Stocks to buy

The advent of artificial intelligence (AI) could prove revolutionary for multiple industries, including manufacturing. In fact, AI is already becoming increasingly prevalent in manufacturing as more companies embrace technology and leverage it to improve efficiency, cut costs, and remain competitive. Therefore, investing in manufacturing AI stocks could prove to be incredibly lucrative over time.

With the aid of AI, manufacturers can streamline production processes, optimize supply chains, ensure better quality control, and tailor products to individual customer needs. Consequently, AI in the manufacturing sphere is projected to grow by a whopping $2.3 billion in 2022 to $16.3 billion through 2027. Therefore, getting in on the ground floor of this sector could lead to tremendous returns on investments over time. Having said that, let’s look at three of the best manufacturing AI stocks to wager on now.

Cognex (CGNX)

Source: shutterstock.com/YAKOBCHUK V

Cognex (NASDAQ:CGNX) is among a handful of pure-plays in the manufacturing AI niche. It provides machine vision systems that use AI to automate and optimize manufacturing tasks. The firm benefitted from tech giants such as Amazon, who were breaking the bank in automating warehouses. However, with the post-pandemic headwinds in play, Amazon and other major companies have been paring back on warehouse and fulfillment spending.

Naturally, it has taken a significant hit to its top and bottom lines in the past year. In its CEO’s own words, “A few of our largest e-commerce customers have paused most of their investments. At the end of 2022, we observed slower trends across our broader factory automation business.” Over the long term, though, machine vision remains an excellent long-term growth market. The technology adoption is still remarkably low in most industry end-markets, and ongoing investment could support double-digit long-term growth for the company.

Nvidia (NVDA)

Source: Michael Vi / Shutterstock.com

Nvidia (NASDAQ:NVDA) has been a bonafide juggernaut in the tech space, which continues to turn heads with its innovative DNA. With its leadership position in the GPU sphere, it is poised to become a leading “pick-and-shovels” player in AI.

In addition to its robust GPUs, Nvidia offers AI software libraries and hardware platforms and boasts partnerships with some of the biggest names in the tech sphere. Whether it’s Nvidia’s CUDA-X AI software libraries, or H100, its AI-ready super-chip, the company will continue to show why it remains the backbone of the AI sphere.

CEO Jensen Huang gloated about Nvidia’s AI capabilities after smashing earnings expectations during the first quarter. He discussed how the company aims to become “the best AI salespeople [in] the world.” Nvidia will emerge as a winner regardless of who prevails in the AI race.

ABB (ABB)

Source: shutterstock.com/Den Rise

ABB (NYSE:ABB) is another AI pure-play that provides its customers with a wide variety of solutions in the manufacturing and industrial automation sectors. Specifically, its solutions include computer vision, robotics, and algorithms that help streamline production processes and reduce downtime. Over the years, it has done well to grow its business at a steady pace while doing so profitably.

Naturally, ABB’s economic slowdown has limited top and bottom-line growth. Its process automation, robotics, and discrete automation segments witnessed a slowdown in order growth last year. However, the improved access to components, better pricing execution, and the volume release from its massive order backlog resulted in strong revenue growth. As it looks to streamline its business further, ABB aims to deliver an operating EBITDA margin of at least 15% regardless of market conditions.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

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