There’s no denying that we are witnessing the breakout of the artificial intelligence (AI stocks have been rising steadily since this market frenzy took over, sending sector leaders like C3.ai (NYSE:AI) and Splunk (NASDAQ:SPLK) to impressive heights. While powerful tech players ride the wave to the top, no winners are being created. But investors should also be watching for promising AI stocks that have yet to experience their breakouts. The AI boom is ushering in a new bull market with significant potential. As InvestorPlace senior investment analyst Luke Lango notes:) boom. In November 2022, privately held OpenAI released its revolutionary bot ChatGPT. Since then, both investors and consumers have been hyper-focused on this new phenomenon.
“The AI Revolution represents one of those once-in-a-lifetime investment opportunities where 1,000% and even 10,000% returns are entirely possible.
With opportunities that big, we shouldn’t settle for 100% winners. We should think bigger.”
One of the best things about AI is how broad it is. It is truly the new frontier of the tech market, spanning from desktop software to electric vehicles (EVs). But right now, many companies seem to be focused on creating the new, improved ChatGPT or producing something similar. Let’s take a closer look at the most promising AI stocks, companies that are poised to change the market even more as they bring new innovations to the mainstream. Some of the biggest names in the tech sector are hard at work but that doesn’t mean we shouldn’t be watching their much smaller peers.
Promising AI Stocks: Alphabet (GOOG, GOOGL)
This titan of the tech sector has wasted no time creating its own answer to ChatGPT. When the bot first began making headlines, experts speculated that it posed a significant threat to Google. But Alphabet (NASDAQ,GOOG, NASDAQ:GOOGL) didn’t waste time worrying, It set to work creating its own version of the bot and seems to be making excellent progress. Yesterday, the company announced plans to start rolling out “Bard AI,” its answer to ChatGPT, within the coming weeks. This new bot is powered by Google’s own Language Model for Dialogue Applications (LaMDA). According to a blog post from the company:
“Bard seeks to combine the breadth of the world’s knowledge with the power, intelligence and creativity of our large language models. It draws on information from the web to provide fresh, high-quality responses.”
Bard AI isn’t the only reason investing should count Alphabet among promising AI stocks, though. As InvestorPlace contributor Chris MacDonald reports, the company is in an excellent position to benefit from almost every new tech market trend, from the rise of quantum computing to the autonomous vehicle revolution. It’s also worth noting that the company has a clear advantage over smaller competitors due to its vast data stores. Now it will be in an even better position due to its ability to extract relevant consumer behavior data through AI applications.
Like Alphabet, Baidu (NASDAQ:BIDU) is focused on creating a bot to rival ChatGPT and it is also making steady progress. BIDU stock has been rising all day as momentum builds for its “Ernie Bot.” According to the company, this name is an acronym for Enhanced Representation through Knowledge Integration and it has been described as a large language model first introduced in 2019. Baidu claims that Ernie manages to integrate extensive knowledge with significant data, “resulting in exceptional understanding and generation capabilities.” Internal testing is scheduled to start in March 2023.
Investors shouldn’t underestimate Baidu’s powerful reach. The company controls more than 75% of China’s search market, very similar to Google’s power in the U.S. Not only has its cloud business been growing but Baidu is also making progress on its autonomous driving component. In late November 2022, it reported plans to construct “the world’s largest autonomous ride-hailing service area in 2023.” According to a statement released by the company, Baidu plans to begin work on this project in 2023. Doing so would help expand its robotaxi business significantly, helping it secure an even greater share of a booming market.
Promising AI Stocks: Stem (STEM)
This company doesn’t typically receive as much attention when investors look for opportunities in tech. But Stem (NYSE:STEM) may be an undiscovered gem among promising AI stocks as well as renewable energy plays. It has successfully carved out an impressive market niche by applying AI solutions to the growing field of clean energy management. Its platform, Athene AI “integrates assets across the clean energy ecosystem, including solar, storage, and EV charging management.” And recently, Stem took this innovative technology a step further when it announced a joint eMobility offering with ChargePoint Holdings (NYSE:CHPT). According to a statement released by the company:
“The offering is expected to integrate Athena®, Stem’s clean energy platform, on-site energy storage, and ChargePoint’s Express Platform to help drive cost savings and maximize value now and over the lifetime of the assets.”
If successfully executed, the offering could yield significant results for both companies. It combines two fast-growing areas of tech, both of which boast high investor interest that isn’t likely to slow down. Additionally, Wall Street seems to like STEM stock. In January 2023, it received a bullish price target and upgrade from Morgan Stanley. And according to data from TipRanks, analysts from UBS and Goldman Sachs also maintain “buy” ratings. Already a leader in the clean energy space, Stem is poised to join the ranks of breakout AI stocks of 2023.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.