Missed Nvidia? 3 Artificial Intelligence Stocks to Buy Now

World Famous Semiconductor Manufacturer Nvidia is widely regarded as a pioneering force behind artificial intelligence (AI), and it remains a leader in the field today. But AI is a fast-growing industry with plenty of room for other contributors, and some experts are even predicting that the majority of companies will adopt AI by 2030, adding $13 trillion in value to the global economy.

Therefore, while Nvidia is a $413 billion giant today, three Motley Fool contributors think: C3ai (AI -0.70%), Risked (RSKD 0.69%)and CrowdStrike (CRWD 0.83%) are artificial intelligence powerhouses of the future. This is why.

Making AI more accessible

Anthony Di Pizio (C3ai): One thing the artificial intelligence industry is missing is accessibility. Usually, only large tech companies with the financial resources and ability to attract talented developers have been able to use AI in a meaningful way. But thanks to C3ai, some of that burden is lightened. The company provides thousands of turnkey and customizable AI applications to 11 different (and growing) industries.

C3ai’s customers are incredibly diverse, ranging from fossil fuel giants to financial services companies. The oil and gas industry is not an industry that investors might associate with an advanced technology like AI, but it makes up the bulk of C3ai’s revenues. Companies like Shell use predictive capabilities to prevent catastrophic failures and reduce greenhouse gas emissions. That company has used C3ai’s applications to monitor 10,692 devices.

But C3ai’s progress in this area is also recognized by some of the biggest technology giants in the world, including: Microsoft and Alphabet‘s Google. Those companies are partnering with C3ai to build better cloud services for their customers, and Microsoft has already created $200 million in value through the partnership.

C3ai generated $252 million in revenue during fiscal 2022 (ending April 30), but lost $192 million for the year. However, it has a very high gross profit margin of 81% and over $950 million in cash and short-term investments on its balance sheet, so it has plenty of room to continue investing in growth before cutting back on expenses to generate positive income. The company expects its opportunity could be worth $596 billion by 2025, so so far it has unlocked only a fraction of its growth potential.

C3ai stocks are down 89% from their all-time high, which could be a great opportunity to take a long-term position.

An overlooked AI choice

Jamie Louko (Dangerous): Riskified – like many companies in the e-commerce space – has been beaten 84% since its IPO in late 2021. However, there is reason to believe that this artificial intelligence (AI) company could be a bargain for these prices. The company helps e-commerce companies detect and prevent fraudulent transactions, with AI and machine learning driving the decision.

Riskified’s solutions have been very valuable to customers. In a study by the company, the top 10 customers saw operating costs fall by an average of 39% as fewer goods were lost to fraudulent transactions. In addition, customers also saw an 8% increase in revenue from transactions that were thought to be fake but were actually authentic. With this incredible value proposition, it should come as no surprise that Riskified has seen 2% or less customer churn annually since 2019.

The company had gross trading volume of $22.7 billion in the first quarter, generating more than $58.8 million in revenue over the same period. The company burned $10 million in free cash flow in the first quarter, which is worrying given that activity could potentially slow over the next year as consumers make fewer e-commerce purchases due to a potential recession. However, Riskified’s balance sheet is robust: it has more than $500 million in debt-free cash and securities.

Assuming the company’s cash burn rate stays the same, it can subsidize 50 quarters of free cash flow with the cash it has on hand. Therefore, Riskified can still be operational and continue to grow after a recession.

That said, investors don’t value it that way: The company’s current market cap is $693 million, but its enterprise value is just $173 million. At this price, investors hardly expect any success from Riskified, which could be too pessimistic. Given its value proposition to its clients, the company could perform much better than Wall Street currently thinks, and in the long run, Riskified has the potential to deliver great results on the other side of a recession.

Where artificial intelligence and cybersecurity meet

Trevor Jennewine (Crowd Strike): Businesses are becoming more digital as they work to improve the customer experience and increase operational efficiency. Trends such as cloud computing and software proliferation are fueling that digital transformation, but those same trends have also created new attack surfaces for hackers. That has made cybersecurity a top priority and CrowdStrike has become the gold standard in endpoint (device) security.

CrowdStrike offers 22 different software modules, all delivered through a single lightweight agent that can be installed without a reboot. That sets CrowdStrike apart from other vendors and streamlines customer adoption. But that’s not the only unique thing about this cybersecurity company. The platform can also stream security signals to the cloud in real time, where powerful AI models analyze data to predict and prevent cyber-attacks.

In fact, management believes its AI models are extremely effective. As the industry leader in endpoint security, CrowdStrike has a data advantage – the platform collects approximately 1 trillion security signals every day – and data is the cornerstone of good AI. That network effect means CrowdStrike’s AI models are constantly improving, keeping the company at the cutting edge of threat intelligence.

That’s why CrowdStrik saw its customer base increase by 57% in the past year and spend per customer by more than 20%. In turn, revenue increased 64% to $1.6 billion and free cash flow increased 49% to $481 million.

Looking ahead, shareholders have good reasons to be excited. CrowdStrike has a sustainable competitive advantage in a market valued by management at $58 billion. Better yet, CrowdStrike’s product pipeline could push that figure to $126 billion by 2025. Suffice it to say, there is ample room for future growth, and the business should continue to benefit from this as companies invest in digital transformation. That’s why this growth stock is worth buying.

Suzanne Frey, an executive at Alphabet, serves on the board of directors of The Motley Fool. Anthony Di Pizio has no position in any of the listed stocks. Jamie Louko has positions in CrowdStrike Holdings, Inc., Nvidia and Riskified Ltd. Trevor Jennewine holds positions in CrowdStrike Holdings, Inc. and Nvidia. The Motley Fool holds positions in and recommends Alphabet (A shares), Alphabet (C shares), CrowdStrike Holdings, Inc., Microsoft, Nvidia and Riskified Ltd. The Motley Fool recommends C3.ai, Inc. at. policy.

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