Many investors may think about sentient robots when tech experts discuss the increasing artificial intelligence (AI) sector. However, smart robots only represent a small amount of the global AI market that is expected to expand at a compound rate (CAGR) of 35.6% from this year to 2026.
A large part of the market revolves around software platforms that aid companies in making data-driven choices, automate routine tasks, streamline their work, and lower costs.
Let’s examine two top AI stocks that will benefit from this huge market expansion.
Nvidia is the world’s top maker of GPUs. It controls 83% of the market in Q2 of 2021, according to JPR, while its top rival AMD having the remaining 17%.
Nvidia’s GPUs are usually linked with high-end computer gaming, but it also sells GPUs for data centers that are used for AI and machine learning work.
Nvidia’s top data center products include its A100 GPU and its DGX A100 system, which combines eight A100 GPUs. All three of the cloud giants — Amazon, Microsoft, and Google — now use Nvidia’s A100 GPUs to support their AI services.
Nvidia also bought the networking equipment company Mellanox last year to further bolster this core business. Nvidia’s data center revenue increased 124% to $6.7 billion, or 40% of its top line, in fiscal year 2021 (which was over in January). Its overall revenue also rose by 53% to reach $16.7 billion.
Analysts expect the company’s earnings and revenue to rise 65% and 54%, respectively, this year, as it moves more GPUs.
Palantir is a data mining company that has two main platforms: Gotham for their government customers and Foundry for its enterprise customers.
Palantir’s products collect data from different sources, process it using AI algorithms, and help organizations make better decisions. The United States military uses Gotham to plan its missions, while the CIA — who is one of the company’s earliest investors — uses the platform to gather information. Palantir leverages this hardened reputation to bring in enterprise customers such as Rio Tinto and BP to its platform.
Palantir’s revenue increased 47% to $1.1 billion last year, and it expects its revenue to expand by at least 30% yearly from 2021 to 2025. This ambitious forecast means it could generate over $4 billion in revenue in 2025. Palantir is not profitable yet, but its operating margins and adjusted gross are increasing and suggest its platforms are still impressing executives.
Author: Scott Dowdy