July 19, 2024

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Forget Nvidia: 3 Artificial Intelligence (AI) Stocks You Can Buy Instead

Forget Nvidia: 3 Artificial Intelligence (AI) Stocks You Can Buy Instead

It’s time to start thinking about the winners in the next chapter of the AI ​​movement.

There’s no denying that the tech giant Nvidia (NVDA 3.55%) It has been the preferred way for many investors to get involved in the artificial intelligence (AI) craze over the past 18 months. And this is true. Its processors form the backbone of most AI platforms.

As is often the case, time and reality are catching up with Nvidia. Rivals are working hard to close the market share gap, and (because it’s already so large) Nvidia’s breakneck pace of growth is set to slow. Its shares are also very expensive by some measures… a premium that has some investors wondering how far they could go in the near term.

Translation: Maybe it’s time to start looking for other ways to invest in the next phase of the AI ​​revolution. Here are three other AI stocks to consider instead of (or at least in addition to) Nvidia.

1. Palantir Technologies

If your experience with AI (and awareness of it) is limited to easy-to-use chat platforms like OpenAI’s ChatGPT, Alphabet’s Google Gemini, or… MicrosoftCopilot, you might agree that they are smart apps. But generative AI doesn’t quite look like the technology that should be the foundation of an entire industry.

However, these AI-powered chatbots are not the only way to market AI solutions. AI platforms built from the ground up are more marketable to industry and organizations from the ground up to help them sift through mountains of digital data to make better informed decisions.

Enters Palantir Technologies (belter -0.34%), the name of independent AI software (meaning dedicated solely to AI-based decision-making solutions) that has become a major player in this emerging industry. It did $2.2 billion in business last year and turned just over $200 million of that into net income.

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That’s not a lot of money, especially for a company with a market cap of more than $50 billion. However, the key to the upside here is the trajectory of these results. Analysts expect Palantir’s top line to grow at a rate of more than 20% annually over the next several years, creating the amount of volume that pushes emerging companies far out of the red and deep into the black.

This prospective growth is being driven by a growing willingness to pay for everything AI can do in the decision-making process. Technology market research firm Precedence Research expects the AI ​​software market to grow at an annual rate of 23% until 2032.

As Palantir Technologies already serves a large number of notable clients including the network name Cisco SystemsThe US Army and the energy giant Exxon Mobilodds are good that it is in a position to capture at least its fair share of this growth.

2. Ionic

Silicon-based binary code computing has been around for decades. It has developed further as the tasks assigned to it have become more complex. However, we have reached a point where common computing hardware can no longer handle the kind that software experts can envision and then create. Quantum computers that use subatomic particles instead of silicon to interpret and calculate digital information are the new frontier of computers. To the extent that this comparison would make any sense, quantum computers could be thousands if not millions of times faster than classical computers, depending on the task they are performing. This of course has huge implications for artificial intelligence.

Ion Q (IONIC 1.02%) It is one of the few companies developing these computing platforms. It has already developed and marketed it, in fact; Now it’s just improved. The IonQ Tempo platform currently in development will use a 64-chip superconducting embedded qubit chip (a central element for the computing functions of quantum computers), versus the IonQ Harmony unveiled in 2020 which used just 11 quantum particles per chip.

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Don’t misunderstand though. the world no Waiting for next generation technology. The company already boasts of a lot of paying customers and development partners starting from Lockheed Martin To Microsoft’s Airbus To Oak Ridge National Laboratory to name a few. Q4 revenue of just $7.6 million is still 77% better than the prior-year quarterly comparison, with the company largely hampered by a lack of capacity to build more systems and provide more services. However, it is in response to demand. Precedence Research expects the quantum computing market to expand at a compound annual growth rate of 37% until 2030.

There is an above average risk here to be sure. This means that quantum computing is still a relatively young science. Its landscape could change little in the near and distant future.

However, the expected reward measures this risk. The current consensus price target for IonQ is $14.98. This is 85% higher than the current stock price.

3. Apple

And last but not least, add apple (Camel 2.86%) Here’s a list of AI stocks you can buy other than Nvidia. It’s a suggestion that may surprise some investors. Although it is the most profitable publicly traded company in the United States for good reason, it is not viewed as a major player in the AI ​​space. (Saudi Arabia’s state-owned oil company, Saudi Aramco, is the most profitable company in the world.)

This is about to change though. At a shareholder meeting in February, CEO Tim Cook noted, “Every Mac powered by Apple silicon is an extraordinarily capable AI machine. In fact, there is no better AI computer on the market today.” Cook also highlighted Apple’s work in generative artificial intelligence. To this end, he also asked the world to look for new functions for artificial intelligence through its technologies later this year.

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What that meant wasn’t entirely clear at the time, though details are slowly emerging. In May, for example, reports emerged that the company was working on its own AI data center processors (rather than relying on third-party chips like those made by Nvidia). Then, at its annual developer conference this week, the company announced that OpenAI’s ChatGPT will soon be able to integrate with newer Apple devices. Perhaps most notably, Cook made it clear that Apple will not collect or store any personal data through the use of its new artificial intelligence offerings.

At first glance, investors weren’t exactly thrilled. They were expecting more, or at least anticipating more details about these and future AI-powered features. But 24 hours later, the stock was trading up 6% on the news.

Don’t be like early stock traders and don’t underestimate what Apple just revealed. This may be exactly what a group of die-hard Apple fans have been waiting for before upgrading their iPhones. As such, don’t be surprised to see bread saver sales finally rise again. This may also be just a glimpse into Apple’s larger AI ambitions.

Susan Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. James Bromley has positions in the alphabet. The Motley Fool has positions in and recommends Alphabet, Apple, Cisco Systems, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.