Next Move Strategy Consulting expects the AI market to become more significant in the next ten years.
They think it will go from worth about $100 billion to almost $2 trillion by 2030. We will use artificial intelligence (AI) in many areas, such as supply chains, marketing, making products, research, analysis, and more. Some essential trends in AI are chatbots, AI that creates images, and AI used in mobile apps.
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ChatGPT has been making noise in the AI industry. It is owned by a company called OpenAI. The presence of industry leaders like NVIDIA and Microsoft in the AI race is thriving, with NVIDIA leading the pack.
Sean explains the importance of GPUs (Graphics Processing Units) in AI and how they enable computers to process multiple data points simultaneously, making them vital for AI applications.
Sean also mentioned that NVIDIA currently dominates the GPU market, owning 90 percent of it. He discusses the consideration of valuation in investment decisions, saying that NVIDIA's current stock price is double the historical average price-to-book ratio, which suggests a cautious approach.
It means we can also resort to alternative investment opportunities in the AI industry.
Artificial Intelligence Stocks to Consider
Here are three artificial intelligence stocks that you can consider investing in:
1. Advanced Micro Devices, Inc. (AMD)
AMD, a close rival to NVIDIA, also presents competitive offers in the GPU market, emphasizing price competition alongside technological aspects. Notably, the utilization of GPUs is costly in AI applications, leading to per-usage pricing for AI software.
AMD is the primary focus due to its relatively low valuation compared to competitors in the AI chip-making industry.
While NVIDIA holds a leading position, other companies seek alternatives to avoid the artificial intelligence stock price premium associated with its dominance. AMD's valuation, currently at 3.03, is considerably lower than the industry average of 20 plus, partially attributed to past issues.
This low valuation presents an opportunity worth considering.
2. Broadcom Inc. (AVGO)
AVGO is a significant AI chip producer, mainly focused on making these chips. What's interesting is how I use AI to analyze things, which helps a lot. When we look at the market for AI chips in 2023, NVIDIA is in the lead with 50%, followed by Broadcom and Intel at 15%. These chips are different from the graphics processors AMD makes.
Broadcom, ranking second in chip-making, is worth exploring. The industry is growing because more people want these chips. The big question is whether this demand will keep going up. Now, let's talk about Broadcom's AI stock value. Right now, it's expensive. In comparison, AMD artificial intelligence stocks look like a better deal.
Something incredible is that top AI chipmakers like Broadcom and NVIDIA are trading at almost twice as high as their usual prices. As for Intel, opinions about its future differ. It's had some issues making chips and keeping up with competitors. Intel's price-to-book ratio is 1.47, while the five-year average is 2.4.
Still, we’re looking into Broadcom as a second consideration for AI stocks to buy. Even though Broadcom is a leader, its market value is lower than NVIDIA's.
3. C3.ai Inc. (AI)
Despite being relatively small compared to giants like Microsoft and IBM, C3.ai is rapidly gaining ground in the AI industry. They provide AI applications and solutions to large multinational corporations, serving as consultants who implement and create AI software for these big companies. They are like the architects of AI in big firms.
C3.ai's niche lies in serving industries like oil and gas and defense, which offer stable cash flow due to their needs. The company is listed on the New York Stock Exchange, and although it's a relatively new player, its revenue is growing substantially. While the net income is negative, the high gross profit margin suggests growth potential.
In Artificial Intelligence (AI), C3.ai is often compared to Tesla for its rapid growth and potential. Remember that investing in high-growth stocks carries risk, but it's one of the artificial intelligence stocks worth considering. Additionally, exploring AI-related ETFs can be an alternative investment approach, given the broad range of AI-related companies in these ETFs.
Overall, the AI industry offers exciting investment opportunities, and learning about AI and exploring which best AI stocks to consider is a valuable way to participate in this growing field. Don’t forget that before investing, always do your due diligence, whether it's for artificial intelligence stocks or not. You can also use AI-powered tools to review trends and help you make decisions. Even ChatGPT can help you learn more about a company before you invest in their stocks.
Check out our YouTube channel if you want to watch Sean’s full video on this session about top AI stocks to consider.
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