The artificial intelligence (AI) bull market is ablaze.
With the advent of ChatGPT, the prowess of generative AI technology has been illuminated, prompting a frenzy of tech companies vying to harness its capabilities to elevate customer service and streamline operations.
Investor fervor has ignited alongside this phenomenon, propelling tech stocks to new heights since the dawn of 2023, with the renowned “Magnificent Seven” spearheading the charge.
Let’s delve into the forefront of the AI race.
Image source: Getty Images.
Leading the Charge: Nvidia’s Dominance
Discourse on generative AI stands incomplete without an ode to the monument that is Nvidia (NASDAQ: NVDA). The company’s revered graphics processing units (GPUs) have been the backbone of the AI revolution, serving as the linchpin in operating AI models like ChatGPT.
Nvidia’s strategic foresight galvanized its foray into AI years before, culminating in a robust AI infrastructure and pivotal partnerships with entities such as OpenAI, a move that has handsomely paid dividends. Boasting an estimated 98% stranglehold over the data center GPU market, Nvidia’s technological supremacy and unprecedented component demand have given rise to scarcity, conferring upon it formidable pricing leverage.
Nvidia’s recent financial performance narrates a tale of triumph, elucidating the stock’s meteoric 400% surge since the outset of 2023, positioned as the third-most valuable entity globally, outshined solely by Microsoft (NASDAQ: MSFT) and Apple.
A 265% uptick in fourth-quarter revenue to $22.1 billion, fueled by a staggering 409% surge in data center revenue to $18.4 billion, saw its generally accepted accounting principles (GAAP) net income soar by 769% to $12.3 billion, yielding a profit margin exceeding 50%.
While Nvidia’s growth tempo may decelerate, its unwavering lead in AI technology promises enduring triumph.
Microsoft: Pioneering AI Software
While Nvidia commands the AI hardware arena, Microsoft has carved a niche for itself as the paragon of AI software.
Fortified by its colossal investment of an estimated $13 billion in OpenAI and its expansive reach across diverse tech platforms, Microsoft is adept at deploying AI functionalities across a myriad of product lines, a feat it is currently executing.
Leveraging its collaboration with OpenAI, Microsoft has seamlessly integrated AI technology into Azure cloud computing, GitHub code repository, Microsoft Office, and Bing search engine, rolling out its AI Copilot chatbot across these platforms and beyond.
These endeavors have already begun yielding fruits for the business. Notably, management disclosed that six percentage points of Azure’s 30% revenue surge stemmed from AI innovations in its latest quarter.