nvidia(NASDAQ: NVDA) Currently, it is the world's largest public company with a market capitalization of nearly $4 trillion. Wall Street has surpassed its stock price in the age of major AI investments.
“We enter the next 'golden wave' of Gen AI adoption, with NVDA in the front end of another material leg that is stronger than expected demand,” says Anandavarua, analyst at Loop Capital. “NVDA is essentially a monopoly of critical technology and reminds people that it has the power of price (and margins).”
Despite the fanfare, it actually does Another This year, the major AI stock has quietly surpassed Nvidia. Most people have heard of this business, but few people understand how well it is positioned in the next decade of artificial intelligence growth.
Investors mention it IBM(NYSE: IBM) As “Big Blue” for decades. In the past, the company was known as the technology heavyweight class. But over time, much of its business segment has stagnated and overtaken by more agile competition.
However, IBM never stopped investing in key sectors like AI. Today, these investments are paying off a lot. IBM's generation AI business has already generated $6 billion in annual revenue. If demand for AI solutions is expected to increase by more than 30% over the next decade, this could soon become one of IBM's biggest profit drivers.
Quantum computing is also an exciting business opportunity for IBM. The company recently announced the “Quantum Sterling” roadmap, which predicts large-scale, fault-resistant quantum computers by 2030. First, it is to launch a flexible quantum computer that can handle complex demands on a scale that is a historic breakthrough.
NVDA data by YCHARTS
“While still in the early stages of play, IBM is taking this multi-billion dollar quantum computing industry head-on by providing improved software and hardware capabilities to create increased use cases for various sectors,” a Wedbush analyst recently wrote. Considering quantum computing, launching an entirely new wave of AI innovation could provide a serious long-term advantage for competitors focusing on one arena, with a dual focus on both IBM's AI and quantum computing.
All this raises the question: Should you throw away nvidia stocks for IBM? The answer may surprise you.
Image source: Getty Images.
IBM is an exciting AI stock. However, there are some things to understand about business and nvidia. First of all, IBM is a large, diversified company. Currently, only a small portion of that business is exposed directly to AI Tailwinds. Therefore, analysts predict that IBM's revenue growth rate will be only 5.5% this year, compared to NVIDIA's 53% revenue growth rate. Although IBM appears to be investing in all the right areas, it takes time for these investments to become meaningful drivers for both sales and profit.
Secondly, IBM focuses on software rather than hardware. Nvidia's AI GPUs are widely considered to be the best in the business. Additionally, the CUDA developer platform allowed the company to maintain a market share of over 90% of its data center GPUs. On the other hand, IBM is in a much more competitive field, at least in the short term.
As Zach's research analysts conclude, “IBM faces tough competition in most markets.” So, while Nvidia's products continue to be a reliable infrastructure for the AI industry, IBM's services are just one of a wide variety of options.
In summary, AI investors should not yet abandon Nvidia for IBM. However, touching both companies in their portfolio guarantees they are betting across the AI supply chain. The AI revolution from hardware is built on the software used by consumers.
Consider this before purchasing inventory on international business machines.
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Ryan Vanzo has no position in any of the stocks mentioned. Motley Fool recommends international business machines and Nvidia. Motley Fools have a disclosure policy.
This AI stock quietly surpassed nvidia all year round.
