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Machine learning stocks represent publicly traded firms specializing in a subfield of artificial intelligence (AI). The terms AI and machine learning have become synonymous, but machine learning is really about making machines imitate intelligent human behavior. Semantics aside, machine learning and AI have come to the forefront in 2023.

Generative AI has boomed this year, and the race is on to identify the next must-buy shares in the sector. The firms identified in this article arent cheap in an absolute sense. Their price can be quite high. However, they are expected to provide strong returns, making them a bargain for investors currently and cheap in a relative sense.

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Lets begin our discussion of machine learning stocks with ServiceNow (NYSE:NOW). The firm offers a cloud computing platform utilizing machine learning to help firms manage their workflows. Enterprise AI is a burgeoning field that will only continue to grow as firms integrate machine learning into their workflows.

As mentioned in the introduction, ServiceNow is not cheap in an absolute sense. At $563 a share, there are a lot of other equities that investors could buy for much cheaper. However, Wall Street expects ServiceNow to move past $600 and perhaps $700. The metrics-oriented website Gurufocus believes ServiceNows potential returns are even higher and peg its value at $790.

The firms Q2 earnings report, released July 26, gives investors a lot of reason to believe that share prices should continue to rise. The firm exceeded revenue growth and profitability guidance during the period, which allowed management the confidence to raise subscription revenue and margin guidance for the year.

Q2 subscription revenue reached $2.075 billion, up 25% year-over-year (YOY). Total revenues reached $2.150 million in the quarter.

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AMD (NASDAQ:AMD) and its stock continued to be overshadowed by its main rival, Nvidia (NASDAQ:NVDA). The former has almost doubled in 2023, while the latter has more than tripled. Its basically become accepted that AMD is far behind its competition in all things AI and machine learning. However, the news is mixed, making AMD particularly interesting as Nvidia shares are continually scrutinized for their price levels.

An article from early 2023 noted that the comparison between AMD and Nvidia isnt unfair. It concluded that Nvidia is better all around. However, that article also touched on the notion that AMD could potentially optimize its cards through software capabilities inherent to the firm.

That was the same conclusion MosaicML came to when testing the two firms head-to-head several months later. AMD isnt very far behind Nvidia, after all, and it has a chance to make up ground via its software prowess. Thats exactly why investors should consider AMD currently, given its relatively cheaper price.

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CrowdStrike (NASDAQ:CRWD) operates in a combination of growing fields. The stock represents cybersecurity and machine learning directed toward identifying IT threats. It provides endpoint security and was recently awarded its second consecutive annual honor as the best at the SC Awards Europe 2023. The company is well-regarded in its industry and is growing very quickly.

The entity also has strong fundamentals. In Q1, revenues increased by 61% YOY, reaching $487.8 million. CrowdStrikes net income loss narrowed from $85 million to $31.5 million during the period YOY. The firm generated $215 million in cash flow, leaving a lot of room to maneuver overall.

Furthermore, CrowdStrike announced it is partnering with Amazon (NASDAQ:AMZN) to work with AWS on generative AI applications to increase security. CrowdStrike is arguably the best endpoint security stock available overall, and its strong inroads into AI and machine learning have set it up for even greater growth moving forward.

On the date of publication, Alex Sirois did not hold (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.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.

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3 Cheap Machine Learning Stocks That Smart Investors Will Snap Up Now - InvestorPlace