The AI cloud opportunity continues to develop and grow, creating a strong rally and boom in these stocks
Article wall street journal Data from July 2023 shows that the AI cloud boom is creating significant opportunities for stocks in multiple companies. The gist of this article is that cloud providers still cannot support large-scale AI applications. Even the very largest companies based in Silicon Valley and its global equivalents were not considered ready.
The opportunities continue in 2024. The infrastructure wasn’t designed to run the large, complex systems needed for AI or handle the complex calculations like that. In other words, the opportunity is just as big today as it was when the Wall Street Journal published that article nine months ago.
The bulk of the opportunity lies in North America, where AI is growing the fastest. However, the opportunity is global. Take a look at his seven companies that are poised to continue riding the AI cloud boom to new heights.
Alibaba (BABA)
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Let’s get started alibaba(New York Stock Exchange:Baba) Stocks representing Chinese companies and markets outside North America. The Chinese market differs from the American market in important ways. This means that AI applications are also different.
For example, one of the most prominent applications of AI that is positively impacting Alibaba is related to e-commerce. Companies across China leveraged Alibaba’s large-scale language model to significantly increase sales during the November 11 shopping event, also known as Singles’ Day.
Alibaba also cited Singles’ Day’s strong performance in its earnings release in early February. And while these results were positive, they also reflect the broader Chinese economy, where Alibaba continues to face significant challenges. As a result, Alibaba’s revenue has remained roughly flat. Revenue during the period increased by 5%, and cloud revenue increased by 3% as well. Frankly, this was unacceptable to the company and led to a significant decline in net income.
However, that’s not the point here. Rather, what is important is that Alibaba is one of China’s leading cloud providers. This positions the company to rebound strongly and is one of the main reasons why the stock is soaring at this point. One reason to believe this story is simply that Alibaba lowered the price of its AI cloud products to stimulate demand.
Alphabet (GOOG, GOOGL)
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alphabet (NASDAQ:google,Google) still has a chance to further ride the AI cloud boom, even as they continue to fumble for the opportunity. Shares have fallen significantly over the past month as the company continues to struggle to catch up.
There’s an arms race going on in the AI space, and Alphabet has been behind since day one. microsoft (NASDAQ:MSFT) significantly outperformed Alphabet when it announced an investment in ChatGPT in early 2023. It hasn’t really slowed down since then. This forced Google to think about what they could do and take risks to regain ground. Frankly speaking, the results were not very good. The company is currently facing a firestorm over controversial AI-generated images. That only makes the problem worse.
Selling is an opportunity. January profits were better than expected, and interest rate cuts later this year will put tech companies back in the spotlight. For contrarian investors, take bad news as good news and act on it.
Alterix (AYX)
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Alterix (New York Stock Exchange:AYX) is not a popular stock, nor is it one of the best-known companies associated with the AI cloud boom. Instead, this is an analytics automation business that has a legitimate chance of further establishing itself among enterprise customers. This is especially important at this time, as many enterprise customers continue to question the value of their previous investments in AI cloud.
Alteryx is capitalizing on that opportunity. The company recently Databricks Data Intelligence Platform. These new integrations are expected to reduce the time a user takes to generate his or her AI-driven enterprise use cases. Such use cases are the primary target area for AI cloud development. The increased rate of data generation only increases the need for analysis to derive actionable insights.
The expanded partnership could boost Alteryx’s revenue, which was already a strong performer. The company’s sales in 2023 increased by 13%.
Palantir (PLTR)
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Palantir (New York Stock Exchange:PLTR) has recently changed from a strongly government-oriented company to a more commercially oriented company. The company is once again leveraging its connections and relationships with the government to boost its stock price.
Palanitr initially established itself as an analytics company with a more conservative bent. In particular, there were strong ties with the government and the defense sector. After that, the company continued to grow and eventually reached profitability and the stock price rose significantly. A big part of that was our AI cloud products.
It suddenly became a more commercially oriented company. It was at this level in early February, when the company last announced its financial results. Commercial revenue in the fourth quarter increased by 70%. They were catching up with government revenue.
But the company just won a $178 million contract for the Army’s Project Titan, so government revenues are surging again. We plan to utilize Palantir’s AI in our battlefield systems. This could send Palantir’s stock price rising again, giving us reason to believe in its continued strength as the AI cloud continues to evolve.
Nvidia (NVDA)
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Nvidia (NASDAQ:NVDA) is essentially a pick-me-up stock when it comes to AI cloud. The company’s graphics processing units (GPUs) have proven essential within leading cloud companies offering a wide range of AI services.
These GPUs are sold as standalone chips or in combination with CPUs, both of which are used to power the AI cloud. These chips are known for their parallel processing capabilities and have been used for AI for about 12 years.
Once again, Nvidia’s GPUs are by far the most in demand. That demand is driving incredible sales growth. Nvidia expects his $24 billion in revenue this quarter. If this goal is achieved, the same person’s 12-month sales will be triple his.
Investors’ concerns are understandable, considering Nvidia stock traded at around $150 in early 2023 and rose to more than $800 by early 2024. But considering that this quarter’s revenue will probably triple, it’s also perfectly logical to expect Nvidia stock to grow like this: It goes up to $1,400.
AMD (AMD)
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AMD (NASDAQ:AMD) represents Nvidia’s strongest competitors. As AI cloud applications continue to develop, this is the most obvious reason to buy the stock.
While it’s clear that Nvidia has the most sought-after chips for AI applications, its continued dominance is not guaranteed. For one, Nvidia chips are expensive, so it’s clear that buyers are looking for alternatives.both meta platform (NASDAQ:meta) and Microsoft recently announced that it would be switching to AMD chips. It’s quite remarkable that they buy about 60% of all chips that Nvidia has sold recently.
It is clear that AMD has a legitimate opportunity to provide services to companies such as Metaplatform and Microsoft in the future. This has been a powerful force driving AMD stock above $200 recently.
Meanwhile, AMD is also targeting the Chinese market, which continues to face strong export restrictions from the United States. There’s still an opportunity there, but AMD will have to weaken the chips it plans to sell domestically.
Baidu (BIDU)
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Speaking of China, Baidu (NASDAQ:Bidu) is another stock to consider in relation to both the country and the ongoing AI cloud opportunity.
Baidu is similar to China’s Google and offers many similar services. In other words, it is deeply connected to all kinds of internet and artificial intelligence in Japan.
The good news is that Baidu is outperforming other large Chinese tech companies based on revenue. In 2023 revenue he increased by 9%. For example, Alibaba, as explained above, saw revenue growth of just 5% over the same period.
The company hasn’t signaled a precise break away from cloud AI revenue. However, he said much of the growth during this period was due to investments in cloud AI. Baidu represents a contrarian investment that leverages the combined power of China’s economic recovery and cloud AI investment. So, like Alibaba, this stock has a lot of promise.
On the date of publication, Alex Sirois did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer and are influenced by InvestorPlace.com. Publishing guidelines.
