We recently compiled a list of 35 Trending AI Stocks According to Latest News and Analyst Ratings. In this article, we’ll take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands in relation to other trending AI stocks.
Two years after ChatGPT’s public debut, the generative AI landscape has evolved rapidly, triggering substantial investments in artificial intelligence and increasing valuations for startups and large tech companies. This renewed interest has primarily focused on cloud-based AI, where services such as OpenAI’s models run on large data infrastructures. However, as these models become more complex, demand for larger, more advanced data centers is intensifying, leading to a race among companies to build vast facilities. Significant investments are planned, with estimates suggesting that major players will collectively spend around $160 billion in capex next year, primarily to acquire powerful GPUs and the associated infrastructure needed to train AI models . Top executives have even predicted that global investment in data centers could double to $2 trillion over the next few years. Still, the sustainability of this spending spree raises the question of whether the revenue generated by AI applications can compete with the high costs of development and infrastructure.
Learn more about these developments by accessing 10 Best AI Data Center Stocks And 10 Hot AI Stocks According to Goldman Sachs.
Amid these challenges, a new trend in advanced AI is emerging. This concept involves running AI algorithms directly on personal devices like smartphones and computers rather than relying on centralized cloud servers. Edge AI offers many benefits, including real-time response capabilities without requiring a high-speed internet connection and improved privacy since user data remains on personal devices. Analysts predict that nearly 50% of smartphones will have generative AI capabilities by 2027, a significant increase from the current 4%. However, implementing edge AI presents technical hurdles, mainly due to the fact that existing devices lack the computing power and memory to support large AI models. For example, running OpenAI’s GPT-4 model, which contains around 1.8 trillion parameters, is not feasible today on conventional smartphones. Nonetheless, smaller, task-specific AI models are gaining ground because they require less training data and can outperform larger, more generalized models in certain applications. These lightweight models are often open source and designed for specific functions, making them easier to implement on consumer devices.
As semiconductor manufacturers continue to innovate by increasing the processing power and memory of smartphones and PCs, the ability to run AI models on these devices is expected to increase. Research indicates that the proportion of smartphones capable of supporting large AI models could increase significantly in the coming years. Major chipmakers are advancing technologies such as chipset design, allowing them to create more powerful processors without the need to shrink circuitry. For investors, the rise of advanced AI could lead to new opportunities and growth in the consumer electronics market as users are likely to upgrade their devices to take advantage of the enhanced features of AI. UBS analysts predict that combined sales of smartphones and computers could exceed $700 billion by 2027. Ultimately, the success of cutting-edge AI depends on developing compelling applications in which consumers find it valuable enough to invest.
Learn more about these developments by accessing 30 The Most Important AI Stocks According to BlackRock And Beyond Tech Giants: 35 Non-Tech AI Opportunities.
Our methodology
For this article, we selected AI stocks by combing through news articles, stock analyzes and press releases. These stocks are also popular among hedge funds.
Why are we interested in stocks that hedge funds are piling into? The reason is simple: our research has shown that we can outperform the market by imitating the stocks selected by the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A customer entering an internet retail store, illustrating the convenience of online shopping.
Amazon.com, Inc. (NASDAQ:AMZN)
Number of hedge fund holders: 308
Amazon.com, Inc. (NASDAQ: AMZN) operates as a technology conglomerate with primary interests in the e-commerce industry. Scotiabank analyst Nat Schindler recently initiated coverage on the stock with an outperform rating and a price target of $245. The review gives a high level of confidence that consumers will use Amazon’s services more in the future. It is also positive for the company’s ability to monetize its investments in artificial intelligence. The investment firm expects enterprise uses, streamlining customer interactions, accelerating code development, storing and contextualizing unstructured data, and other revenue gains commercial efficiency, are the most important opportunities in the short and medium term.
AMZN global ranks 1st among the AI stocks that are currently trending. While we recognize AMZN’s potential as an investment, our conviction lies in the belief that certain AI stocks hold more promise in terms of higher returns in a shorter time frame. If you’re looking for an AI stock that’s more promising than AMZN but trades at less than 5x earnings, check out our report on cheapest AI stock.
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Disclosure: None. This article was originally published on Initiated Monkey.
