The artificial intelligence (AI) market is set to experience rapid growth in the coming years, with a projected compound annual growth rate of 37% through 2030. This incredible potential has led numerous tech companies to reorient their strategies towards AI, creating exciting investment opportunities in the burgeoning industry.
While the AI market saw significant growth last year, there is still ample room for new investors to reap major gains. In particular, two stocks that have recently undergone stock splits are poised for success in the AI sector and could potentially soar in 2024.
1. Evolution of Nvidia
Nvidia (NASDAQ: NVDA), a leading chipmaker, has witnessed a remarkable surge in business in recent years, with its shares skyrocketing over 1,300% since 2019. The company’s dominance in graphics processing units (GPUs) has positioned it as a formidable player in the AI space.
Bolstered by its years of experience and expertise in GPUs, Nvidia has emerged as a major contender in the AI market, achieving an estimated 90% market share in AI chips. This advantage has translated into impressive financial results, with the company posting revenue growth of 206% in the third quarter of fiscal 2024.
Analysts predict that Nvidia’s earnings per share could reach $24 by fiscal 2026, which, when combined with its forward price-to-earnings ratio, suggests a potential stock price of $1,080 and a projected growth of 97% over the next two fiscal years. Despite increasing competition, Nvidia’s dominant position in AI makes it an enticing investment choice for the new year.
2. Alphabet’s Ascendancy
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), the parent company of Google, Android, and YouTube, holds a powerful position in the tech industry. The company’s success can be attributed to its vast user base, which has enabled it to build a robust digital advertising business and secure approximately 25% of the $740 billion digital ad market.
Alphabet’s annual revenue has increased by 75% since 2019, accompanied by a surge in operating income of 108%. The company’s strong financial performance has been further bolstered by a significant rise in free cash flow. With $78 billion in free cash flow, Alphabet has the resources to invest in research and development, particularly in burgeoning fields such as AI.
The recent unveiling of Alphabet’s highly anticipated AI model, Gemini, positions the company for further growth opportunities. Gemini, coupled with the popularity of platforms like Google Search, Cloud, and YouTube, provides Alphabet with a competitive advantage in the AI landscape. Moreover, Alphabet’s stocks offer greater value in terms of forward price-to-earnings and price-to-free cash flow ratios compared to its major AI competitors.
In conclusion, the AI market presents promising investment prospects in 2024. Both Nvidia and Alphabet, with their strong market positions and financial performance, are well-positioned to capitalize on the growing demand for AI technologies. Investors seeking to embark on the AI investment journey should consider these stocks as potential winners in the new year.
The source of the article is from the blog tvbzorg.com