The artificial intelligence (AI) market has grown like a weed in recent years as organizations collect and process more data to make smarter decisions. However, it can be difficult for investors to filter through the noise and recognize the best investments in this sprawling and fragmented market.
So today, I’m going to shut down that noise and highlight three stocks that offer investors a balanced approach to investing in growth markets. AI market: Nvidia ( NVDA -5.20% ), Selling power ( RCMP -0.87% )and netflix ( NFLX -2.21% ).
Nvidia is the world’s largest producer of discrete graphics processing units (GPUs) for PCs. It also provides high-end GPUs for data centers, where they help handle complex machine learning and AI tasks more efficiently. GPUs can process a wide range of integers and floating point numbers simultaneously, whereas traditional central processing units (or CPUs) process only one piece of data at a time.
Many data centers are now pairing Nvidia’s high-end Tesla GPUs with IntelXeon server processors to process huge amounts of data for high performance computing (HPC) applications. This trend, which is driven by the growth of cloud-based services and mobile apps, has ignited a fire in Nvidia’s data center business.
In its most recent quarter, Nvidia’s data center revenue soared 71% year-over-year to $3.26 billion and accounted for 43% of its revenue. It also grew at a much faster rate than its gaming revenue, which rose 37% to $3.42 billion. Nvidia attributed the growth of its data center business to the accelerated adoption of its GPUs in the hyperscale and cloud computing markets.
Nvidia’s gaming GPU business faces concerns short term downturn as consumer demand for new PCs cools in a post-lockdown market. These short-term headwinds, along with the massive sell-off in tech stocks, have sent Nvidia shares down more than 20% this year.
However, I think this pullback represents a good buying opportunity for patient investors who can look past Nvidia’s short-term challenges and focus on its long-term growth potential in the AI market.
2. Sales force
Salesforce is the world’s largest provider of customer relationship management (CRM) services. With its simplified cloud-based platform, the company initially disrupted the on-premises CRM software industry, which was difficult to scale as the organization grew.
It then leveraged its CRM market dominance to launch additional cloud-based sales, marketing, e-commerce and analytics services. Salesforce has made 20 major acquisitions over the past 14 years to expand this ecosystem and launched additional features to build customer loyalty.
One such key feature is Salesforce Einstein, an AI engine that processes a company’s sales, service, and marketing data to deliver “more personalized and predictive” customer experiences. Salesforce also integrated Einstein into its own app store, allowing developers to build AI-powered apps that “get smarter” with every interaction.
Einstein directly complements his data visualization platform, Tableau, which he acquired in 2019. Speaking of Modernthe use of Einstein with Tableau in his last conference callSalesforce president and chief revenue officer Gavin Patterson said the combination enables the pharma company “to analyze data from all departments and use predictive analytics to make better decisions.”
Salesforce expects annual revenue to nearly double, from $26.5 billion in fiscal year 2022 (which ended in January) to more than $50 billion in fiscal year 2026. This bullish outlook suggests that Salesforce will remain one of the best ways to enjoy the simultaneous growth of the cloud and AI markets.
Netflix isn’t frequently mentioned in conversations about AI stocks, but its entire streaming video ecosystem runs on complex AI algorithms. It uses AI to personalize video recommendations for its viewers, greenlight the production of new content, and even choose the ideal thumbnail images for videos to encourage users to click on more videos.
This massive fabric of AI allows Netflix to launch original hit shows like stranger things, squid gameand Bridgerton without relying on large established franchises. By comparing, disney still relies heavily on its expansive portfolio of properties — which spans the Marvel, Star Wars, and Pixar Cinematic Universes — to drive more viewers to Disney+.
Netflix’s stock is down more than 40% this year in the midst of worries on its decelerating growth in a post-lockdown market and competitive headwinds. However, his shows are always dominating the streaming chartsaccording to Nielsenwhile big institutional investors like Bill Ackman’s Pershing Square remain bullish on the stock.
The next few quarters will likely be bumpy for Netflix, but I think the streaming video leader will once again prove the bears wrong by leveraging its AI algorithms to create a new slate of hit shows. It won’t be fading anytime soon, either: it ended the last quarter with 221.8 million paying subscribers, and it plans to add another 2.5 million subscribers in the current quarter. .
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.