The words "artificial intelligence" likely conjure up visions of dystopian sci-fi worlds for many investors. Yet many tech companies have already developed advanced AI platforms -- indicating that the "future" isn't as far off as you might think.
You've likely already flirted with this technology with Siri or Echo, and you're probably aware that your personal information is constantly being analyzed in the cloud. But how do these pieces actually fit together, and which companies are well-poised to profit from smarter machines?
To figure that out, we should sort these top companies by three main categories -- the advertisers, the SaaS players, and the chipmakers.
Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google andFacebook(NASDAQ: FB) both use artificial intelligence to recognize images and analyze users' data to deliver better targeted ads. Google's AI takes a users' search history, location data, and other information to craft ads, and Facebook does the same with its users' social connections and interactions.
Google has acquired abouta dozen AI start-ups over the past five years. These purchases include deep learning and neural network start-up DNNresearch, which enabled big upgrades to its image search feature, and British AI firm DeepMind, which recently used its program to beat a human world champion at Go. Earlier this year, it acquired visual search start-up Moodstock and bot platform Api.ai.
Facebook has been less aggressive on the acquisition front, but it's FAIR (Facebook AI Research) unit develops many internal tools for image recognition, speech recognition, natural language processing, real-time translation, machine learning, and other algorithmic tasks. It also integrated chatbots directly intoits stand-alone Messenger app earlier this year, which enables companies to offer automated customer support services.
AI and the cloud are joined at the hip, because AI platforms would be useless if they couldn't process a steady stream of cloud-based data. That's why cloud-based SaaS (software as a service) leadersMicrosoft(NASDAQ: MSFT) andSalesforce(NYSE: CRM) are both investing heavily in AI.
Microsoft's SaaS products -- Office 365, Skype, and Dynamics CRM (customer relationship management) -- all feed data back to Azure, its IaaS (infrastructure as a service) and PaaS (platform as a service) ecosystem. To process all that data -- along with search queries from Bing, Cortana, and other apps -- Microsoft formed a massive newAI division called the AI and Research Group in September. It also acquired AI companies like Netbreeze, Equivio, and Genee over the past five years.
Salesforce, the market leader in cloud-based CRM software, is also investing heavily in AI tools to present companies with better analytics to improve customer relationships.