ChatGPT popularized modern Artificial Intelligence in November 2022. After being released to the general public, it quickly became the most used app in history, and large companies started pouring money into seeing how AI can benefit their businesses.
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With people like Satya Nadella (CEO of Microsoft), Elon Musk (CEO of Tesla), and Sundar Pichai (CEO of Google) constantly talking about AI's role in the modern business and the "Fourth Industrial Revolution", many people are left wondering what companies to invest in to take advantage of the AI frenzy that's happening right now!
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While ETFs like QQQ are always a safe bet, this article will focus more on stock-picking. Specifically, I'm going to outline 5 AI stocks that are poised to explode during this Fourth Industrial Revolution (also called the Technological Revolution). However, unlike most blog posts, I didn't select these stocks randomly from a basket of stocks or search YouTube and Reddit for ideas.
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I used AI to query for stocks with certain characteristics. These are:
- AI or Semiconductor stocks
- Have increased their gross profit margin over the past year
- Their gross profit margin is 60% or more
- They made over $5 billion in revenue in Q3 2023
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These criteria are somewhat arbitrary, but there is a method to the madness! I wanted to find stocks that are improving their margins, making lots of money, and are actively growing within the AI space. However, it is possible for you to find the perfect stocks that meet your particular investment thesis. NexusTrade Starter Pack gives you the ability to use GPT-4 to search for novel investment opportunities with its AI-Powered Stock Screener. Learn about how it works in this article.
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Broadcom is also a leader when it comes to internet infrastructure, including semiconductors (the chips that power AI technologies), telecommunications equipment, and smartphones. While not the first stock you think of when you hear "AI", Broadcom Inc (AVGO) has a number of benefits that are often overlooked.
- AVGO had a gross profit margin of nearly 70% during Q3 2023
- Its revenue is almost at $9 billion a quarter, meaning they are printing cash
- They meet the criteria above, which means the amount of money they're taking home each year is increasing.
As AI becomes more ubiquitous and integrated into our daily life, Broadcom stands to profit a great deal, and is a stock that many people may look over.
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4. Microsoft Corporation (MSFT):
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Microsoft is my personal favorite stock when it comes to investing in AI. They stand to gain from many different avenues. To start, Microsoft owns 49% of OpenAI, the creators of ChatGPT themselves. Secondly, Microsoft is integrating AI everywhere! This includes Microsoft Office, Windows, Azure, and VSCode (Copilot). Users can even deploy their own ChatGPT using Microsoft Azure.
If Microsoft sold toasters, I'd probably be "AI-Powered" as well...
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In addition to this, in Q3 2023, Microsoft
- Had a gross profit margin of 69.5%
- Made over $53 billion in revenue
- Continues to grow its profit margin over the past year
Due to its sheer size, Microsoft is unlikely to 100x within the next couple years. But, it is absolutely a great play if you're interested in investing in companies with strong fundamentals and a diverse array of AI products.
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3. NVIDIA Corporation (NVDA):
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Ah, NVIDIA! The meme stock of the AI world. With a 1700% gain in the past 5 years, many people are left wondering whether NVIDIA is still a good investment.
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In my opinion, there are some attributes that makes NVIDIA an attractive long-term investment, even after its meteoric ascent. If Sam Altman wants to raise $7 trillion for an AI Chip company, then NVIDIA's $1.8 trillion market cap doesn't seem tooo expensive. Most importantly, NVIDIA currently dominates the AI semiconductor space.
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Don't get me wrong. There are stocks like Advanced Micron Devices (AMD) and Intel (INTC) that are doing whatever they can to catch up to NVIDIA. While they are trying their best, they still have a long way to go for one big reason. It's not just efficient hardware that AI relies on. It's also AI software.
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Modern AI depends on Cuda, a parallel-computing platform created by NVIDIA. Cuda is heavily integrated into popular AI frameworks like PyTorch and TensorFlow, and even if other stocks had hardware as good as NVIDIA (which they don't), NVIDIA dominates in the AI software business. It will likely take years for other companies to catch up, while NVIDIA can keep dominating and leading the field of innovative AI technology.
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- NVIDIA made $18 billion in revenue
- Their gross profit margin is an astounding 74%
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NVIDIA is printing cash and makes a ton in revenue. They arguable completely dominate this space. And like I said before, if you think Sam Altman has a chance to raise $7 trillion on a brand new AI semiconductor company, then what do you imagine NVIDIA's market cap to be in 2030? 🤔
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2. Salesforce, Inc. (CRM):
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I'm not going to lie. I was shocked to see SalesForce here, especially at number 2. But the numbers don't lie. Salesforce is a software company known for their Customer Management Services (CRM). Einstein AI is Salesforce's integrated artificial intelligence technology that enhances its CRM by providing predictive analytics, machine learning, and data-driven insights.
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In addition, I hadn't realized Salesforce made as much money as it does. For example, in Q3 2023,
- They made over $8.5 billion in revenue
- Their gross profit margin is at 75%.
- Their profit margin is increasing
If you're looking for a fast-growing stock that is actively applying AI into their business, then Salesforce may be the stock you're looking for.
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1. Meta Platforms, Inc. (META):
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The stock everybody either loves or hates. Meta Platforms (META) is better known as Facebook (FB), but they also own other extremely popular applications, including Whatsapp and Instagram.
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Meta invests in AI heavily, and in a wide variety of ways. To start, Meta, being an advertising company, utilizes AI to more effectively match ads to people that would be interested in that type of content, driving better conversions and creating happier advertisers. Meta also owns important aspects of the AI development cycle, including PyTorch, one of the most popular libraries for training AI models. In this same vein, they have Meta Research, which is one of the most influential AI research organizations in the world, right beside DeepMind.
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Most importantly, we can't talk about META and AI without talking about Llama 2.0. Llama is arguably one of the only reasons why the Open-Source community can compete with OpenAI. Meta making Llama completely open-source gave AI into the hands of everybody, not just the tech titans like Microsoft. Moreover, they're working on Llama 3.0, which will likely be multimodal and even better than Llama 2.0, sparking another way of innovation in the open-source community.
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Beyond this:
- Meta has a staggering 82% profit margin in Q3 2023
- Meta made $34 billion in revenue in Q3 2023
Meta is valued at $1.2 trillion, but is absolutely a money-printing machine. They are ungodly profitable and have lots of money to continuously invest in AI innovation. They are arguably the only reason why the open-source AI community is flourishing the way it is. With Mark Zuckerberg's vision of integrating Artificial Intelligence with Virtual Reality (VR), his goal of creating a Metaverse isn't far-fetched. I dare argue that it's coming sooner than the skeptics would like to think.
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While I've interjected my opinion throughout the article, the important thing to keep in mind is that this list of companies was pulled directly using NexusTrade and objective fundamental data. We specifically looked for AI and semi-conductor stocks with a high revenue, and a high, increasing profit margin. Nonetheless, with this analysis, there are a few things to keep in mind.
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For one: it is possible for the model to make mistakes. This can be due to the implementation mistakes by me or data integrity errors with the third-party data provider that NexusTrade relies on. Thus, as with all financial research, it is important to do your own due diligence and fact-check any claims presented by the AI model.
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For two: this article is not a recommendation to buy or sell any stocks. The main purpose of this article is to showcase what AI stocks have strong fundamentals based on objective data. Even if a stock is highly profitable today, that doesn't mean it will be profitable tomorrow. And, if it's profitable tomorrow, that doesn't mean tomorrow's stock price will reflect this. Always do your own research or consult with a financial advisor before investing in the stock market.
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AI is transforming the world. Many stocks, including Meta Platforms (META), NVIDIA Corporation (NVDA), and Microsoft Corporation (MSFT) are poised to gain massively during the AI revolution. If you're looking for money-printing large tech stocks that are becoming increasingly more profitable, than this article should be a great way to gather some ideas.
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This article also shows how financial research can be streamlined by utilizing Artificial Intelligence. All 5 stocks, Broadcom, Salesforce, NVIDIA, Microsoft, and Meta were obtained from a single interaction with the GPT-4 version of Aurora, the AI-Powered Finance Assistant. Combining Aurora with GPT-4 makes her better able to reason, more likely to generate accurate queries, and more capable at summarizing the results in a readable manner. Integrating her into your investing workflows will vastly expedite the financial research process at a very low cost.
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In conclusion, these 5 stocks in the AI and semiconductor industries have strong fundamentals that makes them strong investments. Broadcom (AVGO) and NVIDIA (NVDA) are particularly good choices if you're interested in semiconductors, the chips that modern AI runs on. Salesforce (CRM) is a great option if you're looking for highly profitable stocks actively integrating AI into their core business. Microsoft is an excellent choice for those wanting a stock that integrates AI into everything, including a major investment in OpenAI themselves. Finally, Meta is a phenomenal choice if you're looking for a stock with a high profit margin, actively integrating AI into their business, and making AI accessible to everybody, not just the technical elite.
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Each of these companies have high revenues and large, increasing profit margins. Do your own research, and see if these stocks deserve a place in your portfolio.
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Disclaimer: The content provided in this post is for informational purposes only and is not intended as financial advice or a recommendation to buy or sell any securities. I am not a financial advisor. The insights and analysis shared are meant to demonstrate the capabilities of NexusTrade in automating financial research. It's important to conduct your own due diligence and consult with a professional advisor before making any investment decisions.
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