One of the few guarantees Wall Street offers is that there’s always going to be a next-big-thing investment trend to captivate investors’ attention. At the moment, no trend is garnering more hoopla than artificial intelligence (AI).
When I say “artificial intelligence,” I’m talking about the use of software and systems to handle tasks typically overseen by humans. The not-so-secret sauce to AI is the incorporation of machine learning, which allows software and systems to learn/evolve and become more efficient at their tasks over time.
According to researchers at PwC, AI could add $15.7 trillion to the global economy by 2030 — and there’s no way investors are going to overlook figures this large.
Image source: Getty Images.
Forget about Nvidia. There are considerably better values among AI stocks
While there are dozens of technology-driven companies that have embraced AI with open arms, the poster child of the AI revolution is semiconductor stock Nvidia (NASDAQ: NVDA). Nvidia’s A100 and H100 graphics processing units (GPUs) have become the infrastructure backbone of high-compute data centers. In other words, they’re the brains that allow for the split-second decision-making required of AI-driven systems.
Although Nvidia is expected to have more than doubled its sales in fiscal 2024 (the company’s fiscal year ended in late January) on the heels of exceptionally strong data-center revenue, it’s also a company that’s seemingly priced for perfection in an imperfect industry with numerous unknowns.
As I’ve previously pointed out, Nvidia’s biggest enemy looks to be itself in calendar year 2024. Whereas A100 and H100 GPU scarcity led to phenomenal pricing power that fueled almost the entirety of its data-center revenue growth through the first nine months of fiscal 2024, an increase in the company’s GPU production in the current fiscal year could sap its pricing power and hamper its gross margin.
Something else to consider is that Nvidia isn’t going to be the only GPU player in AI-accelerated data centers. Advanced Micro Devices (AMD) introduced its MI300X AI-GPU last year…
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