their creditworthiness. The company doesn’t lend the money, but they work with banking partners who are able to originate the loans.
Upstart is currently trading at $12.25, which means that the stock is down just about 91% for 2022.
Revenue for Upstart shot up by 264% from 2020 to 2021, and the company brought in revenues of $849 million, but this figure is expected to drop to $830 million in 2022. If it turns out that the economy can bounce back in 2023, they could see their business turnaround. Upstart has also seen many banks, credit unions, and car dealers start using its services.
As always, it’s important to conduct your own due diligence before investing your money into any of these companies. With the amount that share prices have dropped in 2022, it could be the right time to start investing in these firms if you’re a proponent of the power of AI.
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