Why 2020 Is Going to Be Another Huge Year for AI Stocks

Why 2020 Is Going to Be Another Huge Year for AI StocksAI Stocks Continue to Grow in 2020

When we talk about emerging industries, there really is no comparison to the artificial intelligence (AI) sector.

I cover the marijuana industry and tech stocks, and while they are exciting opportunities for investors, no sector has the world-altering potential that AI does.

AI could be the next major economic revolution, the biggest since the Internet and industrialization. And like in both those periods, there’s a lot of money to be earned.

McKinsey & Company projects that, by 2020, AI and machine learning could help create up to $2.0 trillion in value in manufacturing and supply chain planning, as well as $2.6 trillion in marketing and sales. (Source: “Roundup Of Machine Learning Forecasts And Market Estimates For 2019,Forbes, March 27, 2019.)

We’re talking about a potentially multi-trillion-dollar industry growing from almost nothing over the next 10 years. The AI market isn’t just big business; it’s the biggest business there is. AI technology can spread to nearly every aspect of our lives; it has near limitless potential.

Consider that LinkedIn’s “2020 Emerging Jobs Report” names “artificial intelligence specialist” as the job that saw the most growth in the the past five years when comparing different jobs’ hiring growth rates every year, averaged out. (Source: “2020 Emerging Jobs Report,” LinkedIn, last accessed December 19, 2019.)

The LinkedIn report shows a 74% jump each year in AI specialist hirings, on average, since 2015.

“At this stage, most of the workforce doesn’t work in the emerging field of artificial intelligence, but that doesn’t mean it won’t impact everyone,” said Guy Berger, LinkedIn’s principal economist, in the report.

“Artificial intelligence will require the entire workforce to learn new skills, whether it’s to keep up to date with an existing role, or pursuing a new career as a result of automation.” (Source: Ibid.)

And that applies to a number of jobs that we were told would be AI-proof. The banking industry, for instance, looks to be headed toward an AI revolution.

The House Financial Services Committee’s Task Force on Artificial Intelligence recently held a meeting with university academics and Wall Street financial services professionals to discuss the impact of AI on trading, advising, market monitoring, and other activities in the financial services sector.(Source: “Artificial Intelligence Is Superseding Well-Paying Wall Street Jobs,” Forbes, December 10, 2019.)

They are right to be thinking about AI: a report by Wells Fargo predicts that 200,000 banking jobs in the U.S. will be lost over the next decade. (Source: Ibid.)

The fact of the matter is that multi-billion-dollar and trillion-dollar industries are going to be radically redefined by AI technology.

As such, AI companies that are able to operate in this space will have access to some of the most lucrative markets on Earth and play a major role in shaping how those markets develop in the future. That’s good news for those who invest in AI stocks.

The “AI Index,” released annually by Stanford University’s Human-Centered Artificial Intelligence Institute, shows that AI is growing across nearly every metric, from how many papers are published in peer-reviewed journals to the technology’s growth in the job market. (Source: “Artificial Intelligence’s Foothold Increases Going Into 2020,” Forbes, December 17, 2019.)

The U.S. saw its share of jobs in AI-related topics increase from 0.26% of total jobs posted in 2010 to 1.32% in October 2019. While still a small fraction of the total workforce, consider that the percentage has grown by five times in less than 10 years.

That percentage is only going to keep getting larger. The highest share is in machine learning, with 0.51% of total jobs. AI-related labor demand is especially growing in high-tech services and the manufacturing sector.

“The traditional services sector, which includes construction, arts, public administration, healthcare and social assistance, demonstrates a relatively lower demand for AI jobs,” says the AI Index.

The percentage of major companies that adopted AI tech in at least one function or business unit in 2019 was 58%, up from 47% in 2018.

Meanwhile, only 19% of large companies surveyed said they were “taking steps to mitigate risks associated with explainability of their algorithms,” with 13% of them “mitigating risks to equity and fairness, such as algorithmic bias and discrimination.” (Source: Ibid.)

It’s clear that the AI market is going to dominate the next decade. And that means AI stocks are set to see massive growth in the coming years.

Top AI Stock

With all the excitement about the AI industry, it now comes down to honing in on the top AI stock. For me, the company best suited to see massive gains on the back of the AI sector is NVIDIA Corporation (NASDAQ:NVDA).

NVIDIA is mainly known for selling graphics processing units (GPU) that are used in high-end gaming computers, but the company does more than that. Now NVIDIA’s dominance in the GPU space is translating into dominance in the AI industry.

A large part of the AI market will rely on cutting-edge GPU technology. And NVIDIA simply has no rival in that area.

Advanced Micro Devices, Inc. (NASDAQ: AMD), its biggest competitor, has not entered the AI space with much gusto yet, and no other company has the resources and history in the GPU industry that NVIDIA Corporation does.

The experience and resources available to NVIDIA mean that the company is well ahead of the competition in the AI industry.

What’s even better for NVIDIA stock investors is that the company doesn’t have to wait to see financial gains. It’s already on a strong course in the video game sector and other sector. This makes NVDA stock rather safe among AI stocks.

Consider that NVIDIA stock has gained almost 75% year-to-date. That means that, while we wait for the AI revolution (which won’t be much longer), shareholders will still see strong returns on their investment as the company profits from its legacy operations.

And that’s a potent combination indeed. NVIDIA having a strong base of recurring revenue due to its dominance in the video game space, coupled with the sky-high potential of the AI industry, creates one of the strongest AI stock offerings on the market right now.

NVIDIA Corporation is poised to see huge financial gains in the next decades, starting in 2020.

Consider that the company recently unveiled its “Drive AGX Orin,” which will come to production applications in 2022. It’s a powerful bit of technology that will be used in autonomous vehicles. (Source: “Nvidia debuts Drive AGX Orin and open-sources autonomous car AI models,” VentureBeat, December 17, 2019.)

Since the market for self-driving cars is already pegged to be worth billions of dollars in the coming years, here is one solid example of how NVIDIA is going to profit immensely from the AI tech revolution.

All-in-all, it’s hard to beat the AI space when it comes to stock-market potential, and within that space, it’s hard to beat NVDA stock.

Analyst Take

The AI market is going to dominate 2020 (and the next decade). Of that I have little doubt. The ability for AI tech to radically redefine almost every aspect of our lives is apparent upon even a cursory examination.

Couple that with the fact that some companies are performing feats of impressive innovation with their new AI tech and you have a powder keg of potential that’s ready to explode.

I have little doubt that the companies that are most able to harness AI tech will see exponential growth in the coming years. That said, NVIDIA stock is one of the best-positioned AI stocks to benefit from this tech revolution.