This year, Artificial Intelligence (AI) stocks are gaining significant attention due to the rapid expansion of AI technology, which could greatly benefit the global economy.
According to PwC, AI has the potential to contribute a staggering $15.7 trillion to the world’s annual Gross Domestic Product by 2030. Let’s delve into why three AI stocks are worth considering this month.
1. Nvidia
Nvidia is proving to be one of the top AI stocks to invest in. Their fiscal 2024 second-quarter results revealed a remarkable 101% year-over-year increase in revenue, reaching $13.5 billion, and a staggering 429% surge in non-GAAP earnings to $2.70 per share.
Demand for Nvidia’s AI chips remains exceptionally high, with expectations of supply continuing to increase throughout the next year. The global demand for AI servers is projected to grow by 22% annually through 2026, necessitating more AI chips, a market Nvidia dominates with an estimated 85% share.
Nvidia’s revenue is anticipated to more than double to $54 billion this fiscal year, with strong earnings growth expected over the next five years.
2. Tesla
Despite challenges such as price reductions to boost sales and margin pressure, Tesla’s stock has more than doubled this year. Investors and analysts are looking beyond these challenges, with AI emerging as a significant growth driver for the company.
Tesla’s Dojo AI supercomputer, an investment of $1 billion over the next year, is expected to expand the company’s market value by a staggering $600 billion.
This AI-focused supercomputer is poised to unlock new growth opportunities in self-driving taxis and connected services related to autonomous vehicles. Tesla’s potential to tap into a $10 trillion addressable market with its AI capabilities is a strong catalyst for its future growth.
3. Cloudflare
Cloudflare, although less well-known, plays a critical role in enhancing internet connections’ speed, security, and reliability. Nearly 80% of websites relying on content delivery networks and reverse proxy servers use Cloudflare’s solutions.
Generative AI companies are increasingly adopting Cloudflare’s services, signifying potential growth in the generative AI market. Fortune Business Insights predicts the generative AI market could grow by an annual rate of 47% through 2030.
Cloudflare’s impressive financial performance, with a 32% year-over-year increase in revenue to $308 million in Q2 2023, positions it well to capitalize on the growing demand for AI-related internet infrastructure services.
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Conclusion
These AI stocks, including Nvidia, Tesla, and Cloudflare, hold substantial growth potential in the AI-driven landscape. Investors seeking opportunities in the AI sector may consider these stocks as they continue to show promise and innovation in this dynamic field.
Disclaimer: The article mentions specific stocks and their growth potential. It is essential to conduct thorough research and consult with financial experts before making investment decisions.
