Interested in AI investing? Here’s is a round up of what AI stocks are, how you can invest and the top stocks currently on the market.
In recent years, artificial intelligence (AI) has been labelled as the part of the fourth industrial revolution, with many industries and countries investing heavily in it.
As the sector continues to mature and expand, investors may want to open their portfolios to some of the top AI stocks currently listed on the ASX.
Read on for a breakdown of what AI stocks are, how you can invest and which are the top AI stocks on the ASX that you may want to consider investing in.
Top AI stocks on the ASX: What is AI and how do you invest?
Artificial intelligence, in its most natural form, can be described as a technological machine that has the capability to act and react in the same manner that human beings do.
Although AI has become more common place in recent years, a report from NVIDIA states that AI's origins stretch back to the post-World War II era. The company states that since that time, the various components of AI have evolved enough over the years in order to support both machine learning and deep learning.
AI is a component of computer science that focuses on machines replicating humans. Although the technology behind artificial intelligence continues to evolve, there are currently four main focus areas that AI has been designed for: speech recognition, learning, planning and problem solving.
While the AI industry in Australia is relatively small, it is on a steady incline and the expansion is a result of increased demand. Recently, it has been reported that spending on AI in Australia reached AU$333 million in 2016, and has been steadily rising by 22 percent per year. By 2025, spending in the AI space is expected to reach around AU$1.98 billion.
Due to the fact that the AI space is in a state of growth and Australia has been embracing these tech stocks more and more every year, now could be the best time to invest in the sector.
Market participants typically research AI companies and then purchase shares that are issued by that company. When you purchase shares of an AI stock, you are essentially purchasing a stake in the company, with the hopes of making positive returns through the company's successes.
For investors who are interested in investing in the AI sector through stocks, it is important to know how to obtain those shares on the market. There are two main ways that an investor can invest in an AI stock. The first way is when market participants purchase through a major AI company, and the other way of trading on the stock market is by investing in an AI stock through junior companies or startups.
Top AI stocks on the ASX: Top 3 AI stocks
Below we've outlined the top three ASX-listed AI stocks with market caps over AU$40 million. Data for this article was gathered using TradingView's stock screener on January 21, 2020.
1. Appen (ASX:APX)
Current Market Cap: AU$3.14 billion
Appen was founded in 1996 and soon after released the company's AI tech, which is predominately used in the technology, automotive, financial services, retail, manufacturing and government sectors.
Human-annotated data is the field in which the company's expertise lies, and this type of technology is used to operate both machine learning and artificial intelligence. Some of the most prevalent forms that Appen's AI technology can take include digital assistance and chat bots. The technology's capabilities include fraud protection systems and sending people recommendations via search engines, such as Google (NASDAQ:GOOGL).
According to the company's most recent financial report, Appen's revenue grew by 60 percent to reach AU$245.1 million. Momentum built in speech and image revenue, which shot up 85 percent to AU$39.9 million through organic growth.
2. BrainChip (ASX:BRN)
Current market cap: AU$70.57 million
BrainChip's artificial intelligence technology is heavily influenced by the anatomy of the human brain, in particular the neurons. The result of that influence is spiking neural networks, a kind of neuromorphic computing. The spiking neural network is able to act independently through the knowledge and information it consumes. Additionally, BrainChip's AI has the capability to compartmentalize and assign association of information the same way our brains do.
The company uses this technology system through its two initial divisions, which are the BrainChip Studio and BrainChip Accelerator. This AI technology is primarily used to help various types of law enforcement and intelligence organizations identify faces and objects on video footage at a more rapid speed than more common, and often times older, technology.
Brian Chip's second AI tech endeavour came in the form of the Akida Neuromorphic System-on-Chip (NSoC), which BrainChip referred to as a new type of neuromorphic computing chip. “Each Akida NSoC has effectively 1.2 million neurons and 10 billion synapses, representing 100 times better efficiency than neuromorphic test chips from Intel (NASDAQ:INTC) and IBM (NYSE:IBM)," BrainChip states on its website.
At the end of 2019, BrainChip revealed that its market cap is on the incline and it possessed a revenue stream of US$9.5 million in cash. Looking forward, the company has begun to evaluate the prospect of opening two innovation centres this year. The first location would be in Western Australia, while the second location would be in Shanghai, China, in order to take advantage of the large and rapidly expanding AI space that can be found in that region.
3. SenSen Networks (ASX:SNS)
Current Market Cap: AU$49.20 million
SenSen's company model involves mixing AI and video technology. The combination of the two technologies resulted in the creation of a platform with video intelligence capabilities.
One of the company's most sought after applications is called SenGAME, which provides real-time intelligence for the gaming industry, used mostly in casinos. This portion of the technology has the ability to improve casinos by rapidly analyzing various elements that take place at each gaming table. The tech can scan the entire casino and determine the amount of individuals at a table, the number of hands being dealt on an hourly basis and the type of bets people are making.
Due to the fact that the video-AI combo can quickly identify and report all of the activity that transpires at each gaming table, SenSen's technology fixes the common problem of dealers, players and chips generally moving too fast for traditional technology.
In the company's latest quarterly report, SenSen noted that it had managed to incur AU$1.33 million in cash receipts, which was up 50 percent from the same time period last year. Additionally, the company revealed that in 2019, it signed its first US customer contract with Chicago Parking Meters, with the promise of delivering its client tech solutions from improving parking space management efficiency throughout the city of Chicago.
In 2020, while still focusing on its home base — the Australian market — SenSen plans to further expand its AI technology solutions in the US.
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Securities Disclosure: I, Nicole Rashotte, currently hold no direct investment interest in any company mentioned in this article.
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