Why these three stocks could soar.
Artificial intelligence (AI) has the potential to be one of the greatest revolutionary advances in technology the world has ever seen. Businesses are just beginning to embrace this technology and what it can do. However, the early results are very promising, allowing organizations to become more efficient and better serve their customers.
But don't get me wrong. Artificial intelligence is still in its infancy, and there are plenty of opportunities for investors to profit from companies leading the way with his AI. Let's take a look at some of the best stocks for the AI ​​bull market.
Nvidia
No other company is benefiting more from AI today. Nvidia (NVDA 1.27%). Manufacturers of graphics processing units (GPUs) have become the backbone of the infrastructure needed to power AI applications in data centers. GPU chips can perform technical calculations faster and with less energy than central processing units (CPUs), making them ideal for use in AI training and inference.
Nvidia's GPUs, on the other hand, have become the industry gold standard due to their CUDA software platform that allows them to program the chips directly, saving customers time and money.
Nvidia continues to be the go-to company for building more powerful data centers needed to power AI applications. Nvidia, on the other hand, is not a one-trick company, and its network business also benefits greatly from AI.
Nvidia has experienced tremendous growth, with revenue more than tripling in its most recent quarter. Nevertheless, the company's stock price is attractive at just 36x forward earnings, and the stock is trending higher as the business grows and investors push the stock higher.
Amazon
When it comes to AI, Amazon (AMZN -1.07%) It may not be the first stock that comes to mind. But the e-commerce giant is investing heavily in the technology.
The company owns the largest cloud business, Amazon Web Services (AWS), and is benefiting from the proliferation of AI. He has also developed two of his chips, Trainium and Inferentia, specifically for AI applications.
On the software side, the company has developed a platform that allows customers to build their own AI models and applications. The SageMaker platform helps customers build, train, and deploy machine learning models. Additionally, the Bedrock platform provides high-performance models from Amazon and other leading AI companies through a single API, allowing customers to build their AI applications.
Amazon also built Amazon Q, its own AI-powered assistant for software developers. AI assistants can write, test, and debug your code. You can also answer questions about company policies, products, and other topics.
Amazon has shown in the past that it is willing to spend big sums of money for big returns in the end, and AI appears to be no exception. Trading at a forward P/E of around 41, the stock has room to rise given the AI ​​growth opportunity in front of the company.
Soundhound AI
shares of Soundhound AI (Thorn 7.16%) Earlier this year, Nvidia's stock price soared on news that it had invested in an AI-powered voice assistant company. However, the stock price has recently returned to more reasonable levels.
Soundhound's technology supports more natural interactions between voice assistants and humans, allowing users to ask more complex questions and get better answers. The company has made significant inroads into the automotive industry and is making good progress in the restaurant sector as well. But the technology's applications should extend far beyond these two industries.
The company has an attractive recurring revenue business model in which it receives royalty payments based on the volume, usage, and lifespan of its products. For applications that don't involve products, such as restaurant services, use a subscription model.
SoundHound is still relatively small, with just $46 million in revenue last year. However, the company has a significant backlog of $661 million in reservations that, if realized, could turn into revenue over the next few years. The weighted average term of that contract is approximately 6.5 years and incorporates more of a revenue backend. Much of the company's backlog is due to its relationships with about 20 car brands and the integration of their technology into new models of its vehicles.
SoundHound stock, trading at more than 21 times forward sales, isn't cheap. However, the company's valuation has fallen significantly in recent months, and it has a lot of potential for growth if it can continue to move its technology into more products. For example, entry into smartphones would be a game-changer for companies and stock prices.