Stephen McBride: Let’s talk money today, Chris.
We’ve given a lot of background on artificial intelligence (AI) over the last two days. Today, we’ll get into specific stocks and sectors to profit from AI now.
Chris Wood: So, from an investor perspective, the most exciting thing about AI is it’s a needle-mover right now.
The last few years, we’ve heard a lot about “pie in the sky” technologies that sound compelling but are years from making any kind of business impact. AI is the opposite. It’s transforming industries as we speak… and moving stock prices now and will for years to come.
Take ICAD (ICAD), for example. It’s an early stage company using AI image recognition to help detect breast cancer up to three years in advance.
Stephen: And this is just the tip of the iceberg. AI can “read” many medical images, like MRIs, better than humans can, right?
Chris: And not just any humans. This was a job only highly paid doctors could do before. Now, these doctors, who often make $500K+ a year, can go do more important things.
Think about the cost-savings and profit-boosting potential in just this one narrow application of AI in healthcare. Scale that across the entire US—and eventually the world—and you’re looking at saving billions of dollars, easy.
Imagine how valuable a technology like this is. And there are hundreds of them on the way—both in and outside of healthcare.
Stephen: Let’s talk about AI opportunities outside of healthcare. But really quick… you made an important point I want readers to remember.
AI lets companies do more with far less employees.
In general, doing more with less employees has been the trend of technology for a long time. For example, Facebook (Meta) has an astronomical “profit per employee” of $497,338. That means every Meta employee is bringing in nearly $500K in profits. Apple’s profit per employee is $446,220. Google, Microsoft, and Adobe’s are all over $200K.
These companies’ stocks usually do very, very well. We all know the names above are “hall of fame” stocks.
In our “How to Act on the AI Revolution” talk, I predicted AI will lead to the first company that makes $1 billion with less than 10 employees.
So Chris, what AI investments do you like outside of healthcare? I think readers have heard us praise Nvidia (NVDA) enough by now. We continue to recommend NVDA in our Disruption Investor advisory. It’s the number one–performing stock in the S&P this year and is up 140% since October, largely because AI can’t happen without its GPU computer chips.
What other AI opportunities do you see?
Chris: There’s one sector in particular. Quick story. My family’s from New Orleans. We lived through Hurricane Katrina. So this hit home for me.
Hurricane Ian recently crushed much of the South. Shortly after the storm passed, nearly 3,500 people near Charlotte got an alert on their smartphones. It offered them $700 in assistance, no questions asked. This was long before anyone could get out there to assess the damage.
How? An AI algorithm made by Google surveyed the damage through satellite images. It saw where the worst damage was and helped direct funds to those residents affected faster than any insurance company ever could.
Stephen: This is “image recognition,” or “ computer vision.”
Chris: Exactly. Your longtime readers are familiar with this. You were one of the first analysts to write about this idea. And your recommendation of Tobii AB (TOBII.ST)—a company that makes artificial “eyes” for people with vision problems—worked out well.
Stephen: I agree. AI is a total game-changer here. It allows computers to not just “see,” but to understand and draw conclusions from what it sees.
Self-driving cars alone are probably a trillion-dollar opportunity here.
But it goes so far beyond that.
Take one of the lowest-tech professions: farmer. Did you know last fall, John Deere (DE) shipped its first fleet of AI-equipped tractors? Their cameras can see each individual plant and decide what to do with it. This is a cucumber; fertilize it. This is a weed; chop it.
It’s amazing. The company says the technology pays for itself with labor savings in three years or less.
Chris: Yes, AI is flourishing in all sorts of places you wouldn’t suspect. Rentokil (RTO), the world’s largest pest control company, uses AI facial recognition to identify which individual rats are leading an infestation.
But of all these areas, I believe using AI to analyze satellite imagery is the most immediately lucrative investing opportunity.
The tech is already being deployed to do things like spot military convoys, monitor border crossings, manage port traffic and stockpiles of commodities... and much, much more.
One tiny company (under $2/share) has the best AI tech here—better than Google. This one I cannot mention here because it’s a “best buy” in my Project 5X advisory. Can we give readers a link to learn more?
Stephen: Of course... They can go here to get all the details. Thanks, Chris. More tomorrow...
Stephen McBride
Chief Analyst, RiskHedge
