Many of today’s hot stocks pushing artificial intelligence and machine learning may go the way of Long Blockchain Corp. That is to say; companies are jumping on the bandwagon and using AI or ML buzzwords to push stock prices higher – even if there’s limited relevance to their operations.
A few firms, long entrenched in machine learning, are positioned to withstand the inevitable market cooling towards the new technology. These forward-thinking organizations use machine learning to optimize operations and better serve a diverse customer base. Ultimately, machine learning is a billion-dollar industry. That’s an evident fact.
What’s less evident is which growth stocks represent the best chance for savvy investors to generate 10x+ returns. However, a portfolio based on these three stocks may be the best bet for massive gain as the industry matures.
Palantir Technologies (PLTR)
Although Palantir Technologies (NYSE:PLTR) has some critical structural issues scaring away investors, there’s little doubt the firm is at the forefront of machine learning. Beloved by government and corporate clients, Palantir’s machine learning opportunity isn’t limited to data modeling development. That’s the easy part.
As the company’s sales materials assert, “building AI/ML models for one-time insight is relatively straightforward, but managing models over time and making them useful for downstream operations is much more challenging.” Palantir’s real-world military application, and thus long-term viability, came to the fore throughout the Ukraine conflict.
The country broadly uses Palantir’s machine learning tech as a strategic partner for military and civil rebuilding operations. The digestible nature of Palantir’s data-driven insight became especially apparent during targeting operations as the firm is “responsible for most of the targeting in Ukraine.”
Targeting is a complex series of operational steps that demand immediate and accurate analysis to deliver useful battlefield effects. True to Palantir’s unique selling proposition, Palantir’s platforms integrate disparate data for actionable insight. With sources including satellite and social media feeds, Palantir enables battlefield visualization to drive decision-making at the highest levels.
Unfortunately, global conflict seems like an ongoing inevitability. But Palantir’s machine learning-enabled tools, and non-combat applications, mean the stock may one day generate 100x returns for early investors.
BlackRock Inc (BLK)
BlackRock (NYSE:BLK) may not be the first name investors consider when pondering machine learning’s long-term potential. But it should be. Quantitative and algorithmic investing has long been a staple for massive management firms like BlackRock. But they’re taking it to a new level with machine learning.
The company’s artificial intelligence and machine learning incubator, BlackRock AI Labs, is uniquely positioned to capture machine learning’s potential in asset management. The company is developing unique approaches to portfolio management, generating greater returns for clients – and investors in the firm itself.
BlackRock AI Lab projects are diverse and wide-ranging. This means the firm has a broad series of customer segments for machine learning-based products and solutions. For example, one project targets high-net-worth individuals to determine the best allocating illiquid alternative assets in a comprehensive portfolio “using a convex optimization-based model predictive control policy.”
On another end of the spectrum, BlackRock AI Labs assists seniors of all income levels to maximize retirement benefit withdrawal timelines, including Social Security.
These public-facing projects are just a facet of BlackRock’s wide-ranging tools. The company was arguably one of the first to rely heavily on artificial intelligence and machine learning with the 1988 launch of its now-pervasive Aladdin investment management software. Today, BlackRock’s commitment to the future could mean a $10,000 investment today may turn into $1 million later.
Iron Mountain Inc (IRM)
The best system envisioned isn’t worth much if you don’t have the computing power to build and operate it. Furthermore, speed and accessibility are critical. This makes data center REITs like Iron Mountain (NYSE:IRM) an overlooked play for machine learning-minded investors.
Iron Mountain is already a major player in providing expansive data center and cloud solutions. Over 90% of Fortune 1000 firms use Iron Mountain to store information, including legacy documents like photos, contractual agreements, and audio recordings. But its imminent benefit to investors is the demand for greater space required to run and store data.
Iron Mountain’s subterranean and topside data centers are state-of-the-art, providing a range of clients with the efficiency, uptime, and reliability needed for traditional computing processes and machine learning. What’s as important as space, size, and sufficiency is the security surrounding proprietary data involved in machine learning.
Palantir’s written at length about the importance of securing the installation of their platform and the truisms hold across all types and scopes of machine learning tools. Security is top-of-mind for Iron Mountain, too, and the company provides viable options for even the most demanding machine learning applications.
Ultimately, Iron Mountain diversifies a machine learning-focused portfolio with a REIT offering a sizeable and reliable dividend.
Iron Mountain is less of a pure growth play than other options. Still, the company can turn $1,000 into $1 million through burgeoning demand and dividend reinvesting magic.
On the date of publication, Jeremy Flint held a long position in PLTR. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
