Artificial intelligence (AI) is transforming industries and creating massive economic opportunities. According to IDC research, AI spending will have a $19.9 trillion global economic impact by 2030. As the AI boom accelerates, savvy investors are looking beyond the usual suspects to find hidden gems poised to benefit from this technological revolution.
Let's explore three companies quietly making waves in the AI industry, each offering a unique approach to capitalizing on this transformative technology.
Image source: Getty Images.
Powering the AI revolution
Navitas Semiconductor (NASDAQ: NVTS) is at the forefront of next-generation power solutions that are critical for enabling energy-efficient AI data centers. The company's GaN (gallium nitride) and SiC (silicon carbide) power semiconductors offer significant efficiency improvements over traditional silicon chips.
Navitas recently unveiled its innovative "IntelliWeave" digital control technique, which enables AI data center power supplies to achieve over 99% efficiency. This technology could be a game changer as data centers seek to minimize power consumption while meeting the intense computing demands of AI applications.
While still unprofitable, Navitas is seeing strong revenue growth. In the second quarter of 2024, the company reported revenue of $20.5 million, up 13% year over year. With a growing pipeline of over 60 data center customer projects and the recent launch of new products tailored for AI applications, Navitas is well positioned to capitalize on the surge in AI infrastructure spending.
Building the foundations for AI
Applied Digital (NASDAQ: APLD) is rapidly expanding its high-performance computing infrastructure to meet the booming demand for AI processing power. The company designs, builds, and operates next-generation data centers optimized for AI and machine learning applications.
Applied Digital's cloud services business is growing at a healthy clip, with two new graphics processing unit (GPU) clusters added in the most recent quarter. As a result, the company's cloud services business segment generated $25.9 million in revenue during this period.
The company is also making progress on its first 100 MW high-performance computing facility in North Dakota, with plans to expand total capacity at the site to 400 MW. Applied Digital is already in the design phase for two additional buildings at this location, which will contribute to the planned 400 MW total capacity and further bolster its ability to meet the growing demand for AI computing resources.
A recent $160 million private placement, which included investments from Nvidia and prominent real estate developer Related Companies, underscores Applied Digital's potential in the AI infrastructure space. While the company reported a net loss in its fiscal Q1 2025, which ended Aug. 31, revenue surged 67% year over year to $60.7 million, driven by growth in its cloud services segment.
From Bitcoin to AI
Iris Energy (NASDAQ: IREN) is leveraging its expertise in Bitcoin mining infrastructure to capitalize on the growing demand for AI computing power. The company has expanded into AI cloud services, generating $3.1 million in revenue in its fiscal year 2024 from multiple customers across reserved and on-demand markets.
Iris Energy's transition to AI is still in its early stages, but the company has significant potential to repurpose its extensive data center infrastructure and renewable energy resources for AI applications. The company is currently evaluating AI data center opportunities for its 1.4 GW West Texas site through a process managed by Morgan Stanley.
Despite facing challenges in the volatile Bitcoin mining market, Iris Energy reported improved financial results for fiscal year 2024, which ended June 30. The company achieved earnings before interest, taxes, depreciation, and amortization (EBITDA) of $19.6 million, compared to a loss of $123.2 million in the previous year. Bitcoin mining revenue reached a record $184.1 million, up from $75.5 million in fiscal year 2023.
The AI wild card
While these companies offer intriguing exposure to the AI boom, they come with significant risks. All three are currently unprofitable and face intense competition in their respective markets. Their success depends heavily on the continued growth and adoption of AI technologies.
However, for investors willing to take on higher risk in search of potential AI winners, Navitas Semiconductor, Applied Digital, and Iris Energy offer unique angles on the AI revolution that are flying under most investors' radars. As the AI industry continues to evolve, these lesser-known players could emerge as significant beneficiaries of the ongoing technological transformation.
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George Budwell has positions in Navitas Semiconductor and Nvidia. The Motley Fool has positions in and recommends Bitcoin and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
