Artificial Intelligence has long been a goal for technology innovators. The concept captured imaginations well before computers went mainstream, and today, AI is a reality. Free AI software is available for individual and business use, and AI is starting to become integrated into daily life on a wide scale.
Through the use of machine learning and deep learning, AI can apply intelligence to processes and analyze massive data sets and then automate decisions based on this evidence. That means a reduction in the need for human interaction, an increase in speed, and the ability to complete time-consuming tasks in a matter of moments. AI has been credited with making crucial scientific and medical breakthroughs that weren’t possible just a few years ago.
The use of artificial intelligence is spreading across industries and new applications are developed every week. Analysts forecast that the global artificial intelligence market will expand at a CAGR of 36.6% until 2030. That means a tremendous opportunity for investors to capitalize on the adoption of Artificial Intelligence. These are three AI stocks at the forefront of the AI revolution.
NVIDIA
Revolutionary Graphics Processing Units and ambitious investments in the research and development of AI systems have made Nvidia (NASDAQ:NVDA) a leader in the AI market. Some analysts describe NVIDIA as a toll road that most AI software companies have to go through to launch.
It’s for that reason that Nvidia’s solutions are at the core of AI computing. In contrast to conventional central processing units, GPUs were designed for the concurrent execution required by computations within AI algorithms. The present GPU architectures from Ampere to Hopper deliver superior performance and efficiency, which promotes advances in AI.
Nvidia’s AI growth is supplemented by complementary software platforms like CUDA. This allows developers to take advantage of Nvidia’s GPUs in AI applications. CUDA is an indispensable application for AI researchers and engineers who work on deep learning models and other AI-related projects.
Nvidia’s GPUs are the backbone of data centers for cloud giants like AWS, Google Cloud, and Microsoft Azure. This demonstrates the critical role Nvidia plays in supporting large-scale artificial intelligence and other enterprise AI systems.
In the last quarter, the company launched the NVIDIA Blackwell platform to fuel a new era of AI computing at a trillion-parameter scale, as well as the Blackwell-powered DGX SuperPOD for generative AI supercomputing.
Nvidia has established business relationships with major technology corporations and research centers to advance AI. Acquisitions like the purchase of Mellanox are expected to improve Nvidia’s capabilities in AI and data processing.
AI and data center product revenue is steadily increasing due to the continued demand for AI solutions across industries. Nvidia’s current market position, coupled with its ongoing commitment to AI research and development, is credited with key advances in the AI revolution.
Nvidia reported record quarterly revenue of $26 billion in the first quarter, up 262% from a year ago. Data Center revenue came in at a record $22.6 billion, up 427% from a year ago.
Nvidia stock has delivered exceptional results for investors over the past decade. It is up almost 200% in the past year, and it trades at 46.53x forward non-GAAP earnings.
Analysts’ optimism is evident with 42 out of 46 of those covering Nvidia stock rating it aa a Buy.
Microsoft
Microsoft Corporation (NASDAQ:MSFT) is one of the largest companies investing in AI, pouring research and development dollars into proprietary technologies and numerous collaborations with partners.
Microsoft’s central AI initiative is the Azure platform. Azure AI provides a suite of tools for developing, training, and deploying artificial intelligence models. Some of the most efficient AI capabilities available can be implemented in the cloud without a solid in-house infrastructure.
Microsoft has incorporated AI-based features into almost all of its Microsoft Office products and business solutions. Some of the most popular include smart search and language translation data analysis in Office 365 with AI applications.
The use of artificial intelligence is central to Dynamics 365, a program that analyzes consumer data to predict business operations, understand customer behavior, and automate processes. Microsoft Copilot and Copilot stack also support business decision-making, data analysis, and automated content creation.
The company’s collaboration with OpenAI is strengthening its standing as a leader in AI while OpenAI relies on Azure cloud services to deploy models for users. The symbiotic partnership creates a foundation from which Microsoft and OpenAI can launch the next generation of AI tools and solutions.
Microsoft’s investment in AI has already produced strong financial results. Microsoft’s total revenue came in at $61.9 billion for the quarter ending March 31, 2024, representing a 17% year-over-year rise.
Bill Gates’ company is uniquely situated to define AI progression within the technology industry, and influence its role in society.
Microsoft shares have delivered impressive long-term returns over the past several years. Over the past five years alone, Microsoft stock went up nearly 240% and currently trades at 38.11x forward non-GAAP earnings, which is considered a premium when compared to industry peers.
Analysts forecast the stock will climb roughly 9% over the next 12 months, and a majority, 40 out of 43, say Microsoft stock is a Buy.
Alphabet
Alphabet’s (NASDAQ:GOOGL) DeepMind AI is widely considered to be one of the world’s first real AI initiative by a tech giant. Fast forward a few years, and it has projects that touch nearly all AI use cases, including machine learning, NLP, vision, and robotics.
AI is an integral part of Alphabet’s digital services, which include Google Search and Google Assistant. Alphabet’s DeepMind subsidiary was instrumental in developing reinforcement learning and neural networks that form the basis for mainstream AI tools.
One of the most well-known examples is DeepMind’s success in creating AlphaGo back in 2016. AlphaGo is an AI tool capable of defeating human champions in the intricate Go games.
Waymo, another subsidiary of Alphabet, is focused on research and development of AI applications related to autonomous vehicles. The self-driving cars Waymo created are a blend of AI, machine learning, and sensor data, which is used for safe navigation and operation. When these vehicles are ready for widespread use, they have the potential to reshape transportation by improving safety and increasing efficiency.
In the cloud space, Google Cloud provides organizations of all sizes with a full suite of AI-enabled business tools. Services like Google Cloud AutoML and BigQuery ML allow companies to train and deploy large-scale models for such purposes as data analysis, customer support, and predictive maintenance.
Alphabet’s continued and projected investments in AI systems have resulted in higher user engagement, more efficient operations, and higher revenues. Top line revenues totaled $80.5 billion for the first quarter – a 15% increase from the year-ago period.
That’s just the beginning. Google’s AI chief executive said the company will spend over $100 billion over time to develop AI technology through research in the field, adaptation of AI products and services into its market offering, and venture capitalist investments.
Alphabet stock has gained more than 50% over the past year and is currently trading at 24.42x forward non-GAAP earnings. An impressive 33 out of 44 analysts have rated Alphabet stock a Buy.
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