Beginning in 2023, the semiconductor giant Nvidia (NASDAQ: NVDA ) was a $360 billion company. Its fortunes quickly changed when OpenAI and its artificial intelligence (AI)-powered chatbot, ChatGPT, wooed investors.
ChatGPT's ability to accurately answer complex questions and generate text and computer code on command has sent the world's biggest tech giants clamoring to buy Nvidia's graphics chips (GPUs) for their data centers as they develop, train, And are the best in the industry for development. Deployment of AI applications
As a result, Nvidia's revenue increased, and the company is now worth $2.6 trillion. This could be just a taste of things to come as Wall Street believes AI will add between $7 trillion and $200 trillion to the global economy within the next decade.
Picking the winners and losers in the AI race won't be easy for investors, but the following five stocks offer a solid starting point.
1. Nvidia
Nvidia is currently unsurpassed in the data center chip market. Its H100 GPU is the perfect choice for data center operators such as Amazon And Microsoft (NASDAQ: MSFT ), who are buying them for tens of thousands and renting computing power to AI developers. According to Nvidia, they can earn $5 in rental income over a four-year period for every $1 they invest in AI GPUs, so their appetite to spend more is no surprise.
But Nvidia is gearing up to start shipping its new H200, which is twice as fast as the H100 for inferring AI models (giving them live data so they can make predictions). In addition, production has begun on another series of GPUs built on Nvidia's new Blackwell architecture, which can compute up to 30 times faster than the H100.
Nvidia reported its financial results for the first quarter of fiscal 2025 (ended April 28), and recorded a cumulative 427% year-over-year increase in its data center revenue to $22.6 billion. . Notably, this accelerated the 217% growth the company had projected through fiscal 2024, and with new GPUs on the horizon, its momentum now looks assured.
Nvidia's 10-for-1 stock split will take effect on June 10, so buying a share will soon cost investors $1,064 out of pocket today.
2. Alphabet
the alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL ) Google is the parent company of YouTube, Waymo, and DeepMind (among other subsidiaries). Google Search has been the window to the Internet for more than two decades, so Alphabet has mountains of useful data with which to build AI models, and it's doing just that.
The company launched a chatbot called Bard last year to compete with the new ChatGPT-powered Microsoft Bing search engine, but has since been replaced by a more advanced lineup of AI models called Gemini. It has been replaced. Alphabet calls the Gemini's multimodal capabilities among the most advanced in the industry, meaning it can interpret and generate text, images, videos, and computer code better than most competing models.
Alphabet stock is up 26% this year, and is trading at an all-time high, yet with a price-to-earnings (P/E) ratio of just 26.8, much higher than the 31.3 P/E ratio. It's cheap. Nasdaq-100 Technology Index. In other words, it's a huge value compared to almost every other AI tech giant.
3. Broadcom
Over the decades, Broadcom (NASDAQ: AVGO ) Developed innovative products in the semiconductor and computing industries, including the world's first miniature infrared transceiver, which allowed wireless data exchange for computers, phones, printers and more. In 2016, it merged with semiconductor giant Evago Technologies and then acquired semiconductor device supplier CA Technologies, cybersecurity company Symantec, and cloud software giant VMware.
Broadcom now has a multifaceted presence in AI. For example, Symantec partnered with Google's VertexAI platform to create SymantecAI, a virtual assistant designed to speed up incident response in its existing cybersecurity software. Then there's VMware, which facilitates virtual machines so multiple users can plug into a single server to use all of their capabilities. In the age of AI, where chips are expensive (and in short supply), this helps developers get the most out of their data center infrastructure.
Broadcom also offers AI operations software for businesses and data center hardware designed to accelerate AI workloads. The company is poised for strong growth in 2024 and is one of the most diversified AI stocks money can buy.
4. Lemonade
Lemonade (NYSE: LMND) AI is being used to transform the insurance industry, from the customer experience to the way premiums are calculated. Its chatbot, Maya, can write quotes for potential customers in less than 90 seconds, and its AI bot, Jim, can pay claims for existing policyholders in three minutes without human intervention.
Lemonade's internal lifetime value (LTV) models predict everything from a customer's likelihood of making a claim to the performance of its insurance products in specific geographic markets. All of this information is pulled together so that Lemonade can try to provide the most accurate premium possible, which can translate into savings for policyholders.
Lemonade has attracted more than 2 million users so far — many of them younger peers — proving that its tech-driven approach to the relatively boring insurance industry is resonating. Is. It's still a small company with a market capitalization of just $1.2 billion, but it's growing fast and its stock currently offers an attractive risk-reward profile.
5. Microsoft
Last but certainly not least is Microsoft. It's the biggest company in the world, and as I talked about earlier, it agreed to invest a portion of its coffers in OpenAI last year. The deal quickly made Microsoft a leader in the AI software space thanks to the startup's latest GPT-4 models, which power a growing number of the tech giant's products.
Legacy 365 software applications Word, Excel, PowerPoint, and Outlook now feature an AI Copilot, capable of quickly creating text, images, and more to increase user productivity. Even the Windows and Edge Internet browsers have an AI assistant ready to answer the most complex questions.
However, the Azure cloud platform for business is currently the fastest growing part of Microsoft's business. Its Azure OpenAI service gives developers access to the latest large language models (LLMs), which they can use to build their applications. As of the most recent third quarter of fiscal 2024 (ended March 31), Microsoft said that 65% of Fortune 500 companies are customers of the Azure OpenAI service, highlighting how rapidly AI is advancing in the corporate world. Traveling from
Microsoft is the biggest AI software stock investors can buy right now.
Should you invest $1,000 in Nvidia right now?
Before buying stock in Nvidia, consider this:
gave Motley Fool Stock Advisor The analysis team only indicated what they believed. 10 Best Stocks For investors to buy now… and Nvidia wasn't one of them. 10 stocks that made the cut could generate monster returns in the coming years.
Consider when Nvidia This list was created on April 15, 2005… If you invested $1,000 at the time of our recommendation, You will have $697,878.!*
Stock Advisor Provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks every month. gave Stock Advisor There is a service More than four times S&P 500 Returns since 2002*.
View 10 Stocks »
*Stock Advisor will return on May 28, 2024.
John Mackey, former CEO of Whole Foods Market, is a member of the board of directors of The Motley Fool, an Amazon subsidiary. Suzanne Frey, an Alphabet executive, is a member of The Motley Fool's board of directors. Anthony DiPizio has no position in any stocks. The Motley Fool has positions and recommends Alphabet, Amazon, Lemonade, Microsoft and Nvidia. The Motley Fool recommends Broadcom and the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a Disclosure Policy.
Nvidia and 4 other stocks can help you build the ultimate artificial intelligence (AI) portfolio Originally published by The Motley Fool