Publicly traded companies publish a quarterly update to investors featuring their latest financial results and business milestones. In analyzing the most recent quarter (ending March 31), we found common themes emerging in the discussions around each stock. It’s artificial intelligence (AI).
According to FactSet, 110 S&P500 Companies discussed AI at earnings calls. This is a record high and an 80% increase from the same period last year.
Microsoft, Tesla and Amazon are among the companies most watched
microsoft (MSFT 0.85%) is a shareholder of ChatGPT creator OpenAI, and both companies have already completed a long list of integrations with the former’s various products. At Microsoft’s recent earnings call, management said 2,500 enterprise customers had already signed up to use OpenAI on the company’s Azure cloud platform, a staggering 1,000% increase in just three months. became.
Tesla (TSLA 3.11%) Management told investors that a beta version of the company’s fully self-driving software has officially surpassed 150 million real-world miles. CEO Elon Musk said it’s a data advantage that competitors can’t match, and he said it’s helping the electric vehicle expert train its AI models better (and faster). , suggesting that it could potentially help win the race to full self-driving cars.
Amazon (AMZN 1.21%) Executives discussed AI broadly, saying they plan to build every aspect of their business on top of large-scale language models to reinvent the customer experience, from online shopping to advertising to entertainment.
While these are some of the most popular AI stocks among investors, here are two other S&P 500 stocks buzzing about the technology. These stocks have the potential to make big gains from here.
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1. Advanced Micro Devices: Selling pickaxes and shovels during the AI Gold Rush
Advanced Micro Devices‘ (AMD -1.35%) The stock is up 86% this year, despite a relatively weak first quarter.AI plays a definite role in investor enthusiasm, especially after key rivals Nvidia (NVDA -1.11%) recently revealed just how big an impact this technology could have by boosting its financial forecasts for the next quarter.
Nvidia has an estimated 90% market share of the data center chips needed by companies to train AI models, and AMD is working to erode that dominance. In its first-quarter earnings call, management revealed that his AMD-powered LUMI supercomputer in Europe was used to train the largest completed language model to date. But here’s the problem. LUMI runs on the AMD MI250X data center chip, and the company’s new MI300, due out later this year, delivers up to eight times the performance.
It will be the world’s first advanced processing unit (APU) for data centers that combines CPU and GPU technology. CEO Lisa Su said the new chip will power Lawrence Livermore National Laboratory’s new El Capitan supercomputer, making it the organization’s first exascale platform with an estimated 2 exaflops of performance.
El Capitan is expected to be the world’s fastest supercomputer at launch, but here are some surprising stats. If all his 7.7 billion people on Earth completed his 1 calculation in his second, it would take him 8 years to do what the people of the world could do in El Capitan. Please do it within 1 second.
Additionally, AMD has consolidated parts of its AI team into one division to accelerate progress in this area. I think the company will likely erode Nvidia’s market share over time, which could pave the way for AMD to become a trillion-dollar company within the next decade.
2. Meta Platforms: AI Means Less Social Networking, More Entertainment
meta platform (meta) is the parent company of the world’s largest social media platforms such as Facebook, Instagram and WhatsApp. When Facebook launched in 2004, it was designed to connect college students and friends online, but it has evolved several times since then. It now helps families stay in touch across the globe, and it also helps businesses reach out to their customers.
Now, alongside Instagram, a new transformation is taking place, not only prioritizing video content over photos and text, but also focusing on entertainment rather than social networking. The trend has been ignited by ByteDance’s TikTok platform, which uses AI algorithms to learn user preferences and serve video-based content that users are most likely to be interested in.
The Meta version of it is called Reels. The feature is now live on both Facebook and Instagram, and Q1 of 2023 was the breakout time for this feature. At the company’s earnings call, management told investors that rapid improvements in its AI algorithms have increased the amount of time users spend on Instagram by 24%, and AI is also increasing Reel’s monetization efficiency. In other words, algorithms are better at targeting ads to specific users, which could portend companies to spend more money on Meta’s platform.
CEO Mark Zuckerberg recently said that AI is Meta’s biggest investment right now and that the company is taking an open-source approach, resulting in more developers adopting the company’s large language models. said he hopes to That way, more data equals better, more accurate AI models, helping Meta stay ahead.
Given improved monetization and increased time spent on Instagram, AI has been a major catalyst in returning Meta’s revenue to growth territory in Q1, after spending most of 2022 in contraction (YoY). Coupled with a series of cost cuts, Meta shares have surged 112% in 2023 so far. But the company’s AI efforts are still in its infancy, so investors might expect further financial strength and a further rally in the stock.
John McKee, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Randy Zuckerberg is the former head of market development and public relations at Facebook, the sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. Anthony Di Pigio has no positions in any of the mentioned stocks. The Motley Fool has positions with and endorses Advanced Micro Devices, Amazon.com, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has a disclosure policy.
