Recently, technology stocks have been hit hard because some investors have left the sector in search of what seem to be safer bets. But because so many people are selling their tech stocks, some companies that are making big strides in artificial intelligence look like good buys right now.
You might think of Amazon as an online store, but artificial intelligence is one of the things that makes its online store work.
AI is in charge of making suggestions and rankings for the products on its platform, as well as deciding which deals to show to customers. AI is also used in the company’s StyleSnap feature, which lets customers take a picture of the clothing they want to buy and immediately find similar items for sale in the store.
Amazon’s AI is used for more than just online shopping, though. Amazon’s Amazon Go and Amazon Fresh grocery stores use AI in the real world, along with sensors and cameras, to keep track of what customers put in their carts and automatically charge them when they leave the store. Amazon calls it “Just Walk Out” technology, and since 2020, stores like Starbucks have been able to buy licences to use it.
All of this is impressive, but Amazon’s Amazon Web Services (AWS) cloud computing service may be the most useful way AI helps the company. AWS gives developers and businesses a wide range of AI tools, such as speech-to-text, image and video analysis, chatbots, forecasting, detecting fraud, and much more.
Amazon’s main source of profit is AWS, which made $6.5 billion in operating income in the last quarter, up 56% from the same quarter last year. AWS is not only very profitable, but it also has 33% of the market share for cloud infrastructure services.
And since cloud computing is expected to grow into a $1.6 trillion market by 2030, Amazon’s leading position in the market and its early focus on AI should help the company continue to benefit from the rising demand for AI.
Nvidia has been at the top of the market for video game processors for a long time because its graphics chips are so good. But the company has been getting better at making chips for AI data centres.
A few months ago, the company released three new AI-focused chips that will help it stay ahead of its rivals. Nvidia needs new versions of its semiconductors because its data centre segment is making up a bigger and bigger share of its sales.
It made $3.7 billion in revenue from its data centre in the last quarter, which is an increase of 83% from the same quarter last year. These data centre sales made up 45% of total sales, which is up from 36% in the same quarter last year.
Chips made by Nvidia have been used in everything from AI servers to cars that drive themselves, and the company is only going to have more opportunities in the future. According to Allied Research, the global market for AI chips will be worth nearly $195 billion by 2030, up from just $8 billion in 2020.
Nvidia is already the leader in artificial intelligence chips, and the company is moving deeper into this huge market. This means that the company should be able to grow along with the growing AI market.
Don’t forget this
Right now, the stock market is very unstable, so buying shares in these tech companies probably won’t make you money right away. But investors should keep in mind that one of the best ways to make long-term gains is to find great companies that are market leaders and hold on to their stocks for at least five years.