The emergence of artificial intelligence in 2023 was incredibly important to the markets. In fact, it’s reasonable to assume that AI may have saved the economy in 2023. 2022 was an incredibly difficult year for the markets. The Federal Reserve went on an austere march to bring inflation down with higher rates. Marcus tumbled, and recession fears were very high. And then something changed.
The emergence of AI sent markets on a reverse course, with the Magnificent 7 leading the way. Those companies continue to do much of the heavy lifting today. Investors now seek to understand which firms could become similarly important moving forward due to AI. Three in particular stick out in my mind.
AMD (AMD)
AMD (NASDAQ:AMD) is currently the 44th most valuable stock globally. It has a long way to go if it is indeed going to crack the ranks of the Magnificent 7. That said, AMD has made some serious waves of late that suggest its opportunity is just beginning.
The company recently made waves with the launch of its MI300 AI accelerator. The technology comprises both data center-grade GPUs and accelerators and has been very well received by the markets. Enterprise customers and Cloud vendors are a vital battleground for the next iteration of AI evolution.
Importantly, both Meta (NASDAQ:META) and Microsoft (NASDAQ:MSFT) have said that they will buy AMD’s newest AI chip. Here’s what’s really important in that regard: Each of those firms purchased 150,000 of Nvidia’s h100 chips in Q3. There were roughly 500,000 sold in total. The fact that meta and Microsoft are willing to switch speaks volumes about Nvidia’s pricing and the belief of those firms in AMD’s newest chips.
Adobe (ADBE)
Adobe (NASDAQ:ADBE) continues to be a very strong AI company and tech stock but also seemingly always just outside the top echelon. Regardless, it’s a strong firm with AI offerings, including Sensei and Firefly. Adobe is currently the 32nd most valuable firm globally based on market cap putting it in the top spot among firms discussed here.
The company recently released its 4th quarter earnings, which were quite strong. The company posted earnings per share of $4.27 which exceeded analyst expectations overall.
Revenues exceeded $5 billion in the quarter, settling at $5.05 billion. That figure was roughly 30 million dollars above what Wall Street was expecting. That strongly implies that Adobe’s AI Investments are having their intended effect.
2023 has been dominated by AI, in particular, generative AI. That’s an area where Adobe particularly shines due to its strong offerings in all things related to graphics. The company currently sits far Outside The Magnificent Seven in terms of market cap but if generative AI can produce greater revenues in relation to graphics moving forward, then Adobe will be a winner.
Salesforce (CRM)
Salesforce (NYSE:CRM), Like the other two stocks on this list, lies well outside the market cap levels of the Magnificent 7. It is just a few slots behind Adobe and is currently the 37th most valuable company globally based on market cap.
I think there are two primary reasons for investors to consider Salesforce at the moment. First of all, the company is doing well on a fundamental basis. During the most recent quarter, the company’s earnings per share exceeded expectations on revenues that increased by 11.5%.
Further, Salesforce has invested in AI and includes services such as Salesforce Einstein and Einstein GPT. Investors should be aware that macroeconomic factors favor the company at the moment. Over the next few months the cost of lending is likely to decline leading firms to invest more heavily in customer relationship management. Salesforce dominates the sector and is likely to only get stronger as business spending spikes as a result of future rate cuts.
On the date of publication, Alex Sirois 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.
