NVDA - AI Will Transform Everything: Investors Be Early Adopters and Buy These 3 Stocks
2024-03-27 16:50:00 ET
Since the advent of apps like ChatGPT, artificial intelligence (AI) has rapidly become one of the most important trends in the tech industry. With AI-based innovations permeating across all sectors of the economy, businesses are finding faster and more efficient ways to perform tasks. Many might argue that the rise of AI can be considered the next big thing since the Industrial Revolution.
While ChatGPT is one of the most commonly known uses for AI, the technology has far more use cases and performs more essential functions for businesses otherwise. Many companies are already leveraging AI-based innovations to drive more growth. In turn, these companies offer more growth potential for investors to capitalize on.
Today, I will discuss growth opportunities investors can explore with companies using AI.
U.S. tech giants in the AI space
Alphabet ( NASDAQ:GOOG ) is one of the biggest players in the AI space right now. With Gemini , the company has its own competitor for ChatGPT. While the company’s AI progress has been overshadowed by blunders during rollouts, it is only a matter of time before its vast resources, expert engineers, and knowledge will lead to more meaningful strides for the search giant in this space.
Besides its AI division, it owns YouTube, Google Cloud, Google Play app store, Fitbit, and several others. With its fourth-quarter (Q4) 2023 operating income jumping by 30% and revenue by 13% year over year, it can offer growth to investors through capital gains.
NVIDIA ( NASDAQ:NVDA ) might not be making waves in generative AI (GenAI) like Alphabet, but it is critical to the sector. The US$2.38 trillion tech giant manufactures the chips used by the GenAI industry. As an already leading chip manufacturer, NVIDIA has a monopoly over the chips being used by the industry.
Alphabet and others have tried competing with NVIDIA in this space. However, NVIDIA’s focus gives it the advantage of delivering more innovations that leave diversified companies competing in this space behind. As of this writing, NVIDIA stock is up by almost 260% in the last 12 months.
Trading at 79.63 times trailing earnings, it is not a value stock. However, TD Cowen analyst Matthew Ramsey believes that NVIDIA stock can go up to US$1,100 per share due to the growth of data centres powered by chips supplied by the company.
Kinaxis
Kinaxis ( TSX:KXS ) is a $4.28 billion market capitalization supply chain management and sales and management operation planning software company headquartered in Ottawa.
While it does not have anything to do directly with AI technology, the company is utilizing AI-based innovations to improve its operations. The company is using AI to help businesses track and interpret their supply chain metrics better.
Through Kinaxis’s RapidResponse AI, the company’s clients can track metrics like inputs, buying patterns, inventory, and much more, better. Additionally, data-driven AI solutions allow companies to get better supply chain metrics, such as expected inventory required. Before AI came into the picture, getting such metrics required countless hours of human labour for manual analysis.
As of this writing, Kinaxis stock trades for $150.26 per share, up 5.54% in the last 12 months.
Foolish takeaway
While giants in the U.S. tech industry are the obvious names investors think of when seeking AI stocks, more companies benefit from the AI revolution. With its presence in supply-chain sensitive and manufacturing industries, Kinaxis is an excellent example of a Canada-based AI stock you can consider adding to your self-directed portfolio to leverage growth due to AI-based innovations.
The post AI Will Transform Everything: Investors, Be Early Adopters and Buy These 3 Stocks appeared first on The Motley Fool Canada .
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Alphabet, Kinaxis, and Nvidia. The Motley Fool has a disclosure policy .
2024