Why is everyone talking about artificial intelligence?

If you’re an active investor and frequently look at new companies to potentially buy stocks, you’ve no doubt heard a significant increase in the use of the term “artificial intelligence” or AI. This technology has attracted the attention of many investors as something new and fresh.

The reality is that AI has been around for a long time. Why is it talked about so much now and why is it so important?

Let’s take a closer look at AI and why it’s getting all this new attention. Along the way, I’ll leave you with a few companies to consider as AI investments.

The chatbot revolution kick-started the AI ​​conversation

First, let’s start with a basic AI definition that isn’t inspired by a sci-fi movie. Alphabet (GOOGL 0.53%) (GOOG 0.71%) defines AI as “a set of technologies that enable computers to perform a variety of advanced functions, including the ability to see, understand, and understand spoken and written language translate, analyze data, make recommendations, and more.”

Essentially, engineers can train AI to perform basic human tasks, especially those related to processing data. A good recent example of the use of AI is ChatGPT from OpenAI. After being fed various (and large amounts) of data and parameters for using the data, ChatGPT can perform tasks for you in an almost human-like manner, e.g. B. write an email or create a business plan. But if you ask him a question about something he doesn’t know, the chatbot will fail (or in some cases make up a wrong answer).

The Google search engine (which uses AI to a lesser extent and in a different way) processes around 8.5 billion searches every day. There are some concerns that ChatGPT could capture a growing share of Google’s search business should the chatbot prove to be a superior alternative. When Microsoft (MSFT 2.14%) announced it would launch a ChatGPT-based form of its Bing search engine, it rocked this huge market. In the fourth quarter alone, Google search generated $42.6 billion in revenue for Alphabet.

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The first results indicate that this technology is not quite competitive yet. In one interaction, Microsoft’s chatbot told a user to leave his wife. In another interaction, it insulted the user by comparing them to various dictators.

Despite the obvious need for adjustment, many companies are interested in using it.

AI is not a new technology

CrowdStrike (CRWD 1.41%), a cybersecurity company, uses machine learning (ML), which uses AI technology to extract data and continuously learn to help its customers and gain a competitive edge. The software constantly analyzes its users’ resources and tries to spot patterns that might indicate whether an activity poses a threat. Additionally, if one customer is attacked, the same threat pattern is propagated to all of CrowdStrike’s other customers, so another is not vulnerable to the same type of attack.

Palantir (PLTR 7.08%) is another company with AI as the backbone of its offering. Palantir specializes in data analysis and can process massive amounts of data from various different sources to derive actionable insights. The platform began with public sector/government use (it reportedly helped track down Osama bin Laden’s last hideout) but is now making the same capabilities available to the private sector. As the software affects different companies (in one example, Tyson Foods used it in 20 projects to identify inefficiencies that eventually saved over $200 million), Palantir’s AI-powered data analytics platform is only being used more widely.

AI gets its moment in the spotlight

Both CrowdStrike and Palantir would make great investments and are a good place to start investing in AI. Another excellent investment is Alphabet, although some are wondering if its reign as king of the quest might be over after the launch of Microsoft’s Bing chatbot.

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Alphabet CEO Sundar Pichai noted in the company’s recent conference call that Alphabet has been an AI-first company for over six years and has developed the backbone of many of the AI ​​technologies used today. You’ll likely see the results of its AI research in the years to come as competition forces Alphabet to open its hand. But with the massive resources Alphabet has dedicated to AI, their investment should pay off in the long run.

AI isn’t a new technology and probably won’t do the job for everyone, as some of the technology’s fearsome think. Instead, it aims to help automate and improve aspects of data usage. While AI was in the spotlight for its time, this technology is increasingly being discussed, so investors should allocate their portfolios accordingly to take advantage of technological change.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keithen Drury has positions at Alphabet and CrowdStrike. The Motley Fool has positions in and recommends Alphabet, CrowdStrike, Microsoft, and Palantir Technologies. The Motley Fool has a disclosure policy.