If you’re wondering how to trade the AI craze spurred by ChatGPT, researchers at Baird say they’ve got you covered.
“Companies on our list have advanced AI capabilities and we believe will benefit from the ‘tidal wave’ of AI-powered applications,” Colin Sebastian, senior analyst at Baird, and his team wrote in a note to investors.
The list of 50 top ideas from public companies that are leaders in AI and machine learning ranges from small to megacaps and falls into a variety of categories.
Amazon ( AMZN ), Alibaba ( BABA ), Alphabet ( GOOGL ) ( GOOG ), and Pinterest ( PINS ) are the four giants listed under “Internet,” while Nvidia ( NVDA ) is the play of choice for “Storage and Semiconductors.”
The more unusual approaches to investing in AI stem from the “Human Capital Technology and Solutions” category, which names stocks such as ADP (ADP), Ceridian HCM Holding (CDAY), Paycom Software (PAYC), Paychex (PAYX), and Paylocity Holdings (PCTY).
The list, compiled by senior analyst Mark Marcon, includes the following highlights:
“WDAY has always been a leader in AI/ML (Artificial Intelligence/Machine Learning), and is one of the first software companies to put a lot of emphasis and investment into it,” Marcon wrote. “During the recent investor day, WDAY emphasized that ML is being integrated into all elements of the platform.”
The analyst also highlights the personnel company’s relationship with Microsoft and Google, both of which are leaders in AI/ML.
Automatic data processing (ADP)
The payroll company began discussing its interest in artificial intelligence and machine learning several years ago as a way to leverage its data to add value to customers.
“Data is one of the most important inputs to developing and maintaining a successful AI/ML program, and ADP and PAYX have the most data of any payroll provider, paying one in four US private sector payrolls,” Marcon wrote .
Robert Half International (RHI)
The staffing company already has the most robust AI/ML capabilities among its public sector peers.
“RHI has a proprietary database of over 30 million candidates, and RHI uses AI/ML to find the best-matched candidates for open positions, significantly improving recruiting productivity,” Marcon wrote.
“Additional opportunities include using AI/ML and chatbots to reach candidates and customers, potentially reducing both service and sales costs,” he added.
Marcon added a negative note for all staffing and recruiting organizations: Some of the positions filled by these companies “may at some point in the future be automated away by AI/ML-enabled software.”
“Many staffing companies are moving up the value chain to reduce exposure to positions that may be displaced through automation,” the analyst wrote.
Ines is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre
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