Artificial intelligence (AI) is a powerful technology that will enable many businesses to both save money and accelerate growth. As a result, demand for powerful, efficient AI tools is likely to explode, and companies that can deliver them will be quite prosperous. Today, we’ll look at three of the best AI stocks on the market.

Expanding on my previous points, an article in The Fast Mode concludes: “AI can help companies save money by automating repetitive tasks, analyzing data, and identifying new market trends and opportunities.”

On the growth side, online payments company Paysafe notes that AI can boost small businesses’ revenue by enhancing customer experiences, improving marketing efforts, and enabling better content creation. I believe this is true of not just small companies but businesses of all sizes.

Here are the three best AI stocks to buy now.

Schrodinger (SDGR)

I’ve long been enthusiastic about Schrodinger (NASDAQ:SDGR), which “uses physics-based simulations carried out on the cloud in combination with machine learning to accelerate the discovery of new medicines and materials.”

Since topping out at $117 in early 2021, shares have lost 76% of their value. However, there are signs the Street is becoming much more bullish. SDGR has rallied more than 50% so far this year.

This includes a nearly 30% runup since the company announced fourth-quarter earnings on Feb. 28.  While not yet profitable, the company reported better-than-expected revenue of $56.8 million, up 23% year over year.

In addition to the revenue surprise, a number of analysts have issued positive notes on SDGR in recent months. For example, Citi increased its price target to $51 from $48 on Jan. 31, citing the $110 million cash distribution the company was scheduled to get from Nimbus Therapeutics as a result of the sale of a co-developed potential psoriasis therapy. The firm has a “buy” rating on the shares.

Also bullish is BMO Capital, which sees a firm with a progressing pipeline and disruptive technology. While the bank lowered its price target on shares from $83 to $78, it maintained its “buy” rating. And the revised target still implies upside of around 175% from current levels.

One of the world’s richest people, Bill Gates, has also signaled a vote of confidence in Schrodinger. At the end of 2022, his charitable foundation owned nearly 7 million shares, for a position worth around $196.7 million.

I believe the stock’s current market capitalization of less than $2 billion greatly underestimates the company’s long-term potential.

Aurora Innovation (AUR)

Aurora Innovation (NASDAQ:AUR), which has developed an autonomous-driving technology for trucks, has not yet been embraced by the Street. But multiple, large transportation companies, including FedEx (NYSE:FDX) and Schneider National (NYSE:SNDR), are currently piloting its system. In fact, last year Aurora and FedEx expanded their pilot program in Texas.

There is a tremendous need for Aurora’s software given the shortage of truck drivers in America. Earlier this month, Aurora announced that its system is “feature complete,” meaning “all policy disengagements have been removed, and we have implemented all of the technical capabilities it needs to power trucks built for it in commercial service on our Dallas to Houston launch lane,” the company said.

This is a huge milestone, as it puts the company on the path to commercialization and significant revenue generation. When that happens, likely in late 2024 or early 2025, AUR stock should take off.

In the meantime, investors may want to consider buying shares at the current beaten-down level. The stock is down 75% over the past year, although shares have perked up a bit in 2023, gaining 14%.

Lemonade (LMND)

In multiple columns in 2021, I recommended the upstart insurer Lemonade (NYSE:LMND), which uses AI to provide customer service and process data.  The company’s extensive use of AI reportedly enables it to offer automated, fast customer service that pleases younger Americans. Additionally, AI should enable it to perform back-office functions faster, cheaper and more accurately.

LMND stock fell sharply from its early 2021 highs and continued to sell off in 2022 as investors turned their backs on growth stocks with high valuations. But in 2023, investors seem to have realized that the proverbial sky is not falling. While this has yet to benefit LMND — the stock is flat for the year — shares trade at a very reasonable 3.6 times sales.

In its most recent quarterly results, the company reported a smaller-than-expected loss while revenue more than doubled year over year. Analysts are forecasting revenue growth of 48% this year and 23% next year and for losses to continue to narrow. With investors beginning to reward companies for growth again, LMND should start to trade higher.

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