Here Are 3 Stocks That – Besides Nvidia – Are Getting an AI Premium from Wall Street

Generic AI boom was a big winner for investors this year NVIDIA, The company’s share price surged 234% as demand surged for the chip maker’s processors, which are designed to handle the heavy compute loads needed to train and run large language models.

from LLM Microsoft-Supported OpenAI and others relying on Nvidia’s technology can turn users’ text-based prompts into pictures, poems or PowerPoint presentations.

While Nvidia sucked up the lion’s share of profits — net income during the first three quarters of the year increased sixfold by 2022 — it wasn’t the only stock that caught Wall Street’s attention in the race to make money from artificial intelligence.

software vendor CrowdStrike, hubspot And sales force All have at least doubled this year, far outperforming the Nasdaq, which was up 43% as of Friday’s close. Those companies got a boost after announcing reforms based on generative AI.

But when it comes to the hardware and infrastructure underlying advances in AI and making sure there’s enough potential to move forward, investors are looking at who will benefit besides Nvidia. The iShares Semiconductor ETF is up 64% this year. The data center is another source of optimism, and some cloud service providers are positioned to win business as organizations boost spending on technology to help drive generative AI services.

Here are three other stocks that are gaining momentum due to the generative AI wave:

As the company whose technology is seen as most likely to challenge Nvidia’s AI chip monopoly, amd It has a large following in the software developer community. The stock is up 116% for the year as of Friday’s close.

AMD recently launched its Mi300X AI processor, driving the market for AI chips, which CEO Lisa Su projects will reach $400 billion over the next four years. meta It announced its plans to use the new processors in December, and Microsoft is also a committed customer.

Su pointed to performance gains over Nvidia’s H100 chip.

“AMD is extremely well-positioned to take advantage of the rapidly growing AI TAM as they continue to grow customer partnerships and deliver products with impressive (and extremely competitive) performance metrics,” Deutsche Bank analysts wrote in a note to clients. Let’s continue to present.” Announcement earlier this month.

The stock rose nearly 10% the day after the launch.

Since its public market debut nearly a decade ago, hay or grain gaining ground on cisco In the data center networking gear market. Excitement over its position in AI helped send the stock up 96% this year.

In October, Arista added AI to a key customer segment, so it is now called Cloud and AI Titans. More than 40% of the company’s 2022 revenue came from Meta and Microsoft. The following month, Arista CEO Jayshree Ullal announced a target of $750 million in 2025 AI networking revenue, leading Citi analysts to raise their price target on the stock from $220 to $300.

Companies are choosing Arista hardware to connect their GPUs to the Internet. As models grow larger and workloads become more complex, Arista has the opportunity to interconnect GPUs to help scale the technology.

Arista executives see a decline in enterprise spending in 2024 after years of cloud expansion, with organizations testing systems before making large-scale AI deployments that could begin in 2025.

for years, cloud flare It is ensured that online content can be delivered quickly to end users by creating a global network of data centers that protects web sites from attempted takedowns.

One major customer is OpenAI. When a user tries to access OpenAI, Cloudflare’s technology verifies that it is a person, and not a bot, on the other end. The company is now aiming to become part of the fabric to run AI models and ensure quick responses. In September, the company announced a service called Workers AI, which runs on Nvidia’s GPUs and will expand to 100 cities.

Morgan Stanley analysts, who have the equivalent of a hold rating on the stock, wrote in a November report, “With a consumption pricing model, these services could drive meaningful growth in revenue as adoption ramps up through 2024 “

Cloudflare shares have surged 87% so far in 2023.

Watch: Top Bernstein analyst says Nvidia is ‘cheapest’ AI game

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