Top 3 Best Machine Learning Stocks to Watch
Machine learning (ML) and artificial intelligence (AI) made headlines as some of the most talked about topics in 2023.
There have been some interesting developments in the machine learning area. What once looked like something out of a sci-fi movie is now a reality and very much part of our daily lives.
Naturally, the stock market has taken notice, and machine learning stocks have been drawing the attention to investors alike.
In this article, we will go through some of the basics of machine learning stocks, as well as their pros and cons, the top machine learning stocks to watch, and whether or not they would make potential options for your portfolio.
Sounds interesting? Let’s get started.
Table of Contents
Best Machine Learning Stocks: Introduction
You’ve probably heard or read something about AI and machine learning (ML) at some point over these past 12 months.
The field has grown exponentially in a short period, thanks to the impressive advances in ML technology.
Tech juggernauts and even smaller companies have also drawn plenty of attention from the stock market, with investors spotting a potential option in machine learning stocks.
But before we get started on the best machine learning stocks to watch, we need a proper introduction to this interesting and complex field.
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What is Machine Learning? What are Machine Learning Stocks?
Machine learning (or simply ML) is a subset of artificial intelligence (AI). While they’ve been often mentioned together, we are talking about two different concepts. AI is a broad umbrella term, while ML is just one of the many fields grouped under it – also known as a sub-niche.
Simply put, ML refers to a machine’s ability to learn from and make predictions based on data.
Machines are programmed with an algorithm - a set of rules and instructions that the computer must follow. These machines will then gather and analyze data first, learning how to make sense of that information.
In a relatively short space of time, the machines will be able to recognize patterns, becoming much quicker and more efficient.
Machine learning has plenty of uses, which range from simply providing music and video recommendations in streaming platforms to driving autonomous vehicles or solving complex mathematical and scientific problems.
In finance, machine learning can be used to create automated trading bots, which can buy and sell stocks based on certain parameters, and even predict market movements.
Of course, you can also invest in ML. In this case, machine learning stocks refer to publicly traded companies that are actively engaged in the development, usage and application of ML technology.
Machine learning comes with several advantages compared to regular programs, and even compared to human knowledge – Naturally, ML equally comes with disadvantages, which we will review further on:
- Machines can analyze bulks of data in a very short amount of time.
- Optimized decision-making processes.
- They can also come up with new and valuable insights by tackling problems from different angles.
Best Machine Learning Stocks: Advantages and Disadvantages
Machine learning stocks, like all investment options, come with their own set of advantages and disadvantages. Here are some of the pros and cons of machine learning stocks:
Advantages of Machine Learning Stocks
- ML is one of the fastest-growing fields right now, with rapid advancements. Investing in it early would provide a chance to capitalize on it in the potential near future. Machine learning will likely become an increasingly common part of our daily lives.
- There is a healthy amount of competition in the ML industry right now, which in turn drives innovation forward. Companies try to gain an edge by providing better customer support, innovative products and solutions, and optimizing business operations. ML companies can use their technology to analyze data, make decisions and quickly adapt to market trends.
- ML companies aren’t restricted to the big names like Google, Amazon, or Microsoft. There are plenty of smaller, niche companies that focus on specific sectors - healthcare, finance, or autonomous vehicles, for example.
Disadvantages of Machine Learning Stocks
- Stocks can be quite volatile, and machine learning stocks are no exception. The companies are subject to market sentiment, technological shifts, and competition. Some ML companies also deal with sensitive data, exposing them to regulatory and privacy risks, particularly when it comes to changes in data protection laws.
- Understanding the ins and outs of machine learning is quite difficult, as the theme is extremely complex. Investors need to have a full understanding of what they are dealing with before making any commitments, which may require some extensive research.
- It’s no secret that there are plenty of ethical concerns surrounding machine learning and the AI industry as a whole. The market is sensitive to public opinion, and eventual legal challenges, public backlash, and other problems can affect these stocks.
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Top 3 Best Machine Learning Stocks to Watch
Having now gone through the basics of ML, we will now take a look at the best machine learning stocks available, including the advantages and disadvantages of each one of them.
Please be aware, that the chosen best machine learning stocks to watch are based on the subjective opinion of the author.
1. NVIDIA (NVDA)
NVIDIA has long been a mainstay in the graphic cards market, being arguably the leading name in the industry. However the company’s graphic processing units (GPUs) have also been used to power machine learning platforms. Additionally, NVIDIA is also one of the leading names in the semiconductor industry.
The list of NVIDIA customers includes automakers, biotech companies, and retailers, among others.
Advantage of NVIDIA stocks:
- NVIDIA constantly generates sizable operating profit margins, well into double digits, which creates a positive outlook for investors. The company also invests billions of dollars in research and development (R&D) every year.
Disadvantage of NVIDIA stocks:
- While it is one of the leading companies in the semiconductors industry, NVIDIA will likely face increased competition from other tech giants in the future, such as Intel and Asus.
2. Tesla (TSLA)
Tesla has been synonymous with electric vehicles. Having committed to EV production from the start, Tesla still holds a sizable share of the market. The American carmaker is also famous for its heavy investment in machine learning, spearheading the movement for self-driving vehicles.
Advantage of Tesla stocks:
- As one of the first movers in the EV and self-driving cars markets, Tesla still holds an advantage over its potential competitors, like Ford, GM, and Toyota. The company is constantly improving its machine learning system, collecting data and videos from Tesla car owners via its cloud-based software.
Disadvantage of Tesla stocks:
- The Elon Musk factor has some positives, but also equal negatives. Tesla’s CEO is one of the world’s leading entrepreneurs, but Musk also finds himself involved in controversies more often than not. His actions and statements can also negatively impact Tesla’s stocks.
3. Accenture (ACN)
Accenture is a global consulting and IT services company. Recently, the company has invested heavily in machine learning. Accenture offers machine learning services to boost its clients’ productivity while applying ML to solve problems with increased efficiency.
Advantage of Accenture stocks:
- As the world’s leading consulting firm, Accenture was already well-positioned from the start. Getting a jump-start with its investments in ML makes the scenario even better for the Irish-American giant.
Disadvantage of Accenture stocks:
- Accenture stocks come at a premium price. Additionally, Accenture is also considered a slow-growth stock, which can be seen as a positive, but also as a negative, as it probably won’t offer immediate gains.
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Best Machine Learning Stocks: Conclusion
Machine learning is one of the leading innovations in the tech industry. Investing in machine learning stocks can be an option to diversify a portfolio.
Just like any other stock, machine learning stocks have pros and cons. While the sector is likely set to grow in a short space of time, there are also some concerns - particularly from an ethical standpoint - surrounding AI-related markets.
If you decide to invest in machine learning stocks, then a reliable and certified broker like Admirals is a possible option.
With a demo account, you can trade without using real assets. Once you feel comfortable enough, you can switch over to a live account and start trading with real money.
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Which machine learning stocks are best?
Potentially some of the machine learning stocks which are best include the following:
- NVIDIA (NVDA)
- Tesla (TSLA)
- Accenture (ACN)
What are machine learning stocks?
Machine learning stocks represent companies in the financial market that leverage artificial intelligence to develop and apply advanced data-driven algorithms for predictive analysis and decision-making.
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