Artificial Intelligence (AI) is proving to be a game-changing technology and with it, several companies are emerging as winners in this sector of the economy. The stocks for many of these companies have already seen large gains. But with AI still looking to be in the early innings, many of these stocks have additional room to run.
Let’s look at five AI stocks that could be set to continue to run higher in the coming years.
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Nvidia (NASDAQ: NVDA) is already one the biggest beneficiaries of AI, as its graphics processing units (GPUs) have become the backbone of the AI infrastructure buildout. Demand for its chips is insatiable, and it appears there will be no letup as large language models (LLMs) need ever-increasing computing power and thus GPUs to be trained on as they become more advanced.
With its CUDA software platform long ago becoming the standard on which developers learned to program GPUs, Nvidia has a wide moat that allowed it to attain a dominant share of the GPU market. Meanwhile, the company continues to advance its technology, accelerating its design cycle to once a year (from the previous two-year to three-year cycle). This combination of a wide moat and advancing technology should allow Nvidia to keep its huge market share and continue to be one of the biggest AI winners.
For investors looking for the next big AI chip winner, Broadcom (NASDAQ: AVGO) tops the list of candidates. The company participates in the AI infrastructure buildout through its networking portfolio, which provides switches and network interface cards (NICs), as well as through helping customers build custom AI chips.
The company is looking to grow and take share in the AI data center switching market where its Ethernet switches compete against Nvidia’s InfiniBand technology. It touts that Ethernet technology is superior to InfiniBand in handling AI workloads and transferring data between GPUs. While both technologies have their pros and cons, this is a growing market that is becoming more important as GPU clusters become larger. Thus, there is a lot of potential upside for multiple players to benefit.
Broadcom’s biggest opportunity, though, is in helping customers develop chips designed for specific computing and power needs. The company has been adding a number of big customers in this area, and it should be a strong growth driver in the years to come.
