Artificial intelligence (AI) has been the hottest market topic of 2023. And it’s easy to understand why, as the technology allows us to achieve digital feats that otherwise felt impossible.
To little surprise, several big-tech players, including Microsoft MSFT, NVIDIA NVDA, and Alphabet GOOGL, have been scurrying to become the leader.
Let’s take a closer glance at each company's AI developments and a few other aspects.
Microsoft
Microsoft has gained widespread attention following its new AI-powered Bing search engine and Edge browser announcements.
The new search engine and Edge browser are expected to deliver enhanced search results, complete answers, a unique chat experience, and an overall much easier experience when exploring the web.
MSFT shares provide exposure to red-hot AI technology paired with an income stream; MSFT’s annual dividend presently yields 1.1%. Impressively, the company has grown its payout by more than 10% over the last five years.
Image Source: Zacks Investment Research
Alphabet
Alphabet has recently unveiled its new conversational AI service, Bard, powered by its next-generation LaMDA (language model for dialogue applications).
Bard is expected to deliver high-quality responses drawn from the web, pairing the globe’s knowledge with the power of Alphabet’s LaMDA.
GOOGL shares have gotten much cheaper following rough price action in 2022, with the company’s 17.7X current forward earnings multiple sitting well beneath the 26.1X five-year median.
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NVIDIA
A big focus point of NVDA’s latest release was its Data Center results, which include its AI operations; Data Center revenue totaled $3.6 billion, growing 11% from the year-ago quarter.
There were also several strategic highlights within the Data Center segment, including a partnership with Deutsche Bank DB to further the use of AI within financial services.
The market was impressed with its latest quarterly results, sending shares soaring. This is illustrated by the green arrows in the chart below.
Image Source: Zacks Investment Research
In addition, NVDA sports a strong growth profile, with earnings forecasted to soar 34% in its current fiscal year (FY24) and a further 32% in FY25.
The projected earnings growth comes on top of forecasted Y/Y revenue climbs of 10% in FY24 and 24% in FY25.
Image Source: Zacks Investment Research
Bottom Line
It’s impossible to pick which company will win the great AI race, with investors clamoring over the immense growth opportunities the technology brings.
So far, we’ve seen many big tech companies – Microsoft MSFT, NVIDIA NVDA, and Alphabet GOOGL – all throw their hats fully into the AI arena.
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