Artificial intelligence (AI) has been the big theme of the markets in 2023. After taking a massive beating in 2022, tech stocks began rallying this year, kicked off by the release of ChatGPT by OpenAI, a major AI research firm. ChatGPT is a chatbot that lets you ask questions and get unique AI-written answers to them. OpenAI announced ChatGPT on Twitter in November 2022, and the app quickly became one of the fastest-growing of all time, hitting 100 million users in a few short months. Investors scrambled to buy shares in companies seen as leading the AI revolution, including Microsoft, the only publicly traded company that offers exposure to OpenAI itself.
Lately, AI hype has been simmering down a bit. However, the technology itself is still revolutionary and likely to define how the next decade will play out. In the ensuing paragraphs, I will explore three stocks that are poised to dominate the AI-fuelled decade ahead.
Kinaxis (TSX:KXS) is a Canadian technology company that develops supply chain management software. Its software uses AI to help business owners/managers predict things like supply availability, inventory requirements, and customer demand. It also allows users to model revenue and profit levels coming from their supply chains under different scenarios.
Kinaxis has been offering supply chain management software since the 1980s. It is widely used not just in Canada but in the U.S. and elsewhere, too. The software works by helping companies track all of the different “moving pieces” of their business: raw inputs, inventory, customer behaviour patterns, and so on.
Kinaxis uses AI to help companies forecast the levels of these different “raw inputs.” For example, Kinaxis’s AI can take in reams of data about a company’s inventory levels and use it to determine how much the company will need in order to hit its sales targets. Kinaxis has always aimed to help businesses do things like this, but with AI, it can help them do it faster than ever — even automatically!
Alphabet (NASDAQ:GOOG) is one of the biggest AI research companies in the world. It has an AI research institute called “Google DeepMind” that developed many of the technologies that went into building ChatGPT.
Google was seen as a loser in the early days of the ChatGPT-inspired “AI war.” Microsoft got out an AI-powered search much faster than Google did; the former’s chief executive officer Sundar Pichai said proudly that he and his firm would take market share away from Google. Unfortunately for him, it’s been seven months since AI-powered Bing launched, and Google still controls 90% of the search engine market. That fact shows the resilience of Google’s competitive position, and the company’s own AI efforts are only going to get bigger over time.
NVIDIA (NASDAQ:NVDA) is a U.S. technology company that develops computer chips. It is far and away the biggest financial beneficiary of the AI arms race now occurring. In its most recent quarter, it did $13.5 billion in revenue, an increase of nearly 100% year-over-year and $1.5 billion higher than what analysts thought the company would earn. The growth in profit was even stronger.
Why is NVIDIA making so much money off AI? Because it builds the chips companies need to run AI applications. AI servers feature a core central processing unit and an AI accelerator chip, typically a graphics processing unit. NVIDIA builds far and away the fastest such chips, so it has the AI chip market on lock for the moment.