With the evolution of the artificial intelligence (AI) landscape now well into its second year, the trajectory of success in this realm may be widening, encompassing more players who are investing significantly in cutting-edge AI technologies beyond the conventional Nvidia (NASDAQ:NVDA) GPUs. While the allure of Blackwell GB200 chips is certainly palpable and expected to be in high demand this year, firms are also delving into the development of their own custom silicon.
Moreover, keep an eye out for the previous generation of AI chips (produced by Nvidia and other GPU manufacturers) hitting the market at reduced prices. The march of technological progress ensures that GPUs continue to grow in potency. Simultaneously, the cost per unit of computational power is poised to decrease as energy-hungry GPUs become more energy-efficient with each ensuing iteration.
The journey towards making truly adept AI chips affordable may span a few more years. Yet, the potential easing of interest rates could serve as a catalytic force propelling the global advancement of AI into new frontiers. In the midst of this exciting landscape, here are three AI stocks that show promise as possible future frontrunners in the AI domain.
Qualcomm’s Strategic Positioning in the AI Sector
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Positioned as a cost-effective player in the chip sector, Qualcomm (NASDAQ:QCOM) is poised for success as AI continues its penetration into the cloud and mobile devices space. Anticipation looms large around the imminent release of the company’s Snapdragon 8 Gen 3 chip, slated for later this year. This flagship product is expected to catalyze substantial revenue growth for the firm as we approach the year’s close.
An advocate of Qualcomm’s “AI-focused memory technology,” InvestorPlace contributor Chris MacDonald hails the company’s prowess, particularly in the context of the chip’s integration into the latest Android smartphones. MacDonald’s optimism is well-founded, as Qualcomm’s impending mobile chip is rich in AI capabilities that hold the potential to revolutionize on-device AI processing methodologies.
The concept of “edge AI” is currently a focal point of discussions. Future iterations could witness AI applications running on a dual platform of phones and the cloud. With AI companies like Anthropic developing large language models (LLMs) of varying parameter sizes, the potential for on-device AIs like Qualcomm to seize the edge AI opportunity appears undervalued. At a trailing price-to-earnings ratio of 23.9, QCOM stock looks intriguing from a value perspective.
Meta Platforms: Pioneering AI Innovation
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Despite witnessing a staggering surge of over 440% from its 2022 lows to reclaim the $500 threshold, Meta Platforms (NASDAQ:META) still presents an appealing proposition for investors, trading at 33 times trailing price-to-earnings. The company’s bold foray into AI is unmistakable, with its overarching focus on constructing the metaverse and the requisite devices to access it.
While Meta remains resolute in its metaverse pursuits, the seamless integration of cutting-edge generative AI solutions may facilitate this transformative journey. Noteworthy is Meta’s robust engagement with Nvidia’s H100 GPUs, signaling a significant alignment with the GPU giant as substantial orders are anticipated to continue flowing amidst the Blackwell chip rollout in the current year.
With initiatives spanning the enhancement of its open-source Llama language model to the pervasive integration of AI across its suite of social media platforms, Meta is at the vanguard of AI utilization among its peers. CEO Mark Zuckerberg’s ambitions appear grand, with a discernible eye set on the horizon: the realm of artificial general intelligence (AGI).
Adobe Embarking on an AI Endeavor
Adobe Faces Off Against Rivals: A Battle of AI Titans
Adobe Stock Takes a Dip
Adobe (NASDAQ:ADBE) stock is now down around 20% from its 52-week highs, amidst a recent quarterly stumble and investor skepticism about its ability to compete with AI-driven adversaries.
AI Prospects and Investor Sentiments
Listening in on Adobe’s quarterly conference calls paints a rosy picture of the company’s AI potential. However, some skeptics see Adobe as vulnerable in the face of emerging AI innovators.
Firefly and AI Challenges
Although Adobe has made strides with Firefly and a cautious licensing strategy for AI models, questions linger about the sustainability of AI tools like Firefly in a competitive landscape shifting towards text-to-image technologies.
OpenAI as a Formidable Foe
OpenAI emerges as a formidable rival to Adobe, with tools like Sora and Dall-E posing tough competition. Despite OpenAI’s advancements, Adobe, trading at a modest 48 times trailing price-to-earnings post-decline, still holds promise.
On the date of publication, Joey Frenette did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
