While the COVID-19 has managed to downturn our economy, this outbreak might actually speed long-term technological trends — especially in the teleworking, e-commerce, and automation industries. Considering Artificial Intelligence to be in the centre of these sectors, there are deep-rooted opportunities in AI stocks.
In unpredictable times like these, it is essential to consider companies that contain an upward linear graph of profitability, safe business models and solid balance sheets. Below are three AI-oriented companies that fit the bill.
Considering that the emergence of AI will demand large amounts of storage and processing capabilities, it will also require faster, smaller and powerful chips that not only occupy lesser space in servers but also keep up with the vast amount of work. Lam Research manufactures machines that allow chipmakers to produce the same. Specifically, Lam produces etch and deposition machines that are used across foundries and memory-makers.
Lam has managed to outperform its industry peers. Over the last two semi cycles, Lam grew revenue that was 1.6 times the industry – with an operating income that increased faster than revenue. Along with the generous capital returns, the company also has a strong balance with $4.6 billion in cash and investments as of the last quarter.
Alteryx is an essential core software platform for corporations. Its main product is an end-to-end comprehensive software suite, that assists in building and deploying machine learning algorithms for both data scientists and non-data scientists. Alteryx focuses exclusively on customer usability and hence has made a huge hit with their clients.
Last year, Alteryx grew its customer base by 30% whilst achieving a net expansion rate of 30% – leading to an overall growth of 65%. Alteryx also made $27 million in net profits on a GAAP basis, and net income of $64.6 million on a non-GAAP basis. The company also has cash, cash equivalents, and long-term investments of $975 million in convertible debt.
Micron’s product portfolio will play an important role in future AI applications, considering their productions in DRAM memory and NAND flash storage. In addition to these products, Micron is also one of only two companies to have 3D Xpoint, a non-volatile memory faster than NAND. It is the only company to have all three technologies.
The recent sales figures in late March forecast its increasing revenue even with the widespread of the many quarantines. Considering it is continuing to generate profits in a downturn, along with solid net cash position of $10.6 billion, it means that Micron is capable of weathering the current storm ably.
While for these companies, near-term results are uncertain, they still are extremely profitable businesses with commendable long-term growth prospects.
Also read: Global AI Initiatives to Fight Coronavirus
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