Stocks to buy

The Fourth Industrial Revolution refers to the use of multiple advanced technologies, including “artificial intelligence (AI), robotics, [and] the Internet of Things (IoT).” Also in the mix are “faster computer processing,” “biotechnology,” and “Energy capture, storage, and transmission,” Salesforce reported. I’m upbeat about all of those technologies, and I advise investors to find tech stocks to buy that are each a play on at least two of these innovations.

Certainly, AI-powered robotics are already changing the world, enabling new processes as diverse as self-driving cars, intelligent chatbots, and very impressive voice assistants. AI is also helping to revolutionize biotechnology and energy while combining with the internet of things to enhance cybersecurity and many industrial products.

The following three companies utilize two of these technologies to deliver world-changing products and services. As a result, they are also great tech stocks to buy.

Tech Stocks to Buy: Mobileye (MBLY)

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Mobileye’s (NASDAQ:MBLYReadbook system, powered by its Road Experience Management (REM) technology, “enables deployment of [autonomous vehicles] in new locations almost instantaneously,” MBLY reports. The company adds that high-tech “change detection algorithms,” sent by the “millions” of vehicles that utilize MBLY’s systems, allow Readbook to alter its maps almost immediately. That sounds like AI to me. Moreover, MBLY uses “faster computer processing,” given how quickly Readbook’s maps are changed.

Additionally, Mobileye utilizes advanced AI to accelerate the “training” of its systems. The company used one of Amazon’s (NASDAQ:AMZN) AI offerings to quickly create data and load it onto Mobileye’s system.

According to Mobileye, its advanced technology allows it to update its maps faster and more easily than its competitors. Additionally, the company maintains that its maps are more accurate and adapt to the real needs of drivers better.

It indicates that MBLY’s system works well and appeals to automakers. Its revenue jumped to $1.869 billion last year from $1.386 billion in 2021, while its EBITDA climbed to $61 million from $50 million.

Schrodinger (SDGR)

Source: Shutterstock

Schrodinger (NASDAQ:SDGR) explains that it combines “predictive physics-based methods” with AI to enable drugs to be developed much more quickly and cheaply. Additionally, it maintains that the drug candidates it identifies have a higher chance of being approved than those identified using existing methods.

Using standard technology, researchers typically need “over 4-5 years” to identify a promising molecule that could become a successful drug. With its technology, SDGR could accomplish the task in just ten months.

As I noted in a previous column, in the fourth quarter of 2022, SDGR’s top line jumped 23% versus the same period a year earlier, and the royalties it obtained from helping to discover drugs jumped 19% year-over-year to $9 million.

During all of last year, SDGR’s “drug discovery revenue … jumped 84% to $45.4 million,” while the company predicts that its 2023 drug discovery revenue will come in between $70 million and $90 million.

Medtronic (MDT)

Source: JHVEPhoto / Shutterstock.com

Medtronic (NYSE:MDT), a leading medical-device maker, has developed a robot that helps perform surgeries. Called Hugo, the product utilizes Medtronic’s Touch Surgery Enterprise and 3D visualization. MDT describes Touch Surgery Enterprise as “a first-of-its-kind AI-powered platform that makes sharing surgical video simple and provides surgeons with a powerful new training tool.”

According to Fierce Electronics, when robots are utilized to assist with surgeries, patients’ outcomes tend to be better. Given that reality, I expect many hospitals to buy Medtronic’s Hugo system. The offering has been approved in Europe, Canada, and Japan, along with South America and parts of Asia. It is undergoing tests in the U.S. that should lead to FDA approval.

The current leader in the robotic surgery market, Intuitive Surgical, generated revenue of $6.2 billion last year. I believe that Medtronic can take significant market share from ISRG, causing Medtronic’s financial results to improve greatly.

Moreover, since robots only assist with 3% of surgeries now and AI and robotics are constantly improving, I expect the entire robotic surgery sector to greatly expand in the coming quarters and years.

Trading with a forward price-earnings ratio of 14.4x, MDT stock’s valuation is quite attractive.

As of the date of publication, Larry Ramer owned shares of SDGR  The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.

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