The year 2023 saw the artificial intelligence (AI) market cast a spell on Wall Street, with the Nasdaq-100 technology sector experiencing a 50% surge over the past 12 months due to the captivating allure of generative technology.
Since OpenAI introduced ChatGPT, kickstarting the AI frenzy, the industry has been on an unstoppable trajectory. Forecasts from Grand View Research predict a dazzling 37% compound annual growth rate for the AI market up to 2030, expected to reach a staggering $2 trillion expenditure.
While Nvidia, with its globally acclaimed graphics processing units (GPUs), has basked in the limelight of AI glory, boasting a 220% surge in shares since last May and ranking third in market cap worldwide (following Microsoft and Apple), diversifying one’s AI investment portfolio to include companies in their nascent AI stages may promise greater returns in the years ahead. So, let’s shift our focus away from Nvidia and explore two promising AI stocks instead.
1. Advanced Micro Devices Shines Bright
Advanced Micro Devices (AMD) stock has ascended by 72% in the past year, riding the wave of Nvidia’s AI triumphs and carving out its own space in the competitive AI landscape.
Despite constant juxtapositions with Nvidia, AMD’s market cap of $250 billion, significantly lower than Nvidia’s $2.3 trillion, highlights the contrasting phases of growth between the two rivals. AMD, holding the second-largest market share in GPUs, hints at substantial AI potential, coupled with a more expansive realm for growth in the coming decade.
AMD’s most recent earnings report for the first quarter of 2024, released on April 30, surpassed market expectations, with a 2% year-over-year revenue increase and earnings per share exceeding projections. Notably, the company’s AI-focused data center segment witnessed an impressive 80% annual revenue growth, driven by heightened sales of its MI300X AI GPUs.
Alphabet: The Alphabet of AI Success
Alphabet’s shares have surged by 7% post its Q1 2024 earnings release on April 25. Beating estimates on multiple fronts, Alphabet’s robust investments in AI are beginning to yield fruit, attracting investor interest with its promising growth trajectory.
While chipmakers like Nvidia and AMD offer investment avenues in AI hardware development, attention to the software creators facilitating integration of AI into daily routines is essential. Alphabet shines as a prime candidate, with its revenue surging by 15% year over year in Q1 2024, surpassing Wall Street predictions by nearly $2 billion. AI innovations are propelling multiple facets of Alphabet’s business, enhancing its advertising domain with AI-driven ads.
Alphabet’s cloud computing platform, Google Cloud, emerged as a lucrative AI venture, witnessing a remarkable 28% annual sales growth and a soaring 371% operating income rise to $900 million. With YouTube, Android, and various Google platforms, Alphabet boasts a vast user base, paving the way for extensive AI applications and potential growth opportunities.