We have selected five best artificial intelligence small-cap stocks to buy, as an alternative to bigger tech companies that are also engaged in the AI space. Many tech giants, like Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOGL), Facebook Inc. (NASDAQ:FB), Tesla Inc (NASDAQ:TSLA) and others, are engaged in developing some sort of artificial intelligence, but they rely on revenue from their main business and can be too expensive for a smaller investor to generate meaningful returns from them, even though they are much less risky investments. Small-cap companies engaged in AI can be more volatile, but also have more potential to grow and generate more value, as a result.
Artificial Intelligence is a term that has been around since 1950s. It is defined ass a system that allows a machine to imitate some cognitive functions like learning and problem solving. A decade or so ago, people usually associated Artificial Intelligence with either some theoretical examples or examples present in pop-culture, like the evil superintelligence system Skynet in the Terminator franchise, which wanted to wipe out the humanity.
Nowadays, however, AI systems, while still in their infancy, are widely used and we interact with them day-to-day in order to simplify some of our personal or professional tasks. Of course, this doesn’t mean that if a fully-developed AI system is introduced and is tasked with the protection of mankind, it will quickly go through Twitter feeds and comment sections and will come to the conclusion that the best way to save the humanity is by exterminating it. During a speech at MIT a couple of years ago, Elon Musk called AI “our biggest existential threat”, adding that “there should be some regulatory oversight, maybe at national and international level, just to make sure that we don’t do something very foolish.”
Elon Musk is not the only one concerned about the potential threat of AI. An article written in 2014 by Stephen Hawking, Stuart Russell, Max Tegmark, and Frank Wilczek, says that a success in creating an artificial intelligence could be the biggest event in human history, but might also be the last, unless humankind learns how to avoid the risks.
Meanwhile, artificial intelligence systems that are being developed now are doing their job at being our servants. There are virtual assistants on our phones, computers and tablets that help us with some daily tasks. Some automotive companies are engaged in developing AI systems that can drive vehicles by themselves, thus minimizing the probability of road accidents and making it easier to commute. AI systems are used in the data processing, improving online services, providing information that people need (or that the system thinks people need). AI systems have even entered in the healthcare space, where machine learning is used to identify diseases by scanning lots of information related to various diseases, and so on.
AI has even made its way in the financial world, where systems and algorithms are used to identify patterns, analyze data and make transactions at much faster speeds than humanly possible. At the same time, it offers the possibility for investors to put their money in a new, high-growth and exciting industry. The AI industry is expected to be worth $16 billion by 2022, growing at a compound annual rate of nearly 63%. This huge inflow of money means that investors have lots of opportunities to get some exposure to the industry.
As stated earlier, investors can buy shares of tech giants that have lots of cash to invest in developing their own AI systems and pursuing acquisitions in the space. For example, here are seven Artificial Intelligence Companies to Invest in Now. There are also many AI-focused startups, although investing in a startup is more difficult than in a publicly-traded stock. There are even AI-focused ETFs that offer investors exposure to a basket of stocks. Some ETFs incorporate stocks of the aforementioned tech giants that spend lots of money on R&D in the AI space, while others target companies that are purely engaged in AI systems. ROBO Global Robotics and Automation Index ETF (NASDAQ:ROBO) and Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ) are two ETFs from the latter group. However, in this article, we are going to discuss five small-cap companies that are engaged in the artificial intelligence industry. In addition, we are going to see what is the smart money sentiment towards these stocks.
1. iRobot Corporation (NASDAQ:IRBT)
Market Cap: $2.60 Billion
iRobot Corporation (NASDAQ:IRBT) is a company that was founded in 1990 by three MIT graduates and is known for its consumer robots for inside and outside the house. It’s most well known product are autonomous vacuum cleaners Roomba, but the company also makes autonomous floor moppers Braava, and swimming-pool cleaners Verro. However, iRobot Corporation (NASDAQ:IRBT) is also engaged in developing robots for military use. It has developed autonomous robots that can be used in bomb disposal, transporation, and surveilance. In addition, it is currently working on its SWARM artificial intelligence project that is engaged in developing algorithms to control swarms of individual robots. Among the funds we track at Insider Monkey, there were 15 investors long iRobot Corporation (NASDAQ:IRBT) at the end of June, up from 13 funds a quarter earlier.
2. Brooks Automation, Inc (NASDAQ:BRKS)
Market Cap: $1.80 Billion
Brooks Automation, Inc (NASDAQ:BRKS) specializes in equipment that can be used for automation, vacuum and instrumentation. Its systems are used in the semiconductor industry, where there is need for high-precision automation and a cleaned and controlled environment. It also offers solutions to create an airless environment for the manufacturing of various products that require a vacuum and cryogenics that have applications in various industries, including life sciences, for which Brooks Automation, Inc (NASDAQ:BRKS) provides cryogenic storage solutions, automated compound management and biological sample management systems. Among the investors tracked by Insider Monkey, 23 funds held shares of Brooks Automation, Inc (NASDAQ:BRKS) at the end of June, up from 21 funds at the end of March.
3. AeroVironment, Inc. (NASDAQ:AVAV)
Market Cap: $1.14 Billion
California-based company AeroVironment, Inc. (NASDAQ:AVAV) is one of the top suppliers of drones and other unmanned aerial vehicles (UAV) for the US government. The company has developed a number of solar-powered UAVs used by NASA and military UAVs to be used in surveillance. AeroVironment, Inc. (NASDAQ:AVAV) is also engaged in providing products for clean energy and efficient vehicles. Only five investors from our database held shares of AeroVironment, Inc. (NASDAQ:AVAV) at the end of the second quarter.
4. Mazor Robotics Ltd – ADR (NASDAQ:MZOR)
Market Cap: $1.06 Billion
Mazor Robotics Ltd – ADR (NASDAQ:MZOR) is an Israeli company that provides robotics solutions for the health care sector. It manufactures a robotic guidance system that can be used for spine surgery. Its flagship product, Renaissance, is cleared by the US Food and Drug Administration to be used for spine and brain surgery and is used in 28 hospitals in the US (54 hospitals worldwide). Renaissance works by creating a 3D virtual blueprint of a surgery and the system guides tools and implants to the required location with an accuracy of 1.5 millimeters. There were six investors tracked by Insider Monkey bullish on Mazor Robotics Ltd – ADR (NASDAQ:MZOR) at the end of June.
5. Accuray Incorporated (NASDAQ:ARAY)
Market Cap: $350 Million
Accuray Incorporated (NASDAQ:ARAY) is another healthcare company that develops systems for radiation therapy and radiosurgery platforms. It offers a number of products, such as the CyberKnife Systems, TomoTherapy Systems , and the Radixact Delivery Treatment Product. The CyberKnife Systems are used for the treatment of various types of cancer and tumors. The system tracks, detects, and corrects for tumor and patient movement in real-time during a procedure. During the second quarter, the number of funds from the Insider Monkey database long Accuray Incorporated (NASDAQ:ARAY) declined by five to 10.
These five best Artificial Intelligence small cap stocks to buy are not fully grown, holding a relatively small number of products in their portfolio and some are not so much engaged in the AI space as in the automation. However, they have the potential to expand their product offerings and might move to developing more complex systems that will be closer to sporting the same “cognitive” functions that are associated with Artificial Intelligence.