The pandemic may have created a storm, but it has also created a breeding ground for innovation.
The rise of AI, led by generative AI tools such as ChatGPT and Stable Diffusion, has not only contributed to the recovery of the technology sector, but has also propelled it to unprecedented growth. Looking to the future, one thing is clear: AI is not just part of the tech industry; it is becoming the tech industry.
In general, markets are recovering after the pandemic. However, the arrival of AI has been a particular windfall for technology stocks, especially hardware manufacturers.
The most obvious recent example, of course, is NVIDIA, the company behind the industry’s leading industrial graphics processing hardware and the creators of CUDA technology, without which today’s AI developments would not be feasible.
In just five months, NVIDIA has experienced the largest share price increase in its history. It has now registered a high of 166% after a 50% drop due to a rough combination of political conflict between the US and China, the chip crisis of 2022 and a market freeze caused by the COVID-19 pandemic. In less than half a year, the company has recovered from these losses and there are no signs that it will slow down anytime soon.
AI hardware manufacturers are on fire
NVIDIA isn’t the only company benefiting from the AI spike, though. Other competitive and related companies are also benefiting significantly from this new trend. Here are some of the winners.
Advanced Micro Devices Inc. (AMD)
AMD produces high-performance computing and graphics solutions used in AI applications. They have developed specific GPUs and CPUs optimized for machine learning and AI workloads, and they are the second most popular GPUs for domestic users.
So far this year, shares of the company are up 94% from $65 to their current price of $125. If the share price hits $145, it would offset all of last year’s losses.
Taiwan Semiconductor Manufacturing (TSM)
TSM is the world’s largest dedicated independent (pure-play) semiconductor foundry. As a foundry, they produce chips for various companies, many of which are involved in AI.
The company is up 39% since the start of the year. With another 20% increase, it would make up for the losses from 2022. Chip crisis? Where?
Micron Technology (MU)
Micron Technology is a world leader in the semiconductor industry. They produce a wide variety of memory and storage products, which are critical components for AI and machine learning systems that require fast and efficient data processing.
MU shares are up 47% so far in 2023, and they have growth potential of another 27% before meeting resistance marked by their own all-time record.
Three AI-related software stocks to watch
In addition to the hardware world, software companies are also experiencing a spectacular year, particularly due to the explosion of generative AI, with ChatGPT leading the hype.
Formerly known as Facebook, Meta is one of the favorites among investors. Shifting the focus from the metaverse to AI is paying off for Mark Zuckerberg’s company, which has published major open-source contributions, including the Large Language Model LLaMa, in addition to implementing solutions in its traditional business model.
A Large Language Model (or LLM) is an AI model trained on a large amount of text data and capable of generating human-like responses to various text prompts. (This simulates natural language conversation.) LLaMA is a very popular LLM among AI users and developers.
Meta delivered its best half-year performance in history, up 116% year-to-date through 2023.
Bill Gates’ company is known as the makers of Windows and the Xbox gaming console. But now it is gaining ground to become the “godfather” of OpenAI, the company that developed LLM GPT-4 and ChatGPT, the chatbot that brought AI to media attention.
OpenAI is valued at $29 billion, and Microsoft alone has invested $13 billion. The decision to include GPT-4 in their Edge browser and Bing search engine, as well as using Bing as the default search engine for ChatGPT, was a catalyst for the tech giant’s share price. So far, Microsoft is up nearly 40% in 2023, offsetting the previous year’s losses.
Alphabet Inc (GOOGL)
Alphabet, Google’s parent company, is investing heavily in AI. They have developed Tensor Processing Units (TPUs), which are custom-developed application-specific integrated circuits (ASICs) used to accelerate machine learning workloads. They are also the developers of TensorFlow, an open-source AI library, and offer cloud-based AI services. In the field of software, the company has been much more active.
Bard’s launch with its improved PaLM2 was a success and positioned it as a direct competitor to ChatGPT. The release of LLM models tailored to customer needs has generated a positive response from investors (unlike what happened when the company introduced its first chatbot and started hallucinating). GOOGL shares are up 40% year-to-date and are 20% away from growth until they test the resistance of their all-time high again.