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Artificial Intelligence (AI) and machine learning have been the wind beneath the wings of the stock market, propelling it to record-breaking highs of late. It all traces back to the debut of OpenAI’s ChatGPT, a machine learning marvel that caught the market off guard, sending shockwaves through the indices. The tech-heavy S&P 500 soared 30% in 2023 despite turbulent market conditions thanks to the AI wave. With AI’s rapid evolution, investors are eagerly eyeing the potential of machine learning stocks.
Machine learning is rooted in the art of creating systems that learn and adapt through their experiences. These systems derive insights from data, learning from past errors and diverse encounters to facilitate decision-making. Generative AI, the force behind ChatGPT, is a popular application of machine learning, making stocks associated with such technology promising bets for long-term gains.
Revolutionizing Workflows: ServiceNow (NOW)
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ServiceNow (NYSE:NOW) utilizes AI to streamline operations, forecast outcomes, and enhance user satisfaction. The firm aims to enable its large clientele to boost workplace efficiency by automating mundane tasks. This strategy has yielded impressive results, with NOW witnessing 24% and 68% year-over-year (YOY) growth in revenue and EBITDA, respectively. Projections suggest a similar growth trajectory ahead, painting a bright future for its stakeholders. Investors have reaped handsome rewards, with NOW shares surging nearly 79% in the past year.
In the last year, the company unveiled 15 new generative AI tools, driving up productivity by up to 40%. Moreover, 2023 proved fruitful, with NOW consistently surpassing analyst forecasts quarter after quarter. The Q4 report showcased a 25.62% YOY revenue increase to $2.44 billion, outpacing estimates by $35.27 million. Furthermore, its EPS of $3.11 exceeded projections by 33 cents. Notably, after the earnings release, industry giants like Goldman Sachs, BofA Securities, and UBS reiterated their ‘buy’ rating on NOW shares.
Big Data Mastermind: Palantir Technologies (PLTR)
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Palantir Technologies (NYSE:PLTR) stands tall in the realm of big data analytics, harnessing machine learning to optimize decision-making and outcomes. Machine learning underpins its operations, dissecting vast datasets from various origins to detect irregularities, forecast events, and enhance processes for its clientele. As a result, AI is fueling not just PLTR’s business but also its stock, which soared a stellar 204% last year, overshadowing the S&P 500’s gains.
PALNTIR has enjoyed solid growth in revenue over the past quarters. In Q4, it posted sales of $608.35 million, marking a nearly 20% YOY surge. Although EPS remained flat at eight cents, revenues surpassed expectations by $5.55 million.
Of particular note from Q4 was the 32% surge in commercial sales to $284 million. While the company’s commercial segment used to take a back seat to its government contracts, it has been displaying remarkable strength and autonomy of late. Nonetheless, government contract revenues continue to be crucial for its long-term expansion, climbing to new heights.
The Dominance of Nvidia in AI Stocks
Nvidia’s Unmatched Position in AI Renaissance
Tech behemoth Nvidia (NASDAQ:NVDA) stands as the shining beacon in the AI renaissance. Its astounding 240% surge in stock value last year is a testament to its unrivaled position in the world of artificial intelligence.
Nvidia’s Financial Strength and Growth Trajectory
The demand for Nvidia’s chips and semiconductors that power AI applications remains robust, reflected in its year-over-year revenue growth rates surpassing 125%. This outpaces its impressive 5-year average of 29%, showcasing consistent and remarkable growth.
Moreover, the company’s free cash flow has soared to $10.94 per share, marking a substantial 615% increase from the previous year. This financial fortitude is further underscored by Nvidia’s robust balance sheet, with a total cash and short investments balance of $25.98 billion, up by 95% from the prior year.
With a near-monopoly in the supply of GPUs for AI processing, Nvidia’s long-term bullish case remains exceptionally strong. The company’s relentless innovation and strategic positioning make it a cornerstore asset for any savvy investor looking to capitalize on the AI revolution.
Concluding Thoughts on Nvidia’s Market Standing
In conclusion, Nvidia’s dominance in the machine learning and AI sector is undeniable. Its unparalleled growth trajectory, strong financial position, and strategic market positioning make it an attractive investment choice for those looking to tap into the flourishing AI market.
Remember, in the fast-paced realm of tech investments, Nvidia stands out as a stalwart, a true titan in the ever-evolving landscape of artificial intelligence.
On the date of publication, Muslim Farooque did not have (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.
