Over the last couple of weeks, the buzzword around the tech world seems to be ChatGPT. From writing code to language translation, from writing blogs to creating animations, ChatGPT appears to be doing everything. And with the chatbot reaching 100 million users in two months, the limelight is on AI stocks.
Microsoft's (MSFT) multi-billion multi-year investment in OpenAI, the creator of ChatGPT, is an attempt to capitalise on the alluring growth prospects in the generative AI market.
Further, OpenAI's efforts to innovate ChatGPT, reflected in the launch of its next-generation chatbot technology called GPT-4 on March 14. The new language model is multi-modal, implying that it accepts not only text but also speech, images, and video as inputs.
Increasing use of machine learning (ML) across various business verticals and rising investments could help propel the generative AI market.
Generative AI push attracts Big Tech
What is generative AI?
Generative AI is based on algorithms that generate new outputs based on the data they have been trained on. Unlike traditional AI systems designed to recognise patterns and make predictions, generative AI creates brand-new content in images, text, audio, computer code, and more.
What are the market prospects?
According to the latest report from Brainy Insights, the global Generative AI market is expected to hit $188.62 billion by 2032, at a CAGR of 36.1 per cent during the forecast period 2023-2032.
Gartner expects 30 per cent of outbound marketing messages from large organisations to be synthetically generated by 2025, up from less than two per cent in 2022.
Be it the rise of ChatGPT, and the talks over the rollout of Alphabet’s BARD, Baidu's ERNIE; the AI space makes for an interesting watch.
Given the recent initiatives, Microsoft, Alphabet, NVIDIA, Micron and Adobe deserve a place in the watchlist for stock market investing enthusiasts closely following this space. Here’s why:
AI stocks that are a must watch
Share Price*: $272.23
YTD Performance*: 13.6 per cent
Microsoft’s strength in cloud computing and expanding Azure clientele holds promise for the stock. Moreover, the company aims to democratise AI or make AI technology universally accessible on its Azure cloud computing platform.
Since 2019, the tech giant has been making investments in OpenAI with an initial investment of $1 billion. Recently, Microsoft invested $3 billion in ChatGPT's startup and is currently in talks to invest an additional $10 billion.
This could be a 'game-changer' as Microsoft could integrate OpenAI capabilities into its business intelligence software and disrupt established industries like internet search. It is expected to help the company lead the race in AI-enabled enterprise use cases.
Share Price*: $259.00
YTD Performance*: 80.9 per cent
NVIDIA stands to benefit from the AI hype cycle as its A100 AI chip powers the ChatGPT service.
According to New Street Research, NVIDIA takes 95 per cent of the market for graphics processors that can be used for ML.
The A100 is tailored for the kind of ML models that power tools like ChatGPT, Bing AI, or Stable Diffusion. It’s able to simultaneously perform many simple calculations, which is vital for training and using neural network models.
Be it big firms or startups that are working on software like chatbots and image generators would require hundreds or thousands of NVIDIA’s chips, lending the company an edge over its rivals in the semiconductor industry.
Micron Technology (MU)
Share Price*: $57.64
YTD Performance*: 14.4 per cent
The US-based semiconductor company, Micron Technology, manufactures memory chips that include dynamic random-access memory (DRAM) and NAND flash memory.
Micron appears well positioned to benefit from buzz around generative AI backed by its vast storage and high-performance and high-capacity memory chips that power AI training and inference engines across cloud or mobile and edge devices.
The demand for memory chips is expected to continue to rise as AI keeps on developing.
Share Price*: $101.22
YTD Performance*: 13.6 per cent
Alphabet stock's strength in AI spans digital advertising, YouTube, the Google Cloud Platform, and consumer hardware products. Dominance in search engine market makes it a compelling AI stock to watch.
Although BARD, Alphabet's AI chatbot, made a factual error that resulted in a loss of more than $100 billion to its market cap, we cannot rule out its potential.
Share Price*: $362.88
YTD Performance*: 7.7 per cent
Adobe has built its name by creating software for marketing, content, data analytics, publishing and document management. Its flagship product, Creative Cloud, provides a series of design software via subscription.
In 2022, Adobe went a step further by announcing new AI and machine learning (ML) capacity for its Experience Cloud product. The technology will provide predictive capabilities that will help sales and marketing teams gain an understanding of the various aspects of a marketing campaign that affect a buyer's purchasing decision. The company’s efforts to enhance its AI-based capabilities make it a must watch while discussing AI stocks.
Before you begin investing in the stock market for AI stocks, please note that trading in financial markets carries significant risks. We recommend you do your own research and stay aware of your risk appetite. Also, remember the AI space is continuously evolving, so you must be up to date with the latest trends.
*As of US markets close on March 20, 2023.
— Vijay Valecha is the chief investment officer at Century Financial.
The strong economy, robust regulatory environment, and advanced trading technology have all contributed to this growth
Uniplus offers comprehensive assistance to students, helping them navigate the intricacies of international higher education, from selecting the right university to securing scholarships and financial aid
The strategic partnership will involve both organisations working closely to publish high-quality content in Arabic on the corporate culture of accountability and transparency
Experience the future of beauty shopping with Nessa's interactive, immersive new virtual platform
Contributing to these impressive figures include non-resident Indians based in the GCC searching for profitable investment opportunities and end-use luxury properties in India