ASX AI Stocks: Investing in Artificial Intelligence
Team Veye | 11-Aug-2023
What is Artificial Intelligence?
A machine that can do anything the human brain can do. Artificial intelligence (AI) is potentially one of the most viable new technologies.AI is a broad term that encompasses a lot of technologies, such as 'machine learning', 'deep learning, and 'natural language processing'. It cannot be defined in a particular way due to its vast internal role, although there are some similarities between technologies that are called 'AI'. For instance, almost all AI needs vast amounts of data and processes it to perform a complex analytical task. Many AIs also have the capacity to adapt themselves over time in order to improve their accuracy or reliability. AI is already all around us, and new uses are being devised every single day. AI offers different opportunities to grow the economy, create jobs, and improve human lives.
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Applicability of AI technologies is well equipped in various forms, such as:
• Helping small businesses better understand their customers.
• Transforming local manufacturing to be more competitive
• It helps manage the environment and resources more efficiently.
Investing in ASX Artificial Intelligence Shares
Basically, the artificial intelligence market is large and rapidly growing. Some research based firm predicts that the world AI market anticipated growing at a CAGR of 38.1% until 2030. There are some IT companies heavily investing in the AI space in Australia to take advantage of their presence. Risky investors might allocate fund in ASX artificial intelligence shares for long term.
Australian Government strongly emphasize on to implantation of AI, which has committed $41.2 million to assist the responsible deployment of AI in the national economy. This includes setting the National Artificial Intelligence Centre on a more sustainable footing to support the responsible AI Network. This will strengthen AI governance and industry capability. The investment includes launching the $17 million responsible AI Adopt Program.
This program will fund eligible businesses to run a centre to support small to medium enterprises (SMEs) without AI expertise to adopt AI technologies. This will help SMEs maintain or improve competitiveness in interstate or international markets.
The COVID-19 pandemic has further accelerated the growth of online spaces where consumers can congregate to collaborate and connect.
What are ASX Artificial Intelligence Stocks?
There are Australian companies listed on the ASX that are significantly involved in the artificial intelligence space, known as ASX artificial intelligence stocks. Growth opportunities with AI stocks are notable. The rate of innovation is accelerating as accessibility to rich data sets improves. Increasing usage of cloud-based systems to store large volumes of data has allowed for an expansion in analytical capabilities enabled by deep learning. There are some elite ASX artificial intelligence stocks, notably those participating in artificial intelligence technologies, as follows:
- Wisetech Global Ltd (ASX: WTC)
- Xero Ltd (ASX: XRO)
- Technology One Ltd (ASX: TNE)
- Brainchip Holdings Ltd (ASX:BRN)
- Bigtincan Holdings Ltd (ASX:BTH)
How to Invest In AI Stocks on the ASX?
The adoption of advanced technologies in industry verticals such as automotive, retail, healthcare, manufacturing, and finance is growing at a fast pace. Artificial intelligence is now being infused into everything from self-driving vehicles to medical equipment.
Some ASX AI stocks provide very good buying opportunities for common traders or investors. Therefore, an individual whose risk appetite seems very high may take a chance to invest for long-term benefit through investing in AI stocks on the ASX or by way of a specific ETF that has a specific investment in an AI-oriented area.
Top AI Stocks on the ASX
There are number of stocks listed on the ASX, with heavily involvement in the AI space, they form part of the information technology sector of the ASX. Here are three top AI shares ranked by market capitalization from high to low.
Wisetech Global Ltd (ASX: WTC)
Wisetech Global Ltd. (ASX: WTC) has a market capitalization of $29.04 billion and a current market price of $87.50 as on 10 August 2023. Wisetech Global Ltd. is a developer of the leading logistics execution software CargoWise globally, with customers including over 18,000 of the world's logistics companies across 170 countries, including 41 of the top 50 global third-party logistics providers.
On 17 February 2023, the company reported its acquisition of Blume Global, a leading solution provider facilitating intermodal rail in North America, for US$414 million. Blume is being acquired from funds managed by Apollo, EQT, and other minority shareholders.
WiseTech expects to fund the transaction via a combination of US$134.8 million from existing cash reserves, US$155.0 million of debt from new facilities, and US$124.2 million in new WiseTech Global shares issued to the vendors. This highlights a funding contribution of 70% in cash and 30% from WiseTech Global shares.
Xero Ltd (ASX: XRO)
Xero Ltd (ASX: XRO) has a market capitalization of $17.79 billion and a current market price of $117.50 (dated 10 August 10, 2023) and provides a platform for online accounting and business services to small businesses. It is a New Zealand based public technology company listed on the Australian securities exchange that deals in cloud-based accounting software platforms for small and medium-sized businesses. Xero Limited is a global small business platform with 3.3 million subscribers that includes a core accounting solution, payroll, workforce management, expenses, and projects.
On 18 May 2023, the company reported its full-year earnings to 31 March 2023. The strong operating result was delivered against a complex macroeconomic environment, underscoring the trust customers place in Xero, the resilience of Xero’s business, and its commitment to more disciplined, customer-focused growth. Xero delivered revenue growth of 28%, contributing to an increase in adjusted EBITDA of 45% compared to FY2022 to $301.7 million. This drove a significant increase in free cash flow to $102.3 million, which reflects a free cash flow margin of 7.3% compared to 0.2% in FY2022.
Technology One Ltd. (ASX: TNE)
Technology One Ltd. (ASX: TNE) has a market capitalization of $5 billion, and the current market price of $15.39; is Australia's largest enterprise software company with locations across six countries. The Company provides a global SaaS ERP solution that transforms businesses and makes life simple for our customers. The company's deeply integrated enterprise SaaS solution is available on any device, anywhere, and anytime, and is incredibly easy to use.
On 23 May 2023, the company its financial results for the half year ended 31 March 2023, showing its 14th year of record first half profit, with SaaS ARR up 40% and Profit After Tax up 24%, underpinned by continuing strong demand for the Technology One global SaaS ERP solution. Technology One’s SaaS and Continuing Business now has revenue of $200.0 million for the half year, up 18%, representing 98%+ of our business, reflecting a huge shift from our legacy licence business.
Pros of Investing in AI shares
AI became pivotal for the involvement of revolutionary technology, and is being touted as having the potential to transform the world. Investors that initiate their first investment at this stage are in the best position to benefit from this transformation. The future is AI. Therefore, investing in ASX AI-based stocks might appear beneficial in the long run.
During the COVID-19 pandemic, the whole world was developing habits through online access to various options to bring smoothness to their work or overall requirements. The growing need has accelerated AI adoption at a rapid rate, and it is becoming ubiquitous across business processes.
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Frequently Asked Questions (FAQ)
What are the best ASX stocks for AI?
This is a very preliminary stage for Artificial intelligence to complete its adoption in the industry; however, there are better future prospects for AI. Very few ASX stocks that are Australian companies majorly involved in AI investments are Wisetech Global Ltd. (ASX: WTC); Brainchip Holdings Ltd. (ASX: BRN); and Xero Ltd. (ASX: XRO).
What Australian AI companies are on the ASX?
There are Australian AI companies, especially in the informational technology sector. Stocks listed on the Australian stock exchange are: Wisetech Global Ltd. (ASX: WTC); Xero Ltd. (ASX: XRO); Technology One Ltd. (ASX: TNE); Brainchip Holdings Ltd. (ASX: BRN); and Bigtincan Holdings Ltd. (ASX: BTH).
What are the top 3 AI stocks to buy now?
The top three Australian stock exchange-listed AI-based companies with higher market capitalizations are Wisetech Global Ltd. (ASX: WTC), which has a market capitalization of $29.04 billion; Xero Ltd. (ASX: XRO), which has a market capitalization of $17.79 billion; and Technology One Ltd. (ASX: TNE), which has a market capitalization of $5 billion and has made major investments in AI technologies, positioning itself as a better future prospect.
What is the most promising AI Company?
Wisetech Global Limited has been relentlessly focusing on innovation, adding over 5,200 product enhancements to its global platform in the last five years while bringing meaningful continual improvement to the world’s supply chains. The company's breakthrough software solutions are well known for their sound productivity, extensive functionality, seamless integration, compliance capabilities, and truly global reach.
What are the best AI penny stocks to look at in an ASX buy?
There are AI penny stocks listed on the ASX that have potential in the AI sector, as follows:
Alcidion Group Ltd. (ASX: ALC) has a market capitalization of $155.34 million and a current market price of $0.123 (as 11 August 2023) offers a complementary set of software products and technical services that create a unique offering in the global healthcare market.
Brainchip Ltd. (ASX: BRN), with a market capitalization of $661.21 million and a current market price of $0.373 (as 11 August 2023) is a developer of software and hardware-accelerated solutions for advanced artificial intelligence and machine learning applications, with a primary focus on the development of its ‘Akida Neuromorphic Processor’ to provide a complete ultra-low power and fast AI Edge network for vision, audio, olfactory, and smart transducer applications.
LBT Innovations (ASX: LBT), with a market capitalization of $7.70 million and a current market price of $0.022 (as on 11 August 2023) is a developer of clinical and diagnostic technology based in Adelaide, South Australia. The Company has a product named APAS for microbiology automation.
Appen Limited (ASX: APX), with a market capitalization of $331.10 million and a current market price of $2.11 (as of 11August 2023), is a globally focused company that provides language technology data and services in more than 235 languages and dialects in over 70,000 locations and 170 countries to a range of industries, including technology companies and government agencies. A small-category AI-based stock offers a value-buying opportunity.
Can I invest in AI stock?
Artificial intelligence is at its nascent stage, and a significant impact on the economy has yet to be realized. However, governments from all over the world have been paying attention to the key aspects of AI's usefulness in industries and assessing its positive impact on the GDP contribution. Risky investors might take a chance on their investments in AI stocks to benefit in the long run.
Does Elon Musk invest in AI?
There has been a rumor about Elon Musk starting up an AI-based company, which is revealing that he has bought thousands of graphic processing units to power an upcoming generative AI product. Musk even reported seeking funding from SpaceX and Tesla investors to get the company started.
Elon Musk has been against Open AI, the artificial intelligence organization that he co-founded in 2015 and later walked away from in 2018. He has signed a letter calling for a pause on ‘AI experiments’. Open AI has become a hugely recognizable name on the back of technology like Chat GPT and GPT-4 and is partially responsible for kicking off Microsoft and Google’s current push to integrate AI tools more deeply into many of their products.
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