Artificial intelligence (AI) is an exciting investment trend right now. Generative AI is forecast to become a trillion-dollar market within the next decade, and this will create a lot of investment opportunities along the way.
Some of these investment opportunities are rather obvious, and some have already had parabolic moves, such as Nvidia, which was catapulted into the trillion-dollar club by the AI boom. But others are less obvious plays on AI technology. Here are two I'm loading up on in my own portfolio.
The evolution of AI could boost this metaverse stock
Popular video gaming platform Roblox (RBLX 5.21%) is perhaps the closest thing that exists to a true metaverse experience today. The platform has more than 71 million daily active users who sign up for the platform, create avatars, and explore the experiences available, and millions of developers create (and monetize) unique content.
Roblox gets a cut of all virtual purchases and has some other revenue streams, such as advertising. In 2023, Roblox produced $2.8 billion in revenue.
NYSE: RBLX
Key Data Points
The platform continues to grow rapidly, with 30% year-over-year revenue growth in the fourth quarter. Management has a long-term goal to scale to 1 billion users and is doing a great job of growing internationally and making its platform available in different ways -- for example, Roblox just became available on Sony PlayStation in the fourth quarter. As more immersive devices become widely adopted, such as those made by Meta Platforms and Apple, Roblox could be a big winner.
Roblox isn't a profitable business just yet, but it is clearly heading in that direction. If it can continue to scale rapidly while achieving profitability, it could be a big winner for investors.
An AI bank stock
Banking disruptor SoFi (SOFI 3.84%) is leveraging technology to improve the banking experience for customers and intends to replace customers' relationships with brick-and-mortar financial institutions. And that includes incorporating AI technology to give the bank an edge.
For example, SoFi has integrated the conversational AI engine from its Galileo fintech platform into its banking app to increase satisfaction, improve response times, and make the business more efficient. It also uses AI to detect fraud, automate investment portfolios, and instantly approve loans.
NASDAQ: SOFI
Key Data Points
SoFi's growth has been spectacular and isn't showing any signs of slowing down. The company now has 7.5 million members, up 44% from the end of 2022, and the bank (which only got its banking charter in early 2022) has already scaled to $18.9 billion in deposits. Plus, the bank recently achieved generally accepted accounting principles (GAAP) profitability for the first time, and expects to continue posting profits from now on.
As SoFi's banking business grows, it creates a natural marketing funnel for its loan products, brokerage accounts, and more, and efficiency should naturally improve over time. If SoFi can continue to grow at a rapid pace while improving profitability, it could become a big AI winner for investors.
Invest for the long term
To be sure, while I think both of these stocks could go parabolic under the right circumstances, I own both in my portfolio because I think they'll be excellent long-term investments -- not because I think they'll double or triple quickly. And even if both do well, it's wise to expect significant volatility along the way from the pair.
