3 Top A.I. Stocks to Dominate the Market

June 19, 2023
By The Investing Insider Staff

You know, it's really fascinating to see the kind of impact Artificial Intelligence is having on our world (not to mention A.I. stocks on our portfolio).

It's not just something that exists in sci-fi movies anymore, it's right here, right now, and it's transforming how we live and work in profound ways.

An AI program will soon help doctors diagnose symptoms more accurately. It’s entering our classrooms, helping teachers provide personalized learning experiences for students. And don’t forget the world of entertainment.  There are limitless opportunities for AI to create individual experiences.

But AI isn't just about making our lives easier or more enjoyable...

It's also paving the way for some really exciting investment opportunities.

In fact, it’s the hottest sector in the market right now. And while there are several companies out there making significant strides in AI, today we'll be focusing on three that have really caught our attention.

A.I. Stock #1: NVIDIA Corporation (NVDA)

Company Overview

First up, we've got NVIDIA. They're a tech powerhouse that originally made a name for themselves in the gaming world, but their graphics processing units are now making waves in the AI space. They're becoming a significant player, with their AI platforms being used in everything from self-driving cars to aiding healthcare research.

Graphics Processing Units (GPUs) are vital for the heavy computations required by AI processes, particularly in deep learning. As the use of AI expands across various sectors, the demand for high-performance GPUs also increases. This rise in demand is expected to boost the market share and profits of GPU-producing companies like Nvidia. Furthermore, the continuous evolution of AI technology encourages these companies to innovate, producing even more powerful GPUs and enhancing their relevance and profitability.

Financials and Industry Analysis

NVIDIA's Q1 FY2024 results showed mixed performance across different sectors. The company reported a total revenue of $7.19 billion, up 19% from the previous quarter but down 13% YoY. Net income increased by 44% QoQ and 26% YoY, reaching $2.043 billion. Earnings per share also saw an increase of 44% QoQ and 28% YoY to $0.82. In terms of sector-specific performance, the data center segment was a standout, with a record revenue of $4.28 billion, representing an increase of 14% YoY and 18% QoQ. This was driven by the launch of new inference platforms, NVIDIA's collaboration with Google Cloud, and the introduction of NVIDIA AI Foundations, among other initiatives.

Looking forward, NVIDIA expects its revenue to increase to $11.00 billion (±2%) in Q2 FY2024. The company also anticipates GAAP and non-GAAP gross margins to reach 68.6% and 70.0%, respectively, suggesting strong optimism for the coming quarter.

A.I. Stock #2: Alphabet Inc. (GOOGL)

Company Overview

Then we have Alphabet Inc., better known as the parent company of our favorite search engine, Google. These guys are going all-in with AI. They're integrating it into a vast array of their products and services – from making our search results more accurate to enhancing ad placements and even pioneering autonomous driving (Waymo) and healthcare research (DeepMind and Verily).

In the face of AI-based competition, Google launched its own AI chatbot called Bard during the 1st quarter of 2023​. This move illustrates Google's intent to maintain its competitive edge by innovating in the realm of AI. Google's CEO, Sundar Pichai, highlighted the importance of ongoing innovation in the company's search capabilities, indicating that AI would continue to be a key part of their strategy.

Financials and Industry Analysis

Alphabet exceeded Q1 FY2023 expectations with revenue of $69.79 billion but experienced slow revenue growth due to reduced ad spending​​. A bright spot in Alphabet's portfolio was the Google Cloud unit, which reported a profit for the first time, marking a significant turnaround from a $706 million loss a year ago​. Despite competition from the AI chatbot ChatGPT, Google launched its own AI chatbot, Bard, and remains confident in its search market leadership​​. The company plans to introduce updates to Android and its Pixel smartphones, including a new foldable smartphone​. Overall, Alphabet is navigating its challenges and investing in AI to fuel future growth.

A.I. Stock #3: Salesforce.com, Inc. (CRM)

Company Overview

Lastly, let's discuss Salesforce, a powerhouse recognized around the world for its dominance in customer relationship management software. Notably, this firm has seized upon artificial intelligence (AI) in an expansive way. Their revolutionary platform, Einstein AI, harnesses machine learning to generate invaluable data such as sales predictions and customer trends.

Undeniably, Salesforce has placed a firm bet on AI, earmarking it as a significant propulsion mechanism for their growth. The enterprise has rolled out a multitude of measures to supercharge its AI strategies, including the initiation of a novel AI Cloud platform, investments in generative AI, and procurement of AI-oriented startups. These endeavors constitute a larger aspiration to evolve into a "customer 360" company—a firm with an in-depth comprehension of its clientele across all mediums and interactions. The investments Salesforce is making in AI mirror their confidence in the future of technology and its transformative potential on business operations. They're harnessing AI to bolster sales teams, optimize customer service, and streamline tasks.

Financials and Industry Analysis

In the first quarter of the fiscal year 2024, Salesforce reported an impressive revenue of $8.25 billion, marking an 11% uptick year-over-year. Additionally, they added a net total of 14,000 new clients in the first quarter, culminating in a grand total of 300,000 customers. The firm's strategic acquisitions of MuleSoft and InQuira have broadened its platform, rendering it relevant to a diverse customer base.

Evaluating the first-quarter results, Salesforce demonstrated robust performance. The firm exceeded market expectations in terms of both revenue and earnings, subsequently revising its full-year guidance upwards.

In our assessment, Salesforce holds a strong position for sustained growth in the forthcoming years. As a market leader in cloud-based CRM, the company is reaping the benefits of the enduring trend of businesses migrating to the cloud. Furthermore, Salesforce is channeling investments into burgeoning sectors like artificial intelligence and customer experience. We hold the belief that such strategic investments will empower Salesforce to uphold its market leadership in CRM and fuel further business expansion.

-Investing Insider Staff
This article is informational purposes only and is not investment advice.  See full disclaimer here
Join Investing Insider's "Free Alert Service" today!
Simply fill out the form below get some of our best stock picks deliverd directly to your inbox!

By signing up you agree to our Privacy Policy and Terms.

Featured Articles

About Investing Insider
Investing Insider is a financial education and publishing company. Our team of editors deliver daily tips, picks, and stock market analysis.  Whether you prefer low-risk, deep-value strategies... income investing... or high-risk, high-reward speculative stock picks, we can offer actionable investing ideas to help grow your wealth.
Copyright © 2024 Investing Insider Publishing Ltd. All rights reserved.
30 N Gould St, Suite 2737, Sheridan, WY 82801
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram