The hype around artificial intelligence (AI) has never been more palpable. But with most AI companies located outside Australia and even fewer publicly listed, where can investors get a slice of AI stocks on the ASX?
We may not have the likes of Microsoft Corp (NASDAQ: MSFT) or Alphabet Inc (NASDAQ: GOOG) at our fingertips. However, Australia offers some high-quality businesses that may provide some exposure to the red-hot sector.
Find out what is catching my eye below.
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The next frontier for productivity
Unless you have been living under a rock, you've probably heard of ChatGPT. The AI-powered chatbot owned by OpenAI became the fastest-growing consumer internet app in history in the past week — dethroning TikTok by reaching 100 million users in only two months.
Now, Microsoft, Google, and China search engine Baidu are all squabbling over which can implement the technology the quickest.
Critics may consider AI to be an overhyped fad, but the biggest tech companies in the world appear to be taking it seriously. In fact, Microsoft wasted no time integrating several new AI features into its browser yesterday, giving people the ability to leverage what it calls a 'co-pilot' directly in Microsoft Edge.
Which ASX stocks look ripe for the AI boom
In my opinion, the efficiency benefits of AI in the future will lend themselves to countless applications. As Microsoft CEO Satya Nadella states, "I think that this technology is going to reshape pretty much every software category."
That's why I'm personally keeping an eye on ASX stocks with their toes already in the AI industry.
TechnologyOne Ltd (ASX: TNE) is one such company that already makes use of the technology in its enterprise software solutions. If more enterprises see the value in AI, TechnologyOne could be well-placed to offer off-the-shelf solutions to its customers.
Another ASX stock offering AI-powered solutions is Imdex Limited (ASX: IMD). The company is a software provider to the mining industry, helping it make more informed decisions. One such product is their cloud-based AI spectral interpretation system named aiSIRIS.
Furthermore, Imdex currently trades at a price-to-earnings (P/E) ratio of 24. The valuation and its growth trajectory make it one company I'm seriously considering adding to my portfolio.
The final ASX stock with AI exposure that I think is appealing is circuit board design software company Altium Limited (ASX: ALU).
AI software ultimately needs hardware to run on. The company noted AI as a macro trend for driving increased demand for electronics in its 2022 full-year results.
Altium brings together a long tailwind, a history of executing on growth, and a commendable balance sheet. These ingredients combined make this ASX stock one I'd strongly consider for exposure to AI.
