Artificial intelligence (AI) is a revolutionary technology. Thanks to AI, some existing companies will develop additional revenue streams, while others will struggle to find a place in the new business and technology environment.
Still, other companies that are often not thought of as AI stocks have the potential to grow rapidly, appearing out of nowhere and reaching market caps of $1 trillion or more. It's difficult to predict exactly which growth stocks will reach such milestones, but three of her Motley Fool contributors have found out which of these lesser-known AI stocks will reach such a milestone by market capitalization. have an idea about how he can grow beyond $1 trillion.
Traditional tech stocks benefit from AI revolution
Jake Larch (Oracle): my choice is oracle (NYSE:ORCL)thanks to cloud businesses that are fueled by a surge in demand for artificial intelligence. data server.
Oracle Chairman Larry Ellison said this in the company's latest financial results (for the three months ended February 29th). admitted very frankly microsoftThe explosive growth of the cloud is driving cascading success for Microsoft's suppliers, including Oracle. “We are building 20 data centers [for] Microsoft and Azure. This quarter, he just ordered three more data centers,” Ellison said.
Meanwhile, Oracle's overall revenue increased 7% year-over-year to $13.3 billion in the most recent quarter. Even better, management gave an upbeat outlook suggesting that future revenue goals may be met sooner than expected, as the company's cloud services division is growing 25% year-over-year. I did.
In terms of the company's stock price, it may come as a surprise that Oracle is already the 20th largest company in America with a market capitalization of $345 billion. This is more than twice the size of iconic companies such as: verizon, caterpillarand American express.
Perhaps even more shocking, especially for those of us who lived through the complete collapse of stock prices after the dot-com bubble, is that Oracle has actually been a solid investment for over a decade. In fact, Oracle's stock price is S&P500 In the last 10 years.
So it may be time for investors to take another look at Oracle. This Web 1.0, thanks to its frenetic cloud business; The company's name could be on a fast track to a $1 trillion market cap.
TSMC doesn't get the recognition it deserves
Justin Pope (Taiwan Semiconductor Manufacturing): Semiconductors are the building blocks of AI. This chip powers the huge computers needed to process the data to train AI models. Nvidiais the current king of AI chips, with most of the market share, and company-wide annual sales of just over $60 billion. CEO Lisa Su Advanced Micro DevicesThe Nvidia rival believes the AI ​​chip market will grow to as much as $400 billion over the next few years.
Despite being famous chip giants, neither Nvidia nor AMD actually manufacture the chips. The job is performed by manufacturing specialists such as: taiwan semiconductor manufacturing (NYSE:TSM). TSMC is the world's largest semiconductor manufacturer, with an estimated 56% share of global chip production. As the market leader, there is no doubt that TSMC is the go-to for these new advanced chips that power the latest innovations such as AI.
The market isn't necessarily paying attention to TSMC stock. After all, the company is now worth more than $600 billion. However, it is still a reasonable 23 times the $6.17 per share earnings expected by analysts in 2024.
please think about it. If demand for semiconductors causes the AI ​​chip market to grow this much (several times its current size, if Lisa Su is right), much of that business will go to TSMC. It's no wonder the company's revenue doubles over the next 10 years, which would be more than enough to push TSMC's market cap past $1 trillion.
The future is bright for the world's largest chip factory, but its $1 trillion valuation seems more of a problem. when do not have if.
This travel stock should continue to post AI-driven gains
Will Healy (Airbnb): Most consumers see airbnb (NASDAQ:ABNB) This is natural for a tourism company. This has turned the vacation rental industry upside down, turning every residence into a potential vacation property. Additionally, we build on this reputation by offering activities that appeal to travelers.
Nevertheless, many customers and even some investors will be surprised to learn that Airbnb's success is likely due to AI. First, the company is not a pioneer in this field.The claim belongs to ExpediaVrbo. Additionally, unlike hotel chains, hiltondoes not own the property supporting the lease.
In reality, Airbnb is just a website that lists high-profile properties. The company is increasing its competitive advantage through its AI. This technology can help with tasks such as determining the appropriate pricing level in a particular area or estimating the reputation of prospective tenants.
Airbnb has also discovered some unusual applications for AI. This technology serves to enforce holiday activity restrictions and estimate the likelihood that a tenant will violate such rules.
Airbnb also started testing an AI chatbot to handle many customer support inquiries. To that end, the company recently acquired GamePlanner, a company that could supposedly make his Airbnb AI experience seem more human-like.
Additionally, the company's market cap may be closer to $1 trillion than some assume. The stock has already grown to a market cap of $105 billion thanks to 7.7 million property listings and his 448 million stay and experience bookings in the fourth quarter of 2023 alone. In other words, the market capitalization needs to increase by approximately 3.2 times. 1 trillion dollars.
Admittedly, such a feat could take several years, as the market capitalization would need to grow nearly nine times to achieve that milestone. Additionally, Airbnb's P/E of 23x is lower due to the one-time income tax benefit, making its true valuation based on earnings higher than it appears.
However, the company's price-to-sales ratio of 11x is far from its record low, which should act as a catalyst for further sales and profit growth. Eventually, a $1 trillion market cap should be within reach as AI continues to improve productivity for companies.
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American Express is an advertising partner of The Ascent, a Motley Fool company. Jake Lerch has held positions at Airbnb, Caterpillar, and Nvidia. Justin Pope has no position in any stocks mentioned. Will Healy holds a position at Advanced Micro Devices. The Motley Fool has positions in and recommends Advanced Micro Devices, Airbnb, Microsoft, Nvidia, Oracle, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends his Verizon Communications and recommends the following options: His January 2026 $395 long call on Microsoft and his January 2026 $405 short call on Microsoft. The Motley Fool has a disclosure policy.
3 Surprising AI Stocks Heading for a $1 Trillion Market Cap was originally published by The Motley Fool