The rapid adoption of artificial intelligence (AI) has been gathering steam over the past year, but there’s been a notable uptick in AI-related developments over the past several weeks. Since the start of February alone, shares of Palantir Technologies (NYSE: PLTR) have jumped 55%, Super Micro Computer (NASDAQ: SMCI) surged 72%, Arm Holdings (NASDAQ: ARM) soared 90%, and SoundHound AI (NASDAQ: SOUN) skyrocketed 121% as of the market close on Thursday.
The common thread that runs through these companies is the accelerating adoption of AI. There wasn’t a single development that drove these stocks higher, but rather the growing tidal wave of AI that’s beginning to overtake the tech industry.
Financial Success Fuels Stock Surge
It wasn’t just the growing secular tailwinds of generative AI that drove these stocks higher. Three of the four recently reported quarterly financial results that easily surpassed investor expectations.
Influence of the “Godfather of AI”
There’s a strong argument to be made that Nvidia saw the writing on the wall and positioned itself for the AI boom to come. Investors need only review the company’s recent results to understand the magnitude of the secular tailwind involved.
Valuation: A Point of Contention
The most common bear argument for investing in these and many AI stocks is the valuation. That view is understandable but tends to ignore the stunning growth rates of the companies in question.
