Forget Nvidia: 2 AI stocks that could help make you rich in 2024

As a company that supplies 80% of the necessary training chips, nvidia Arguably the biggest winner of 2023 A.I (AI) Boom. That said, it makes sense for investors to diversify their holdings to target different aspects of long-term opportunities. Let’s see why alphabet (GOOG 2.06%) (google 2.02%) and meta platform (meta 1.95%) It can be in your portfolio beyond 2024.

1. Alphabet

Alphabet, with a market capitalization of $1.79 trillion, is already the world’s fourth-largest company and will need a lot of momentum to continue its expansion. But AI might do the trick. Big tech companies are heavily integrating AI infrastructure into their cloud computing platforms, which could create much-needed diversification and long-term growth.

Among AI companies, Nvidia is particularly successful in that it targets the “pick and shovel” aspect of the opportunity, minimizing competition while maximizing the overall market its products can address. Google is developing a similar strategy (albeit further up the value chain) by turning Google Cloud into a one-stop shop for the data management and AI training needs of all its enterprise customers. Google isn’t the only cloud service provider using this strategy, but it has some key benefits.

Image source: Getty Images.

According to CEO Sundar Pichai, 70% of generative AI startup unicorns use Google’s infrastructure to train and run their models. This is a huge vote of confidence in the quality and price range of the platform. And Google plans to build on that advantage with proprietary AI chips (called tensor processing units) that could cut costs through vertical integration and reduce the company’s dependence on third-party vendors like Nvidia.

Alphabet’s low valuation is icing on the cake for investors. from now on price/profit With a (P/E) multiple of only 22, the stock is significantly cheaper than existing stocks. Nasdaq 100‘S It is estimated to be 29.

2. Meta platform

Since ChatGPT launched in late 2022, Meta’s stock price has plummeted, rising a whopping 174% in the past 12 months alone. Investors are optimistic about the company’s decision to move away from metaverse development and focus more on generative AI, which can optimize advertising and improve consumer-facing platforms.

At first glance, Meta has some clear advantages in AI efforts. The social media giant’s business model has always involved collecting and monetizing massive amounts of data. And generative AI opens up another avenue for this strategy by: Large-scale language model (LLM) is an algorithm designed to generate content from trained datasets.

Meta is also adding conversational AI experiences across its popular apps, introducing features ranging from more responsive image editing on Instagram to unique, conversational chatbots on WhatsApp. These efforts probably won’t have an immediate impact on Meta’s operational performance, but they could help keep the platform’s users engaged and generate valuable customer data.

On the operational side, Meta is recovering from the challenges it faces in 2022. In the third quarter (2023), revenue increased 23% year-on-year to $34.15 billion, while net profit increased 164% to $11.58 billion, driven by aggressive cost reductions. And fired. And with a forward P/E of just 22, it’s not too late for investors to bet on the company’s long-term potential.

An increasingly competitive environment

Beyond 2024, investors should expect the AI ​​landscape to become more competitive, especially on the software side of the market. With this in mind, it makes sense to bet on companies with potential. economic moat. The Alphabet and Meta platforms are a good fit thanks to the wealth of user data that can be used to teach and improve LLM. Both companies expect market-beating growth.