As we move further into year two of the artificial intelligence (AI) boom, we may begin to see a broadening of the winners as more firms continue spending a great deal on the next generation of AI tech. We’re talking more than just the latest Nvidia (NASDAQ:NVDA) GPUs, too. Though I expect the Blackwell GB200 chips to be scorching-hot sellers this year, we may also begin to see firms advance work on their custom silicon.
Additionally, look for the last generation of AI chips (from Nvidia and other GPU makers) to start hitting the market at lower prices. Indeed, GPUs are getting more powerful over time. However, each unit of computing also stands to get cheaper as power-hungry GPUs become increasingly energy-efficient with every generation.
Though it could take a few more years before truly capable AI chips become affordable, enough to lower barriers to entry for some of the more cash-strapped firms seeking to bet big on AI (think startups), I do view the potential for lower interest rates as a driving force behind the phase of AI’s global advance. In any case, here are three AI stocks that I think could be future AI winners.
Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) is a lower-cost chip stock that stands to do well as AI advances in the cloud while finding its way into your mobile devices. The company’s Snapdragon 8 Gen 3 chip, which lands later this year, looks like a standout product that could really jolt the firm’s top line going into year’s end.
Fellow InvestorPlace contributor Chris MacDonald is a massive fan of Qualcomm’s “AI-focused memory technology,” in particular. As MacDonald noted, it’s the chip to be featured in the latest and greatest Android phones. I think MacDonald is right in that we should be more excited about the firm’s upcoming chip, packed full of AI firepower. Qualcomm’s latest mobile chip is full of the kind of technology that could change the way we think about on-device AI processing.
Indeed, we’ve heard ample chatter about “edge AI” lately. Though only time will tell if AI applications primarily run on phones or the cloud, I think there’s no reason why next-generation models can’t run on both.
We have various AI companies, such as Anthropic, building large language models (LLMs) of varied parameter sizes. In the case of Anthropic’s Claude, there’s Haiku for speed and affordability, Sonnet for balance between speed and intelligence and Opus for the greatest intelligence.
For LLMs similar to Haiku (or even Sonnet), on-device AIs could be the go-to. If that’s the case, smartphone AI chip makers like Qualcomm seem overly discounted relative to the AI edge opportunity. QCOM stock goes for 23.9 times trailing price-to-earnings.
Meta Platforms (META)
As Meta Platforms (NASDAQ:META) stock shoots to break through the $500 level again, investors may wonder if there’s still any value to be had. The stock has surged more than 440% from its ominous 2022 lows. But at 33 times trailing price-to-earnings, I don’t think it’s fair to say META stock is an expensive play overdue for yet another massive plunge.
Meta is getting aggressive when it comes to AI. Though building out the metaverse (and the devices to reach it) is still a primary focus of the company, I think Meta’s march into the metaverse can be made easier by incorporating the very best generative AI solutions.
Undoubtedly, Meta has been backing up the truck on Nvidia’s H100 GPUs. It’s a massive customer of the GPU king, and it’s likely to keep the big orders coming as Blackwell chips go on sale this year.
From advancing its open-source Llama language model to powering AI across its social media platforms, Meta seems to be doing far more with AI than most other firms these days. Additionally, CEO Mark Zuckerberg seems to have his sights set on something far bigger — AGI (artificial general intelligence).
Adobe (ADBE)
Adobe (NASDAQ:ADBE) stock is now down around 20% from its 52-week highs, thanks, in part, to a quarterly fumble and investor doubt about its ability to keep up with AI-harnessing rivals.
Tune into Adobe’s quarterly conference calls, and it’s hard not to be upbeat about the firm’s AI prospects. However, some of the bears may view Adobe as more of a potential loser of this new era as AI creators join the chat.
Sure, Adobe has done a great job with Firefly and its “commercially safe” approach by licensing the images on which its models are trained. That said, I don’t know how Firefly and other AI-enriched creativity tools can hold up as more firms target text-to-image to impress the masses. And what’s stopping Adobe’s rivals from going down the commercially safe route as well? Not much.
It seems like OpenAI could evolve to become Adobe’s biggest foe at this point. Sora and Dall-E will be tough for any firm to beat, including Adobe, in my opinion. Despite OpenAI’s impressive (and growing) AI tools, I wouldn’t give up on Adobe quite yet — not while it’s trading at a mild 48 times trailing price-to-earnings after its latest dive.
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.
