Artificial Intelligence (AI) has proven to be an incredible catalyst for many businesses over the past year or so, with many companies capitalizing on the growing adoption of this technology witnessing rapid increases in their stock prices. doing.
For example, if you invest $10,000, Nvidia Its early 2023 price is now worth about $58,000. This is not surprising since this company is a pioneer in his AI field thanks to its graphics cards that allow users to train large-scale language models (LLMs) and deploy AI applications.similar investment super microcomputer The stock is now worth $110,000, compared to early last year, as demand for the company's AI servers has increased.
The good thing is that AI adoption is still in its early stages. Investors could potentially benefit from this secular growth trend by buying solid AI stocks as part of a diversified portfolio.
Palantir Technologies (NYSE:PLTR) and ASML Holding (NASDAQ: ASML) are two stocks that investors can consider buying right now to take full advantage of the rise of AI.
1. Palantir Technologies
Palantir Technologies is proving to be a surefire way to meet the surge in demand for AI software. The company's artificial intelligence platform (AIP) is experiencing strong adoption, and management said it is helping the company “significantly shorten sales cycles and accelerate the rate of new customer acquisition.” . AIP enables organizations to integrate large-scale language models into their operations through bootcamps. Bootcamp is a bootcamp hosted by Palantir to help clients understand his AI use cases and how to use this technology to improve his business.
Thanks to AIP, the number of commercial contracts signed by the company has increased rapidly. “Demand for AIP is unexpected and we see bootcamp as a delivery mechanism for AIP, driving a growing addressable market for AIP,” management said in a February earnings call. he pointed out.
Palantir's strength in the AI software market is a key reason why analysts expect the company's revenue to grow 22% to $2.71 billion in 2024. This is an improvement from the 17% growth reported in 2023. More importantly, Palantir's AI business is among the best in the world. The AI software platform market is in the early stages of growth, with annual growth of 31% through 2030 and expected to generate $279 billion in revenue by the end of the decade.
If Palantir can maintain its impressive deal momentum, growth could accelerate further. For example, the number of deals worth $1 million or more concluded in the fourth quarter of 2023 nearly doubled compared to the same period last year to 103.
Palantir's remaining performance obligation (RPO), the amount of future contracts Palantir expects to fulfill in the future, also increased 28% year over year to $1.24 billion. RPO growth is outpacing sales, and the company is well-positioned with a healthy revenue pipeline.
Now, the company has partnered with: oracle By distributing your AI software platform across a broader network, you can reach more customers. These encouraging developments explain why analysts are predicting annual earnings growth of 85% for the company over the next five years.
This increased profitability is likely to further benefit Palantir shareholders, making it a top choice for investors looking to add AI growth stocks to their portfolios.
2. ASML Holding
Semiconductors are playing a critical role in driving the AI revolution, as evidenced by the huge demand for Nvidia's chips. However, the production of these chips would not have been possible without ASML Holding's machinery.
For example, Nvidia's hot-selling flagship processor H100 is manufactured using a custom 5-nanometer (nm) node. taiwan semiconductor manufacturing, commonly known as TSMC. To manufacture chips based on this process node, TSMC utilizes ASML's extreme ultraviolet (EUV) lithography system.
The good news for ASML is that demand for advanced process nodes is increasing thanks to AI. For example, Nvidia is rapidly ramping up production of AI chips to meet customer demand. To achieve this, foundries such as TSMC are reportedly increasing capital investment. In its last earnings release, TSMC management pointed out that of the total capital investment budget of $28 billion to $32 billion in 2024, “70% to 80% of the capital budget will be allocated to advanced process technologies.”
In addition, Nvidia and apple Capital expenditures for procuring EUV machines should ideally increase as we plan to move to more advanced chips manufactured using 3nm and 2nm process nodes. This is why ASML's machine orders increased significantly in his fourth quarter of 2023.
The Dutch company saw net bookings surge to 9.2 billion euros in the fourth quarter of 2023, up from 2.6 billion euros in the previous quarter. The order backlog remained strong at 39 billion euros. The AI chip market is expected to grow at an annual rate of 38% until 2032, and ASML's orders are expected to expand further as demand for advanced chip manufacturing equipment further increases.
TSMC, for example, plans to build a third factory in the United States to manufacture 2nm chips, but this also means ASML has a dominant position in this market and has ordered its EUV lithography equipment. It also means to do. Overall, the long-term growth of the AI chip market and ASML's dominance over EUV lithography are the reasons why the company is likely to see solid growth going forward.
It's worth noting that the company's stock price has soared nearly 10x over the past decade, but the lucrative semiconductor opportunities that lie ahead indicate that ASML stock could be a big winner in the long run. ing.
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Harsh Chauhan has no position in any stocks mentioned. The Motley Fool has positions in and recommends ASML, Apple, Nvidia, Oracle, Palantir Technologies, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
2 Millionaire-Maker Artificial Intelligence (AI) Stocks was originally published by The Motley Fool.
