With so many different companies claiming the artificial intelligence (AI) moniker as of late, it can be difficult to determine which AI offerings are worth investing in. Companies can define themselves as AI stocks by doing anything from providing cloud infrastructure hardware to training large language models to using machine learning for data analysis. To narrow it down, this article will focus solely on AI software stocks to buy.
For companies such as these, the value lies in the relative capabilities of their software products. Because these companies do not manufacture goods, they rely on the effectiveness of their intellectual property to garner subscriptions or sales. For investors, these types of companies can provide a safe entry into the speculative nature of AI. Mostly because their software acts as an auxiliary revenue support rather than their sole offering. These three AI software stocks to buy are all increasing their customer bases thanks to reliability and the added value their products provide.
Datadog (DDOG)
Focusing on cloud-based monitoring and analytics platforms has proven successful for Datadog (NASDAQ:DDOG) in recent years. By offering observability for information technology (IT) infrastructure performance, Datadog’s proprietary cloud software is growing in popularity. That’s because the company supports developers’ efforts to pinpoint software errors and track user experience.
Furthermore, the company’s cloud-based approach to offering software-as-a-service has allowed it to more effectively integrate AI into its products. Its most current AI project, Bits AI, is a direct support tool for developers who want real-time queries and summaries of code and data stacks.
What makes DDOG even more attractive is its strong growth, with an increase of 79 additional customers who pay over $1 million a year. The company also saw a 27% year-over-year (YOY) increase in revenue, putting it at $2.13 billion. Datadog might get less publicity, but its strong growth and direct AI applications make it a buy currently.
Fortinet (FTNT)
Fortinet (NASDAQ:FTNT) develops and sells various security solutions and software to protect businesses and organizations from cyber threats. The company has made firewalls its core product line, offering customers a first line of defense against hacking and ransomware.
On the AI front, Fortinet offers a service called FortiAI. This deep-learning solution is designed to optimize the investigation of cyber attacks. By shortening investigation times, Fortinet asserts its customers can accelerate their responses to hacking threats by identifying them in real-time and blocking them from corporate networks.
Moreover, the company’s solid performance in 2023 saw a 10% increase in revenue and an 8.5% increase in Fortinet service billings. Consider the fact that FTNT currently ranks among the top cybersecurity providers and you get one of the top AI software stocks to buy.
Cisco Systems (CSCO)
A leading player in the field of computer networks, Cisco Systems (NASDAQ:CSCO) has made serious moves to keep growing. Chief among these exciting changes is Cisco’s new partnership with Nvidia (NASDAQ:NVDA), which has the potential to skyrocket Cisco’s stock value. Thanks to its significant expertise in Ethernet networking, Cisco and Nvidia intend to integrate AI with highly secure Ethernet-based infrastructure.
Together, Cisco and Nvidia have been able to synergize Webex with AI-powered meetings and virtual desktop infrastructure. This exceptional commitment to functionality saw Cisco’s revenues increase to $57 billion in 2023, representing 11% yearly growth. The company also completed its acquisition of Splunk, further expanding its market offerings and revenue streams to cybersecurity.
This merger comes at the perfect time. As organizations continue adopting AI, they will look to Cisco’s ecosystem. Of all the AI software stocks to buy, Cisco might be the most promising, should it capitalize on aggressive growth.
On the date of publication, Viktor Zarev did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.