When it comes to artificial intelligence (AI) stocks, Nvidia has stolen the show this year. This isn’t particularly surprising as the company has an 80% share of the AI chip market.
But it’s not the only company that should do well from AI in the coming years. Here’s a look at three other well-known companies I’m backing.
A platform for artificial intelligence
One stock that I believe is being underestimated as an AI play is Amazon (NASDAQ: AMZN). It’s not talked about in the same way that companies like Nvidia are.
But here’s the thing. Amazon Web Services (AWS) is likely to be the cloud computing platform that a lot of AI developers build on in the years ahead. So, the company is likely to play a fundamental role in the AI revolution.
We’re optimistic that much of this world-changing AI will be built on top of AWS
Amazon CEO Andy Jassy
One thing that excites me here is ‘Amazon Bedrock’. This is a service that allows companies to build their own unique generative AI applications. I think it has a huge amount of potential.
Now, competition from other Big Tech players is a risk with this stock. Make no mistake, the AI battle is going to be intense.
With Amazon’s valuation currently near historic lows, however, I’m very optimistic about the stock. My medium-term price target is $250.
Bringing AI to the people
Up next, we have good old Apple (NASDAQ: AAPL).
Until recently, this stock hadn’t been much of an AI play. But that all changed earlier this month when the company announced the launch of ‘Apple Intelligence’ – its AI platform (which leverages the power of ChatGPT).
I see this as a massive development. That’s because, across the world today, there are around 2.2bn Apple devices. This means Apple could be the main provider of AI solutions to the global population. Note that people will have to upgrade a lot of their products to get the new AI features. So, this could push Apple’s revenues significantly higher.
Regulation is a risk here. It seems that the iPhone maker is delaying the launch of Apple Intelligence in the EU due to regulatory concerns.
I think Apple will work any challenges on this front, though.
Already profiting from the technology
Finally, we can’t talk about AI and not mention Microsoft (NASDAQ: MSFT). It’s a part owner of ChatGPT.
One reason I’m bullish on Microsoft is the company’s ‘Copilot’ service. This is an AI assistant designed to work within Microsoft 365 applications such as Word, Excel, PowerPoint, etc.
Microsoft is charging $30 (£25) per user per year for this. So, it could generate a stack of extra revenue for the company in the years ahead. One analyst believes we could be looking at Copilot revenue of up to $9bn this financial year (ended 30 June 2024). That would be about 4% of total revenues.
Of course, it’s hard to know at this stage how successful Copilot will actually be. There’s a chance that a lot of companies will baulk at the $30 per user fee.
I reckon this stock will be an AI winner in the long run, though. I plan to keep buying it on pullbacks.
