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According to analysts, these 3 AI-focused stocks will be future winners in this sector

Jessie Ramsdale
28. 3. 2023
5 min read

All the hype and excitement around new artificial intelligence (AI) programs like ChatGPT is completely justified. RBC says its potential is as huge as it seems, which is why it's highlighting 3 stocks to buy.

In a recent note to clients, the firm (RBC) called generative AI an "unlocking capability" that enhances the capabilities of technology in general. They say that before AI, there were three of these major technology breakthroughs: the internet, software as a service, and cloud computing and mobility.

The RBC group wrote that AI will be a "rising tide" that will enrich a large number of technology-focused businesses, and warned that companies that don't get on board quickly have a lot to lose.

According to the analysts, three broad categories of companies have the most to gain: cloud-oriented companies that are rapidly incorporating AI and using it to their advantage; niche companies that are using it to build their leadership positions; and mid-sized software companies that can use AI to shrink their lead over more established competitors.

But it's not just the established tech titans that can benefit from the rise of AI technology.

"We believe that the widespread adoption of AI could also lead to commoditization, particularly for smaller companies, allowing ecosystems such as cloud providers and digital advertising platforms to expand existing moats and capture more value," the RBC analysts wrote. "We also wouldn't underestimate the technology of close followers who, like Microsoft, have been investing in AI for more than a decade."

Here's their pick:

1. Microsoft $MSFT-0.2%

We believe Microsoft's primary goal is to make Azure the de facto standard cloud platform for AI tasks to help bridge the gap between Amazon Web Services and create more distance from other hyperscale cloud vendors like Google Cloud Platform and Oracle Cloud Infrastructure ... At the same time, it could distract Google to some extent from more aggressive competition in cloud infrastructure."

However, it is generally believed that Microsoft may use AI in many areas, such as:

1. Cloud services: Microsoft offers cloud services such as Azure AI, which allows developers and data scientists to build and deploy AI and ML solutions in the cloud.

2. Office applications: Microsoft plans to use AI and ML in various applications within the Office suite, such as Excel, Word, PowerPoint, and Outlook. The goal is to improve user productivity and efficiency by enabling intelligent features such as automatic proofreading, translation, and recommendations.

3. Healthcare.

4. Automotive: Microsoft is working with automotive manufacturers and suppliers to develop new AI and ML solutions to improve safety, efficiency, and driving experience.

5. Gaming: Microsoft plans to use AI and ML in the gaming industry, for example to create smarter NPC characters and better matchmaking.

6. Retail: Microsoft plans to use AI and ML in the retail industry, for example, to personalize the customer experience and improve logistics.

2. HubSpot $HUBS+0.5%

Thesis: "We talked to users who consider HubSpot's Marketing Hub to be better than Salesforce's Marketing Cloud, but they stay with Salesforce because Marketing Hub lacks certain enterprise-class features. AI can enable HubSpot to narrow that gap and make its product suite more competitive with Salesforce in the mid-market and even at the enterprise level sooner than expected.

HubSpot, like many other companies, is actively using artificial intelligence (AI) and machine learning (ML) to improve its products and services. Key areas where HubSpot plans to use AI include:

1. Marketing tools: HubSpot plans to use AI to personalize content and improve targeting of advertising campaigns. Using data analytics and machine learning, it will be possible to better understand customer behavior and optimize marketing campaigns.

2. Customer service: HubSpot plans to use AI to improve customer service and support. For example, AI-powered chatbots will make it possible to resolve customer issues faster and provide a better customer experience.

3. Automation. This can help increase efficiency and worker productivity.

4. Data Analytics: HubSpot plans to use AI to analyze data and provide better insights for customers. This will help to better understand customer behavior and optimize marketing campaigns.

5. Predictive Analytics.

3. Veeva System $VEEV-0.7%

"Generative AI has meaningful potential to change the way drugs are designed and marketed. ... Given the vast amounts of data Veeva has from its market-leading position, Veeva can leverage generative AI to provide unique insights (which can extend to the commercial business). From a commercial perspective, Veeva can use AI to streamline its CRM, from updating and testing contact information to helping pharma reps better target the right healthcare professionals."

So where can they use AI?

Predictive Analytics: Veeva plans to use AI for predictive analytics to predict customer behavior and better target marketing campaigns.

Personalization: Veeva plans to use AI to personalize content and improve targeting of advertising campaigns.

Relationshipmanagement: Veeva plans to use AI to manage business relationships with physicians and pharmaceutical companies, including monitoring interactions and improving communications.

Supply chain optimization: Veeva plans to use AI to optimize the supply chain and improve logistics in the pharmaceutical industry.

Image data processing: Veeva plans to use AI to process image data, including digital imaging and magnetic resonance images, which can help improve diagnosis and treatment.

  • What are your thoughts on their selection?
  • Who do you prefer in the future?

Please note that this is not financial advice. Every investment must undergo a thorough analysis.


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