The year 2023 has seen a surge of interest and investment in artificial intelligence (AI), as companies and countries compete to develop and deploy AI-based applications. The potential impact of AI on the global economy is significant, with Goldman Sachs predicting a $7 trillion boost and a 15% increase in productivity over the next decade.
Nvidia, a leading provider of graphics processing units (GPUs), has experienced a surge in demand for its flagship H100 chip, which has a waiting period of at least six months for buyers. With the H100 processor costing $40,000 and up, analysts expect Nvidia’s revenue to double in the current fiscal year to $54.6 billion, with adjusted earnings projected to increase from $3.34 to $10.76 per share.
While Nvidia’s growth prospects are impressive, its high valuation may deter some investors. Fortunately, there are other options to consider for those looking to capitalize on the AI revolution.
Alphabet, the parent company of Google, presents an attractive opportunity. Although initially lagging behind Microsoft in the AI race, Alphabet has quickly caught up by integrating AI across its various offerings. The company is now testing a generative AI platform called Gemini, which utilizes large language models (LLMs) to enable users to create chatbots, email drafts, music lyrics, news stories, and more. Alphabet plans to make Gemini available through its Google Cloud Vertex AI service, providing customers with access to AI models and applications without the need for expensive hardware.
The demand for cloud-based AI infrastructure is expected to grow exponentially in the coming years, with estimates suggesting that the market could generate $207 billion in annual revenue by 2028. By expanding its AI services on the Google Cloud platform, Alphabet aims to improve its share of the cloud infrastructure services market, which currently stands at 11%. This move could drive further revenue growth for Alphabet, which generated $26 billion from Google Cloud in 2022.
Another AI-focused opportunity lies in Amazon. The proliferation of AI, coupled with Alphabet’s strong position in the digital advertising market, is expected to fuel stronger growth for the company, which recorded $283 billion in revenue in 2022. Analysts predict continued momentum for Amazon, projecting a revenue of $376 billion in 2025. With a market cap surpassing $2.25 trillion, investors stand to benefit from the company’s AI-driven growth and long-term upside potential.
In conclusion, while Nvidia offers impressive growth prospects in the AI sector, its high valuation may deter some investors. Alternatively, Alphabet and Amazon present compelling options that are well-positioned to capitalize on the AI revolution. With their respective advancements in AI technologies and cloud-based infrastructure services, these companies offer investors an opportunity to benefit from the widespread adoption of AI and its impact on the global economy.