Many technology companies that have embraced artificial intelligence (AI) have seen their share prices rise in recent months, and a portfolio manager says he believes the industry has even more room to grow.

Shane Obata of Middlefield Capital Corporation said that the AI tech sector is already showing signs of strong returns for investors, and he identified three stocks he thinks will pay big dividends down the line.

“Right now we’re in the spending arms-race phase, but that’s going to turn into a return on capital at some point,” he told BNN Bloomberg in a Wednesday television interview.

“We need to see this stuff paying dividends, but it’s already paying dividends in certain places… it will take time to proliferate, but we’re seeing early indications for sure.”

Obata recommended Alphabet (GOOGL, NASDAQ), Broadcom (AVGO, NASDAQ) and MongoDB (MDB, NASDAQ) as his top picks in the tech sector.

Obata and members of his household own shares of Alphabet, and he personally owns shares of MongoDB. Shares of all three stocks mentioned above are owned by clients at his firm.

None of the companies mentioned are investment banking clients at his firm.

For the full interview, click on the video at the top of this article.