While investing in the stock market, veteran experts often advise investment in futuristic stocks that have a solid market share and the potential to provide significant gains over a long period of time. So, what could be better than those stocks which are majorly based on futuristic technology such as artificial intelligence or internet of things (IoT).
Imagine a company dealing with such futuristic technologies such as smart assistant, driverless cars, automated recommendation, voice recognition systems and other such applications, and you get the chance to invest your money in such companies via their stocks. So, will you treat this as a great investment opportunity or as a huge risk?
To help investors get some clarity, Forbes Advisor India has listed the top six AI-based stocks of India which might help you in fetching significant returns for the long haul.
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Best Indian Artificial Shares 2023
List of Best Indian AI Stocks
TATA Elxsi
Why We Picked It
(*As on April 11, 2023)
Tata Elxsi belongs to Tata Group of Companies and thus can be a safe bet. Tata Elxsi is among the world’s leading design and technology services providers across various segments, including automotive, broadcast, healthcare, and transportation. It is involved in integrating digital technology and design thinking with the help of big data engineering, visual and extended reality, cloud computing, IoT, cybersecurity and robotics.
Bosch
Why We Picked It
(*As on April 11, 2023)
Bosch is easily an investment in the future, with its stock likely to offer steady gains for years. The company owes its success to its near-constant search for technologies of the future. Bosch has the capability to bring inclusive expertise in automotive technology with hardware, software, and services to offer complete mobility solutions. With a wide array of products based on AI and machine learning systems, Bosch is all set to lead on a growth path with its strong overseas clientele as well as an evolving Indian footprint.
Persistent Systems
Why We Picked It
(*As on April 11, 2023)
Persistent Systems is an IT solutions company which offers AI based software and technology solutions in India and globally. It provides services such as digital payments, intelligent automation, data governance and by taking full advantage of automation, cloud and infrastructure and AI. The company deals in various segments such as healthcare, insurance, life sciences, healthcare, industrial, telecom and software and hi-tech. The company claims to have more than 350 clients annually and has its strong presence in 18 countries.
KPIT Technologies
Why We Picked It
(*As on April 11, 2023)
KPIT Technologies is another leading Indian multinational company providing software, AI and digital solutions to the automobile and mobility sector, in the major parts of the U.S., UK and the rest of Europe. The company has a wide-ranging solution for automated driving, advanced driving assistance solutions. It also deals in battery management systems, high powered inverters, advanced charging equipment and many more other areas.
As per company, KPIT is on track to beat FY23 growth outlook backed by revenue growth of 44.7% (year-on-year) and net profit growth of 43.5% on YoY basis.
Cyient
Why We Picked It
(*As on April 11, 2023)
Cyient Limited provides geospatial, IT and data analytics solutions in North America, Europe and Asia Pacific. The company deals in digitization of drawing and map, remote sensing, computer designs and modeling, repair development engineering. It helps industry to exploit the power of location in this digital era. The company has more than 20 years of experience in embedded software solutions with a focus of cost optimization and accurate machine-oriented results.
Happiest Minds Technologies
Why We Picked It
(*As on April 11, 2023)
Happiest Minds Technologies can be one of the safest bets if you wish to invest in AI based stocks. The company is headquartered in Bangalore, India with operations in the U.S., UK, Canada, Australia and Middle East. Happiest Minds deals in enterprise transformation and next generation products. It invests heavily in IoT, software defined networking and big data along with advanced analytics. The company provides its services to a huge range of industries such as automotive, banking, consumer packaged goods, e-commerce, education publishing, retail and manufacturing.
What Are AI Stocks?
Artificial intelligence is a kind of system which involves intelligent and responsive machines, computers, and robots which can perform tasks very much like humans or in an automated way. Artificial intelligence is a new-age technology, which is capable of finishing the given tasks much faster and in a more accurate way.
From self-driving cars, smart digital assistants, and manufacturing robo-advisors to healthcare sector and automated financial investing, AI is used in many sectors in the economy and thus stocks of such companies can be referred as “AI Stocks”, which are known as future-ready shares and carries significant scope to grow in long haul. Thus, AI stocks refers to shares in those companies which use artificial AI and such similar machine tools in the distribution of products, applications or services.
In India, the AI sector is still evolving at a faster pace and serves a broad industry with several segments.
Here are the main sectors of Artificial Intelligence in India:
- Software
- Hardware
- Services
- Manufacturing
- Information Technology
- Automobile
- Communications and Telecom
Related Article: What Is Artificial Intelligence (AI) And How Does It Work?
What are the Benefits of Investing in Indian AI Stocks?
Given the mounting interest in AI and other such machine learning systems, we cannot ignore the fact that many companies are capitalizing on AI capabilities and solutions which can prove to be a boon in upcoming years. Thus, in such a scenario, investing in AI stocks may prove to be a solid long-term investment. Let’s list out the main benefits of investing in artificial intelligence.
Positive Outlook: AI based stocks are here to stay long. As per one of the reports published by World Economic Forum, technologies of the fourth industrial revolution tend to create an economic value of $3.7 trillion by 2025. System integration, application development and data services are expected to be the key technology focus areas across consumers, enterprises, industrial, and devices markets.
Cutting-Edge Investment: We all know the fact that AI is disruptive, and so are their stocks. Technologies such as IoT, advanced robotics, artificial intelligence are already helping big to generate productivity with lost cost benefits. One of the benefits of investing in AI stocks, that such companies are striving their best to provide cutting-edge solutions on a global scale to the industries as well as governments around the world.
Diversification: Gone are the days where investors were just limited to a certain and specific sector such as pharma or banking. New age investors want to explore more. Thus, investing in AI stocks allows such investors to diversify their portfolios at large and gain a certain amount of exposure to this high-growth and hi-tech led industry.
Ensuring Long-Term Sustainability: AI stocks are regarded as key drivers of innovation, accuracy and efficiency. Since, such companies focus more on long-term growth along with cost-effectiveness, which further indicates long-term sustainability. And, long-term sustainability improves the survival of the company in the future by ensuring that resources used by the business are responsibly managed and maintained.
Key Factors to Consider Before Investing in Indian AI-Based Stocks
AI is known as the next frontier in investment management. Artificial intelligence is able to provide new opportunities which reflect accuracy and efficiency in their operations with cost effectiveness. Below mentioned are key driving factors which must be considered if you are planning to invest in intelligent solutions and systems.
Do Your Research: It is very important to research about an AI based company’s performance and its various business strategies along with its growth plans.
Check the Price-to-Earnings Ratio: Before investing in any AI stocks, you must comprehend the nitty-gritty of their financial operations. The investor must keep an eye on the company’s debt, their profitability, cash flow and earnings per share. Such important financial metrics can help you gauge a company’s financial health and also helps you to understand its potential for long-term growth.
Check Their Management Team: The management team of any AI-related company is one of the crucial factors to consider. The investors can assess the company’s management team and evaluate its track record of success to get a fair idea. Also, look for skilled and veteran leaders who already have a deep knowledge of the industry and carry a clear vision for growth. A strong management team ensures investors about the company’s long-term success.
Regulations: Law and regulations for the AI sector is constantly evolving in India. So, before putting your money in any of the AI stock, ensure that the specific rules and regulations are already at place. For instance, India is still not able to bring any solid regulations on driverless cars.
Bottom Line
In short, for all the AI stocks, the investor must consider the potential risks and opportunities of the AI based companies. They must evaluate the company’s revenue, market share, profitability and growth potential and other crucial fundamentals. It is obvious that companies with solid growth trajectory are likely to provide much better returns on investment.
It is also advisable for investors to weigh up all the related consequences and then decide to make AI stocks as a part of your investment portfolio with cautious approach and limited exposure.
Frequently Asked Questions (FAQs)
What is the biggest risk of entering into AI stocks?
Every stock in the equity market carries its own share of risks and profits. Similarly, in the case of AI stocks, it is necessary to weigh the technology standards, initial set-up costs, presence, regulatory scenario, risks to human employment and the biggest risk of overtaking humanity as a whole.
Why should I invest in AI stocks?
AI stocks have the capability to transform unimaginable into reality. Therefore, they might give you immense returns if you have the risk to bet on hi-tech and AI based solutions. There is no doubt that AI stocks are emerging as one of the hottest new investment trends in years to come.
How are AI stocks different from other regular stocks?
Rest of stocks might belong to such companies which are dealing in something which is already there from past several years. But AI is evolving and thus its regulation and process are also not completely set. AI is an evolving technology which is still in its developing phase and companies focused on AI may be not very profitable but hold a very promising future. AI stocks prices may be more volatile than the other regular stocks.
How can I invest in AI stocks in India?
Just like any other stock, you can invest in AI stocks. For this, you need to have a brokerage or demat account which allows you to trade or buy/sell in that particular share. You can select your share and decide how much exposure you want to take based on your investment goals and risk appetite.
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