The pandemic may have brought a storm, but it also created fertile ground for innovation.
The rise of AI, led by generative AI tools such as ChatGPT and Stable Diffusion, has not only helped improve the tech sector but also propelled it to unprecedented growth. As we look to the future, one thing is clear: AI is not just part of the technology industry; it becomes THE tech industry.
Markets, in general, have rebounded post-pandemic. However, the advent of AI is a particular windfall for tech stocks, especially hardware manufacturers.
The most obvious recent example, of course, is NVIDIA, the company behind the leading industrial-grade graphics processing hardware and the creators of CUDA technology, without the contemporary advances in AI not possible.
In just one five months, NVIDIA experienced the most significant increase in stock price in its history. It has now recorded a 166% spike after enduring a 50% decline due to a severe combination of political conflicts between the US and China, the 2022 chip crisis, and a market standstill due to the COVID-19 pandemic. In less than half a year, the company has recovered from these losses, and there are no signs of it slowing down in the near term.
AI hardware manufacturers are on fire
However, NVIDIA is not the only company reaping the benefits of the AI surge. Other competing and related companies also profited greatly from this new trend. Here are some of the winners.
Advanced Micro Devices Inc. (AMD)
AMD manufactures 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 are the second most popular choice of GPUs for domestic users.
So far this year, the company’s shares have risen 94% from $65 to the current price of $125. If the share price hits $145, it will make up for all of last year’s losses.
Taiwan Semiconductor Manufacturing (TSM)
TSM is the largest dedicated independent (pure-play) semiconductor foundry in the world. As a foundry, they make chips for various companies, many of which are related to AI.
The company is up 39% since the start of the year. With another 20% increase, it will recover losses from 2022. Chip crisis? wherever
Micron Technology (MU)
Micron Technology is a global leader in the semiconductor industry. They manufacture a wide range of memory and storage products, which are essential components for AI and machine learning systems that require fast and efficient data processing.
MU shares are up 47% year-to-date through 2023, and they have the potential to grow another 27% before encountering resistance marked by their own long-term upside.
Three AI-related software stocks to watch
Beyond the hardware realm, software companies have also experienced a remarkable year, largely due to the explosion of generative AI, with ChatGPT leading the hype.
Formerly known as Facebook, Meta is one of the investors’ favorites. The shift in focus from the metaverse to AI has yielded results for Mark Zuckerberg’s company, which, in addition to implementing solutions to the traditional business model, has also published significant open-source contributions, including Large Language Model LLaMa.
A Large Language Model (or LLM) is an AI model that is trained on large amounts of text data and can produce human-like responses to various text prompts. (It simulates a conversation using natural language.) LLaMA is a very popular LLM among AI users and developers.
Meta had its best half-year performance in history, rising 116% year-to-date in 2023.
Bill Gates’ company is famous for being the creator of Windows and the Xbox gaming console. But now it has become the “godfather” of OpenAI, the company that developed LLM GPT-4 and ChatGPT, the chatbot that brought AI into the media spotlight.
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, has been a factor in the tech giant’s stock price. So far in 2023, Microsoft is up nearly 40%, making up for losses from last year,
Alphabet Inc (GOOGL)
Alphabet, Google’s parent company, is investing heavily in AI. They produce 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 is very active.
Bard’s launch with the improved PaLM2 was a success, positioning it as a direct competitor to ChatGPT. The release of LLM models adapted to the needs of customers generated a positive response to its investors (unlike what happened when the company presented its first chatbot and it began to fantasize). GOOGL shares are up 40% so far this year and are 20% away from rising until they challenge their long-term resistance again.