From AI to Robotics: 3 Stocks With the Potential to Make You a Millionaire
Find out which AI stocks should be on your list as the AI industry continues to grow
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Whenever the largest, most powerful companies in the world are all investing heavily in a specific trend, investors need to take notice. Over the past year, that trend has been artificial intelligence (AI) and autonomous robotics. Some may call it a bubble, while others are focused on it being the next technological revolution. If all goes according to plan, robots will be able to eliminate most mundane human jobs within the next few decades.
So where should investors start with AI and robotics stocks? Usually, the established industry leaders are the best targets. In this case, big tech stocks with plenty of cash flow and a well-developed base of existing users. If you have been wondering about which robotics stocks to research, start with these three foundational AI companies that every investor should own.
Intuitive Surgical (ISRG)
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Intuitive Surgical (NASDAQ:ISRG) is the global leader in robotic surgery equipment with more than 8,800 of its da Vinci Surgical Systems in use worldwide. The current price of ISRG sits near the bottom of its one-year analyst price target range. If we take the average analyst price target, ISRG has about a 10% implied upside from today’s price of $386.70.
The da Vinci Surgical System is nothing short of a medical marvel. The units have already performed over 14 million procedures and have been peer-reviewed in more than 38,000 articles. Today, there are four different generations of da Vinci models, each with its unique use cases and specializations. Not only are these units precise and easy to use, they can be used remotely by the best surgeons from anywhere in the world.
Intuitive Surgical is a profitable company, which isn’t always something you can say about medical technology companies. It trades at a fairly expensive valuation at 18.9x sales and 61.7x forward earnings but you are getting a 14% compound annual growth rate (CAGR) for net income over the past decade. It’s pricey, but ISRG is the proven industry leader in surgical robotics and is in a position to continue compounding over the next years.
Amazon (AMZN)
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Amazon (NASDAQ:AMZN) is a company that needs no introduction. It is the world’s largest e-commerce and cloud computing company and is used by millions of Americans daily. Amazon has the potential to be the world’s most valuable company one day and analysts agree. The average analyst price target is $226.66, which represents about a 20% upside while the street-high target of $500 is nearly 200% more.
When it comes to robotics and AI, Amazon is a great place to invest your money. The company already has over 750,000 robots helping humans in Amazon’s massive distribution centers. The complexity and efficiency of Amazon’s robotic systems are also a testament to the power of the AWS cloud infrastructure which will also help shape the AI industry as well. Generative AI and large language models are just some of the technologies already being built using Amazon’s AWS platform.
Despite having the second-largest annual revenue in the world, Amazon is trading at just 3.36x sales. This is even more impressive considering that Amazon is trading at all-time high prices. It becomes more attractive when you realize that it’s also grown its revenue at a CAGR of 22% over the past ten years. Whether it is AI or robotics, Amazon is positioned to be the global leader in both.
Microsoft (MSFT)
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Microsoft (NASDAQ:MSFT) is the world’s largest company by market cap and the leader in enterprise software. Analysts are bullish on Microsoft even as a $3 trillion company with 53 of 54 recommendations in April rated as Buy or Strong Buy. The average price target of $472.39 represents nearly 15% upside, while the highest price target on Wall Street of $550 is nearly 40% higher than today’s price.
Why is Microsoft a play on AI and robotics? The company proactively formed a partnership with ChatGPT’s creator OpenAI. The two companies have worked fast to integrate GPT into Microsoft’s suite of applications.
How cheap is the largest company in the world? Fairly reasonable! Shares of MSFT trade at about 13x sales and only 31x forward earnings. Microsoft has seen a 14% revenue CAGR over the past five years. It expects to see sales increase even further thanks to its work with OpenAI. This valuation and growth should put this stock on any investor’s buy list.
On the date of publication, Ian Hartana and Vayun Chugh 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.
