Innovative technologies have regularly reshaped the world. In the past few decades, inventions such as the personal computer, the Internet, and the smartphone have greatly enhanced human productivity, while creating enormous wealth in the process.
Artificial intelligence (AI) promises to be the next transformative technology. In fact, research firm McKinsey estimates that AI could boost global economic output by 16% (or $13 trillion) between 2018 and 2030.
Companies like nvidia (NVDA 0.74%) And the Lemonade (LMND -4.07%) The main beneficiaries of this trend could be because they both use artificial intelligence to shape the future of technology.
1. Nvidia: The Gold Standard in Artificial Intelligence Infrastructure
In 1999, Nvidia invented the Graphics Processing Unit (GPU) which revolutionized the gaming and entertainment industries with its ability to render realistic computer graphics. But GPUs have also become the accelerators of choice for complex data center workloads such as scientific computing and artificial intelligence. Today, Nvidia has over 90% market share in supercomputer accelerators, and its technology has become the gold standard in artificial intelligence.
Forrester Research He recently said that the Nvidia GPU is synonymous with AI infrastructure, and Nvidia has consistently achieved top scores in the MLPerf Benchmarks, a series of tests designed to measure the performance of AI technologies.
This success stems from its development from chip maker for an integrated computing company; Nvidia has augmented its hardware with a growing library of subscription software and developer groups that simplify the creation of AI applications for uses such as genetic sequencing, speech recognition, robotics, and self-driving cars.
But these headwinds are temporary, and Nvidia AI is shaping the future of many industries. Among other applications, fintechs help stop fraud, manufacturers detect product flaws, health care providers analyze medical images, and social media platforms promote engagement.
Nvidia puts its instructable market at a trillion dollars, and the company should benefit massively as AI continues to reshape the world. With the stock trading at 12.3x sales – a bargain compared to the three-year average of a 20.3 multiplier – now seems like a good time to buy this one. Artificial intelligence growth stock.
2. Lemonade: AI-powered insurance
Lemonade brings artificial intelligence to insurance sector In an effort to reduce friction and lower prices for consumers. Whereas traditional insurers use agents to sell policies and process claims, Lemonade handles this through AI-powered chatbots. This simplifies the registration process for consumers and reduces the company’s payroll expenses.
Most importantly, these chatbots can collect about 100 times more data per customer than traditional insurance models. Lemonade uses this data in its artificial intelligence engine, which identifies risks and underwrites insurance policies. Ultimately, this data feature should allow the company to price policies more accurately than its competitors, which means Lemonade should eventually achieve a loss ratio (that is, claims payments as a percentage of premiums) below the industry average.
But this has not happened yet. Lemonade posted an 86% loss in the second quarter, well above the property and casualty insurance industry average of 72.5% last year. But part of the Lemonade strategy is paying off. It has crossed 1 million customers just five years after its launch, almost two years contracts Faster than competitors Allstateand State Farm and Geico. So it’s clear that its original digital business model delights customers.
Accordingly, Lemonade saw its average premium rise 18% to $290 in the second quarter, and its retention rate improved 100 basis points to 83%. This translated into relatively strong earnings growth, with gross profit increasing 15% to $11.3 million. However, Lemonade continues to invest aggressively in expanding its business, and reported an incremental net loss of $68 million for the quarter.
Investors still have reason to go higher despite that big loss. Most notably lemonade recently Gained Metromileand accelerating its expansion in auto insurance. This deal will ship its AI engine with billions of miles of remote driving data collected from Metromile customers.
Lemonade estimates that auto insurance is adding $300 billion to its U.S. market opportunity, bringing the total to $400 billion. It also creates a huge cross-selling opportunity, as Lemonade estimates that existing customers already spend $1 billion on auto insurance annually.
Anyone who’s recently bought insurance or filed a claim will likely agree that the insurance business needs disruption, and Lemonade’s AI-powered business model has written annoyingly all over it. That’s why risk taking investors should consider buying this growth stock.