Artificial intelligence (AI) is changing the world. This goes far beyond OpenAI’s ChatGPT and other chatbots. AI personalizes products and advertising to customers. This allows humans to work smarter and faster, and may even enable certain tasks to be performed without the need for a human to perform them.
According to research from PricewaterhouseCoopers, AI could contribute nearly $16 trillion to the global economy by 2030. This means that investment opportunities will continue to grow. Nvidia (NASDAQ:NVDA) and other large technology companies.
3 Motley Fool contributors identified snowflake (New York Stock Exchange: Snow), Palantir Technologies (NYSE:PLTR)and Advanced Micro Devices (NASDAQ: AMD) As a winner with the potential to one day grow into a trillion dollar stock. Here’s what you need to know about these three AI stocks with trillion-dollar potential.
Snowflake partners with Nvidia on generative AI
Justin Pope (Snowflake): Nvidia has become a household name in the field of artificial intelligence (AI), but Snowflake shouldn’t be overlooked. The data cloud company partnered with Nvidia on generative AI last summer. Snowflake is a cloud-based data platform that allows customers to store, organize, share, and query their data. The partnership between Snowflake and Nvidia is a big deal, as Nvidia is the AI chip leader in the industry, so as companies integrate AI into their businesses, they should focus their business on Snowflake.
Currently, Snowflake’s market capitalization is $75 billion. The business generates $2.7 billion in annual revenue. Snowflake receives business from 691 top companies. forbes Global 2,000. Thanks to its usage-based billing model, its 131% net revenue retention rate shows that customers are spending more on the platform over time.
The long-term growth opportunities are huge. The world is becoming increasingly digital, and more and more data will be created over time. That’s reflected in Snowflake’s growth, and we don’t think that’s going to change. As AI becomes more intelligent and capable, future AI models will likely be trained on more data.
Snowflake’s CEO recently retired, but the former CEO was not the company’s founder. Investors should keep an eye on the new CEO’s performance, but don’t let recent developments scare you away from the stock. The company was founded and has deep roots in the corporate sector. Snowflake is a good bet to become one of the next great mega-cap technology companies because the data suggests it could be one of the great investment trends of the future.
Palantir’s market capitalization could eventually surpass the $1 trillion mark
Jake Larch (Palantir Technologies): Considering the current market capitalization Palantir’s total value is about $54 billion, but it has a long way to go before it hits the $1 trillion mark.I never expected it to happen in the next 10 years.. But that doesn’t mean Palantir won’t eventually climb the $1 trillion mountain, nor does it mean it’s a bad stock to own.
Palantir is a software company specializing in AI-powered big data analytics. Although the company first found a market for its services with government intelligence agencies and the defense industry, and those partnerships remain today, Palantir’s future depends on its ability to attract commercial customers.
And the company appears to be making great progress on that front. In the most recent quarter (his three-month period ending December 31, 2023), Palantir’s commercial customer count increased to 497 companies.. Additionally, revenue from U.S. commercial customers increased 70% year over year to his $131 million. Nevertheless, government revenues still exceed commercial revenues.
|
segment |
2023 |
Growth rate (YoY) |
|---|---|---|
|
government income |
$1.2 billion |
14% |
|
commercial income |
1 billion dollars |
20% |
Data source: Palantir Technologies. YOY = change from previous year.
But that could change as more companies sign on with Palantir. Palantir CEO Alex Karp said, “Our performance in U.S. commercials has clearly been exceptional, and some would say exaggerated.”
Either way, the AI revolution shows no signs of stopping or slowing down. And as more organizations turn to AI for analytics and cost savings, Palantir is ready to sign them up as new customers. If that happens, Palantir’s market capitalization is expected to rise. perhaps – Finally — reaches $1 trillion.
When it comes to AI chips, Nvidia isn’t alone on the market
Will Healy (Advanced Micro Devices): When it comes to the AI chip market, Nvidia dominates, accounting for at least 80% of the market, according to analyst estimates. The insatiable demand for this type of semiconductor has given Nvidia a market capitalization of nearly $2 trillion. This will also cause customers to look elsewhere for such chips, and the company best placed in second place could be Advanced Micro Devices.
As a leader in CPUs, GPUs, and data centers, the company is well suited for this role and recently leveraged this expertise by releasing AMD Instinct MI300 series accelerators to meet this demand. According to the company, the MI300A integrates the CPU and GPU into one unit, and the MI300X chip is the most advanced generative AI accelerator.
Furthermore, Allied Market Research predicts that the AI chip market will reach $384 billion by 2032, with a compound annual growth rate of 38%. Therefore, AI chip makers should benefit overall.
Currently, AMD’s data center and AI division accounts for about $6.5 billion, or about 29% of AMD’s revenue. Additionally, AMD also stands out in the client, gaming, and embedded segments, which together account for more than $16 billion of AMD’s approximately $23 billion in revenue in 2023. Therefore, these segments will contribute to the company’s growth, although probably at a slower pace. Faster pace than AI.
Currently, the market capitalization has reached approximately $300 billion, and stock prices would need to rise approximately 3.3 times to reach a market capitalization of $1 trillion. This looks like an achievable goal. Analysts predict that profits in 2024 will increase by 36% and next year by another 51%. Also, the forward P/E ratio is approximately 48 times.
While these valuations are high, they are far from bubble levels and indicate that AMD could organically reach a market cap of $1 trillion. If AMD can meet some of this huge demand for AI chips, the market cap of semiconductor stocks could reach the $1 trillion level sooner rather than later.
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Jake Lerch has a position at Nvidia. Justin Pope has no position in any stocks mentioned. Will Healy holds positions at Advanced Micro Devices, Palantir Technologies, and Snowflake. The Motley Fool has positions in and recommends Advanced Micro Devices, Nvidia, Palantir Technologies, and Snowflake. The Motley Fool has a disclosure policy.
3 Artificial Intelligence (AI) Stocks That Could Someday Be Worth $1 Trillion was originally published by The Motley Fool.
