According to a prominent Wall Street analyst, three major technology companies will experience tremendous growth in the coming years thanks to the early adoption of artificial general intelligence. We agree and add to the list of AI beneficiaries. Needham’s Laura Martin sees Club naming Amazon (AMZN), Alphabet (GOOGL) and Microsoft (MSFT) as the “frontrunners” in the race of tech companies competing in generative AI. In a research note on Thursday, the analyst said these three companies will increase their market capitalization beyond $3 trillion thanks to abundant capital to invest in large language models (LLMs). ) – artificial intelligence algorithms trained to give human-like text responses. Apple (AAPL), also known as Club, was the first company to achieve a market value of $3 trillion. It happened in the summer. Since then, the stock has come back below that milestone and accelerated its decline over the past two sessions on rumors of a Chinese crackdown on government employees using iPhones. While positive about Apple, Martin thinks it will be “dwarfed” by AI companies. AAPL NDAQ YTD Apple Mountain vs. Nasdaq YTD Performance This year’s massive rally in Big Tech, despite a bit of a recent stumble, stems from the AI hype that has pushed the Nasdaq up more than 31% in 2023 Jim Cramer is a believer in developing AI as a transformative technology rather than a flash in the pan. Earlier this year, Jim elevated Nvidia holding Club (NVDA) to “own it, don’t trade it” status due to incredible demand for high-speed semiconductors supporting AI tasks and services like ChatGPT from Microsoft-backed OpenAI. Nvidia’s most recent quarter did not disappoint. Nvidia’s shares have more than tripled in 2023. Jim also appreciates the AI potential at Amazon and Alphabet as well as chip designer Broadcom (AVGO) and enterprise software companies Oracle (ORCL) and Salesforce . He thinks Apple — the Club’s other “owned, not traded” stock — could benefit more from AI, saying Thursday that many people mistakenly believe Apple doesn’t develop the technology This. During Apple’s latest earnings call, CEO Tim Cook emphasized the importance of AI and talked about how the company has been researching it for years. At Needham, Martin singled out Amazon, Alphabet and Microsoft for their “first mover advantage” in general AI, citing their ownership of the cloud environment to run the LLM. Furthermore, each company has its own proprietary data, which is the foundation of AI. “The most relevant high-quality data will enable AI to create the best new content and products, or save costs faster through better online customer service,” Needham wrote. We see these three Big Tech names as AI enablers who will be winners in the nascent AI industry because they are the ones making it easy for other companies to apply general AI to their business and operations. their workload. Here are some recent developments that show how each company is progressing in its AI capabilities. GOOGL YTD Mountain Alphabet YTD Performance During its recent AI conference, Alphabet announced improvements to its AI infrastructure portfolio with a series of new products to help companies train models on your cloud. This includes a partnership with Nvidia to enable developers to build and train their own models for the best infrastructure. According to Baird, by the second half of 2023, Google Cloud, which Jim has previously said is “still in its infancy” is expected to grow at least 20% year-over-year and at least 15% by 2024, according to Baird. That would surpass YouTube as the company’s second-largest revenue segment, analysts note. MSFT YTD mountain Microsoft YTD performance In the coming quarters, Microsoft will increase capital spending to invest in the growth of Microsoft Cloud and demand for AI services. That could hold back earnings growth in the second half of the year as we’ve written before, but Jim is encouraged by the company’s new general AI subscription service, which will likely be revenue-generating periodically from business customers. He called Microsoft the #2 AI stock in the portfolio, followed by Nvidia) and would consider adding to the Club’s MSFT position in the event of a pullback as indicated by its #1 rating. Club. We also expect Amazon’s “highly profitable” Amazon Web Services cloud unit to pick up steam again as the company adds AI-powered AWS tools, Jim previously said. Amazon’s business tools in the cloud help customers and businesses operate more efficiently. Later this year, Amazon will host a cloud computing conference called re:Invent. Morgan Stanley is expecting Amazon to announce new partnerships on AI as well as AI-powered AWS tools to “drive future growth.” (Jim Cramer’s charitable foundation is based in AMZN, NVDA, GOOGL, MSFT, AAPL, AVGO, ORCL, AVGO. See here for a full list of stocks.) When you sign up for the CNBC Investment Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charity portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing a trade alert before making a trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , ALONG WITH OUR DISCLAIMER . NO OBLIGATION OR DUTY OF AUTHORITY EXISTS OR IS CREATED BY YOUR RECEIVED OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
A person walks next to the Google Cloud logo at Mobile World Congress (MWC) in Barcelona, Spain February 27, 2023.
Nacho Doce | Reuters
According to a prominent Wall Street analyst, three major technology companies will experience tremendous growth in the coming years thanks to the early adoption of artificial general intelligence. We agree and add to the list of AI beneficiaries.
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