Artificial Intelligence Stocks -- 5 AI Stocks for 2024
- by The Motley Fool
- May 21, 2024
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Developing power-efficient CPU technology for AI
1. Nvidia
Leading graphics chip company Nvidia has taken advantage of the AI boom, with its graphics cards becoming the de facto standard in data centers worldwide. Machine learning's training phase demands a lot of computing power; the phase that follows, the inference phase, requires less. Graphics processing unit (GPU) chips, which were once used primarily for rendering video games, support both phases well.
Nvidia's data center business now makes up the vast majority of the company's revenue, thanks to the emergence of generative AI. Because it sells the building blocks for AI infrastructure, Nvidia became the first major company to see a significant boost from AI. Revenue has surged through 2023 and early 2024, and the stock has soared as well.
Its chips are popular for demanding workloads that applications like large language models require. The pure-play chip stock also just announced an upgraded version of its AI computing platform, the HGX H200, which major cloud infrastructure services plan to deploy in 2024.
Self-driving cars are another area of focus. Nvidia develops hardware and software platforms that can power driver-assistance features and fully autonomous driving.
A self-driving car must process massive amounts of data from multiple sensors and cameras in real-time, detect objects such as pedestrians and other vehicles, and make complex decisions. They require tremendous computing power -- and that's exactly what Nvidia's platform delivers.
Its professional visualization segment, which includes its omniverse, also has a lot of potential in AI. Nvidia's graphics cards could someday be supplanted by more specialized processors designed for AI, but the company is in an enviable position for now.
2. Alphabet
Alphabet has been preparing for the AI revolution for years, acquiring the AI research lab DeepMind in 2014. It's also among the leaders in autonomous vehicles through its Waymo subsidiary, which is now ferrying passengers in its driverless cars in cities like San Francisco and Phoenix.
Alphabet also launched Gemini, its own AI chatbot, the latest chatbot iteration in its competition with ChatGPT, which was seen as a threat to Google Search. So far, concerns about a challenge to its search dominance seem to have been overblown.
With information at the heart of its business, it's unsurprising that the company has prioritized AI. It's rolled out AI tools for Google Cloud and Google Workspace, including a generative AI assistant that helps write emails. Even its customer acquisition strategy in the cloud is based around AI, as the company has targeted AI start-ups for its cloud infrastructure service.
AI also plays a role in improving its search engine and in YouTube, where it can pinpoint a relevant section of a video and direct users straight to it.
3. Microsoft
Microsoft has gotten a lot of buzz of late, thanks to its partnership with OpenAI. The tech giant began investing in the tech start-up in 2019 and recently invested another $10 billion in OpenAI following the launch of ChatGPT.
Microsoft has incorporated GPT features across its product portfolio, including its Azure cloud infrastructure service, Edge web browser, Office productivity software suite, and its Copilot for Microsoft365. Azure OpenAI has seen a particularly strong uptake, now counting 65% of the Fortune 500 as customers.
CEO Satya Nadella has repeatedly said that he sees AI as the next major computing platform, and the $10 billion investment in OpenAI is a sign of the company's conviction in AI and its belief that it needs to lead that transition or get left behind as it did with mobile.
Microsoft is also harnessing the power of AI in other ways, including automated clinical documentation in healthcare to reduce paperwork and administrative needs. Additionally, it's using Azure to allow customers to build custom AI tools.
4. Amazon
Perhaps no company is using AI more widely than Amazon. Founder and executive chairman Jeff Bezos has long been an evangelist for AI and machine learning, and although Amazon started as an online retailer, technology has always been at the company's core.
Today, Amazon uses AI for everything -- from Alexa, its industry-leading, voice-activated technology; its Amazon Go cashier-less grocery stores; and its Amazon Web Services Sagemaker, the cloud infrastructure tool that deploys high-quality machine learning models for data scientists and developers. It also introduced Bedrock, a service for building AI applications; invested in Anthropic AI, the maker of the AI chatbot Claude; and designed its own AI chips, Inferentia and Trainium.
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