Artificial intelligence (AI) continues to be an exciting investment trend, capturing the attention of many investors. However, it is crucial to choose the right stocks in this space to avoid getting caught up in the hype. Fortunately, there are several AI stocks that offer solid investment opportunities irrespective of the extent to which AI adoption progresses. In December, investors should consider buying shares of Alphabet (GOOG -1.31%) (GOOGL -1.42%), Procore (PCOR 0.31%), and Accenture (ACN 0.64%) if they are looking to gain exposure to the AI sector.
Alphabet, the parent company of Google, stands out as one of the most recognizable names in the field. Google has been actively engaged in the race for AI dominance and recently unveiled its Gemini generative AI model, which outperforms many competitors in various areas. Given this advantage, Gemini is likely to become one of the go-to models for developers working on generative AI applications. Additionally, Alphabet’s strong presence in the advertising industry, with 78% of its revenue derived from this sector, ensures that the company remains robust even if the impact of AI does not meet lofty expectations. Alphabet’s excellent execution is also evident in its rising earnings per share (EPS), which increased from $1.06 to $1.55 in the third quarter. With a price-to-earnings ratio of 20 times 2024 earnings, Alphabet offers a favorable investment opportunity.
Procore, a provider of construction management software, offers a unique value proposition to project owners, contractors, and subcontractors. By integrating all stakeholders into one program, Procore establishes a single point of truth, allowing for seamless communication of changes, budget updates, and progress tracking. The construction industry has been slower to adopt technology compared to other sectors due to limitations in mobile internet capabilities. However, with the ongoing digital transformation, Procore offers investors an opportunity to tap into this sector now that the industry possesses the necessary digital capabilities. Procore is leveraging AI with the launch of its copilot, a tool designed to enhance efficiency. With approximately 18% of project time spent searching for data, Procore’s copilot has the potential to save several hours per day for construction professionals. Besides its AI initiatives, Procore’s financials demonstrate its strength, as revenue grew 33% year-over-year to $248 million in the third quarter, and the company generated $22 million in free cash flow. Procore expects to capture a larger portion of the U.S. construction volume, estimated to be only 12% on its platform, and less than 2% globally. This substantial runway for growth makes Procore an appealing stock to consider.
Accenture, a leading global business consultant, plays a crucial role in aiding companies’ implementation of AI technologies. With its extensive workforce of over 700,000 employees, Accenture possesses the necessary expertise to guide strategy development, solution implementation, and product maintenance throughout the AI lifecycle. As 97% of executives acknowledge that generative AI will transform their companies and industries, businesses are actively seeking ways to integrate this technology. Accenture plays a pivotal role by assisting in the development and implementation of large-scale language models for generative AI, data identification and capture, and ensuring responsible AI usage. Despite experiencing slower growth in 2023 as clients focused on improving efficiency, Accenture is expected to benefit from an economic upturn. The company projects revenue growth between 2% and 5% for fiscal year 2024, along with earnings per share growth of 6% to 9%. Accenture’s ability to deliver high single-digit earnings growth in unfavorable market conditions highlights the strength of its business.
Investors seeking exposure to the AI sector should carefully consider these three stocks: Alphabet, Procore, and Accenture. Each presents unique opportunities and demonstrates strong potential for growth in the AI space. It is essential to evaluate investment prospects in line with individual goals and risk tolerance while considering the long-term potential of AI technology in various industries.
