It can be difficult to determine which AI offerings are worth investing in due to the proliferation of companies adopting the “AI” label. These companies span a wide range of sectors, from providing system components to developing language models and utilizing machine learning for data analysis. This article focuses on investing in AI technology stocks to streamline decision-making.
The advantage for such businesses lies in the extensive range of software products they offer. Without physical products, these companies rely on their intellectual property to attract subscribers and drive sales. This approach provides investors with a relatively secure entry point into the speculative realm of AI, as their applications serve as supplementary revenue streams rather than the core offering. The following three AI technology companies have gained popularity for their reliability and the added value of their products.
Datadog (DDOG)
Datadog (NASDAQ: DDOG) has found success in recent years by specializing in cloud-based monitoring and analytics platforms. Its proprietary cloud software, which provides observability for IT infrastructure performance, is gaining traction. By supporting developers in tracking and optimizing customer experience, Datadog has differentiated itself in the market.
The company’s cloud-centric approach to delivering software-as-a-service has enabled seamless integration of AI into its products. Notably, its latest AI initiative, Bits AI, serves as a robust tool for developers seeking real-time recursive queries and summaries of code and data stacks.
Datadog’s rapid growth is further underscored by a significant increase in high-value customers, with 79 more clients signing up for annual contracts exceeding \(1 million. The company also reported a 27% year-over-year revenue growth, reaching \)2.13 billion. Despite receiving less media attention, Datadog’s strong growth trajectory and robust AI programs position it as an attractive investment opportunity.
Fortinet (FTNT)
Fortinet (NASDAQ: FTNT) specializes in developing and offering a range of security software and products designed to safeguard businesses and organizations against cyber threats. Its core product line, which includes firewalls, provides customers with an additional layer of defense against malware and hackers.
In the realm of Artificial Intelligence, Fortinet has introduced FortiAI, a deep-learning solution aimed at enhancing cyber threat detection and response. By streamlining investigations, Fortinet asserts that its customers can proactively identify and mitigate malware threats in real time, bolstering network security.
Fortinet’s strong performance in 2023 is evident in its 10% revenue growth and an 8.5% increase in Fortinet service billings. Coupled with its reputation as one of the top security firms, FTNT stands out as a compelling choice among AI technology stocks.
Cisco Systems (CSCO)
As a prominent player in computer networking, Cisco Systems (NASDAQ: CSCO) has been actively pursuing growth opportunities. A key development is its strategic collaboration with Nvidia (NASDAQ: NVDA), poised to significantly impact Cisco’s stock value. By integrating AI into secure Ethernet-based infrastructure, leveraging their expertise in Ethernet networks, Cisco and Nvidia aim to revolutionize the industry.
The collaboration has already yielded innovations such as AI-enhanced Webex meetings and online collaboration tools. Cisco’s commitment to cutting-edge features contributed to a revenue surge to $57 billion in 2023, marking an 11% annual growth. Furthermore, the acquisition of Splunk has expanded Cisco’s cybersecurity product portfolio and revenue streams.
This partnership aligns with the increasing adoption of AI by organizations, positioning Cisco as a frontrunner in the AI software stocks landscape. With its aggressive growth strategy, Cisco emerges as a promising investment opportunity.
Please note that as of the publication date, Viktor Zarev did not hold any positions (directly or indirectly) in the securities discussed in this article. The views expressed are solely those of the author and are subject to the InvestorPlace.com Publishing Guidelines.
Viktor Zarev is a scientist, researcher, and writer known for his expertise in demystifying technology stocks with a focus on accuracy and clarity.
