These companies are at the leading edge of the AI revolution

"The proliferation of consumable machine learning [a branch of AI] and AI has the potential to dramatically shift the productivity paradigm across global industries, in a way similar to the broad scale adoption of internet technologies in the 1990s," says a Goldman Sachs report. Not surprisingly, companies and countries are pouring a ton of money into this field.

The global artificial intelligence market is projected to skyrocket from US$643.7 million in 2016 to US$38.8 billion by 2025 -- a compound annual growth rate of nearly 58%.

Companies on the forefront of artificial intelligence are aggressively investing in the field to gain greater control of the market. Tech behemoths, in particular, are rushing to gobble up AI start-ups and are bulking up on patents to strengthen their competitiveness and secure a position of dominance in the future of technology, according to Morningstar equity research.

 Alphabet (GOOG), owner of internet media giant Google, gets 99% of its revenue from the search engine while the rest comes from selling apps and content on Google Play, YouTube Red and cloud service fees.

One of the frontrunners in the artificial intelligence space, Google has been making some attention-grabbing announcements.

"We were not surprised to see Google's continuing focus on using artificial intelligence to strengthen its ecosystem," says a Morningstar equity report. "The firm is adding a variety of vision- and voice-based functionalities that utilize machine-learning algorithms to attract not only more users, but also possibly more digital ad dollars."

With its focus switching from "mobile first" to "AI first," Google is rolling out a spate of machine-learning features including SmartReply, for automated email responses within Gmail, while improving the vision- and voice-based functionalities on its apps and devices.

"Alphabet dominates the online search market with Google's global market share of above 80%, via which it generates strong revenue growth and cash flow," says Morningstar equity analyst Ali Mogharabi, who projects sustained growth in cash flow and leadership in the search market.

Particularly noteworthy are the firm's "efforts to gain a stronger foothold in the public cloud market, which is expected to grow more than 25% annually through 2020," adds Mogharabi, who pegs the stock's fair value at US$860.

In addition, the investment in futuristic projects such as the group's self-driving-car project, artificial intelligence forming the fulcrum of it, could unlock significant revenue within newer markets, he notes.

 Microsoft (MSFT) is a global tech company that provides software, hardware and services. The firm generates its revenues from three business segments: productivity and business processes (28% of sales), intelligent cloud (25%) and personal computing (46%).

"The company has become nimbler and more user-friendly under [CEO Satya] Nadella," says a Morningstar report, noting that "the firm will maintain its status among technology's elite for years to come."

The tech giant is putting artificial intelligence at the heart of most of its tech initiatives and has been relentlessly advancing its AI ambitions through innovation and acquisitions.

While artificial intelligence may not be a meaningful revenue contributor yet, the company's flagship project Cortana, an integrated smartphone assistant, and Windows 10 "are laying the groundwork for the next generation of application development centered on artificial intelligence," says Morningstar equity analyst Rodney Nelson.

As well, Microsoft has established its position as the number-two public cloud vendor with its Azure platform, the firm's public cloud service, which should provide substantial growth for several years.

Prompted by the explosive growth in its cloud properties, notably the torrid expansion of the Azure revenue base, Nelson recently raised the stock's fair value estimate from US$68 to US$77.

The firm's wide moat, or sustainable competitive advantage, stems from its massive enterprise footprint across a multitude of products and services, and effective monopolies that revolve around its Windows operating system, creating network effect and raising switching costs for customers.

A leading designer of graphics chips that enhance the interactive experience on computing platforms,  Nvidia (NVDA) makes products used in a variety of end markets, including high-end personal computers for gaming and automotive infotainment systems.

The chipmaker in one of the biggest beneficiaries of the growing trend of AI-powered services and autonomous vehicles as car makers rush to partner with Nvidia and use its artificial intelligence technology to develop self-driving vehicle systems.

Moving beyond its core gaming business, the company is looking to find profitability through its artificial-intelligence drive. "Nvidia has experienced some success in diversifying its operations, especially in the data centre [business]," which recently racked up more than US$400 million in quarterly revenue, more revenue than the company collected in that segment for the entire 2016 fiscal year.

Nvidia has solidified its leadership position in the supercomputing processor market with its Tesla chips. "The firm has also been a key proponent of the accelerator market for deep learning and artificial intelligence computing," says Morningstar equity analyst Abhinav Davuluri. "Also, Nvidia has sought to drive the push toward autonomous driving with its Drive PX module."

The firm is aggressively pursuing the high-performance computing and deep learning market, which it expects to be worth US$30 billion by 2020, says Davuluri, who puts the stock's fair value at US$44 and cautions "prospective investors to wait for a much wider margin of safety."

Morningstar projects the company's revenue to grow at a high-single-digit annually over the next five years.

The world's largest online social platform,  Facebook (FB) has more than 1.6 billion active users swapping and posting messages, videos and photos on its various apps including Facebook, Instagram, Messenger and WhatsApp. Advertising accounts for more than 90% of its revenue, of which 50% come from the United States and Canada, and 25% from Europe.

Facebook continues to invest heavily in AI and virtual reality to both expand its existing platform and explore new frontiers. "The firm is applying artificial intelligence and virtual and augmented reality technologies to various products, which may increase Facebook user engagement even further, helping to generate attractive revenue growth from advertisers in the future," says a Morningstar equity report.

The social media giant's rapidly expanding monthly average user base, growing 21% annually, points to its burgeoning popularity and market dominance while pulling in advertising dollars. Facebook notched up US$7.9 billion in revenue in the most recent quarter, up 51% from the prior year.

The wide-moat business generates strong top-line growth, remains cash flow positive, and profitable, says Mogharabi, who puts the stock's value at US$135, but recommends "a wider margin of safety before investing in the name."

As with any tech firm, the risk remains of disruption by new technology. For now, though, the company is growing its mobile active users at a healthy 42% annually. Mogharabi forecasts a five-year compounded annual growth rate of 22% and is confident in Facebook's ability to profitably monetize its network to "generate excess returns on capital over the next 20 years."