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These 3 Companies Are Making Big Bets on Artificial Intelligence
Source: Danny Vena




Artificial intelligence (AI) has been making headlines lately, and there are a dizzying number of companies making strides in the area. Market intelligencefirm Tractica estimates Opens a New Window. that revenue related to AI will reach nearly $37 billion by 2025, so with that much at stake, it's no wonder companies are lining up to get a piece of the action.

With so many entrants joining the fray, investors may only be aware of the most visible players in the field and miss out on others. Companies may come to AI as a result of changes in technology, it may be an integral part of the company's evolution, or it may be the result of acquisitions. Let's look at three companies you may not realize are making significant plays in AI: graphics processing pioneer NVIDIA Corporation (NASDAQ: NVDA), Chinese search giant Baidu, Inc. (NASDAQ: BIDU), and chip titan Intel Corporation (NASDAQ: INTC).

NVIDIA GPUs are at the forefront of AI research. Image source: NVIDIA.
NVIDIA


NVIDIA is best known for its chips that render images in computer games, and any serious gamer likely has one of the company's flagship graphics processing units (GPUs) at the heart of their system. Deep learning requires sifting through massive amounts of data to detect patterns, and NVIDIA GPU's were the early choice Opens a New Window. due to the speed and massive parallel processing capabilities they possessed. Those same competencies also provide the data crunching necessary for autonomous driving solutions, another area NVIDIA is seeking to exploit.

Competitors are pursuing potential alternatives to its GPUs, but so far the company has been able to maintain its early lead. NVIDIA has partnered with the biggest tech companies, numerous car makers, and a variety of automotive original equipment manufacturer (OEM) suppliers, which provides an excellent foundation to continue its winning streak. In its most recent quarter, NVIDIA produced revenue of $296 million and $128 million in its data center and auto segments, respectively, accounting for nearly 20% of total revenue, so the company has a lot riding on AI.

Jing Wang, senior vice president of Baidu.
Baidu

Baidu has been called the Google of China -- and with good reason. The company has modeled itself after its American cousin, followed similar technological paths, even producing many of the same "innovations."It should come as no surprise that the company began pursuing AI Opens a New Window. at about the same time asAlphabet(Google's parent name) and developed the Baidu Brain deep neural network. Baidu focused its efforts on four functional areas of deep learning: voice recognition and synthesis, image recognition, natural-language processing, and user profiling.

Baidu's results have been impressive and the company has been investing in AI Opens a New Window. to energize its stagnating growth. The company has been using the results of its AI research to improve user engagement and efficiency, and to pursue new lines of business. Baidu is also deeply involved in autonomous driving and expects to have self-driving cars in small-scale production by 2018. Since AI is infused in a vast majority of the company's business and isn't a separate segment, it would be difficult to quantify its effect on revenue or profitability.

Diane Bryant, executive vice president and general manager of the data center group for Intel.
Intel

Intel is known for its CPUs that power the majority of the world's data centers, but the company has been on a buying spree Opens a New Window. in the last few years, with a focus on opportunities in AI. Those acquisitions have included companies that specialized in data analytics and cognitive computing, natural language processing and gesture recognition, and a variety of technologies related to drones and computer vision. Until recently, its most intriguing purchase was AI start-up Nervana Systems Opens a New Window. , taking the company further into the discipline of deep learning. By combining the Nervana's AI acumen with its chip technology, Intel hoped to make further inroads against NVIDIA's GPUs, which provide the bulk of the heavy lifting for AI processing.

Intel made headlines last week Opens a New Window. when it announced the acquisition of Israeli computer vision and machine-learning specialist Mobileye N.V. (NYSE: MBLY) for $15.3 billion, the company's second-largest acquisition ever. This puts Intel squarely in the driver's seat in its aspirations to enter the autonomous driving segment, which also has its foundations in AI. Intel has chips in 99% of data centers, and the company estimates that AI applications run on only 7% of those, so it is difficult to assess how this factors into the company's financial results.
Foolish final thoughts

There are many companies making progress in AI and it's no wonder that investors may not know them all. While developments in the technology are accelerating, the field is still in its infancy. At this stage in the game, and with so little insight into the exact contribution of AI to financial results, any investment should be based on the fundamentals of each company's previously existing business lines, and the opportunities afforded by the company's AI aspirations should be considered a delightful bonus.

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