Artificial intelligence (AI) has won the hearts and minds of many investors thanks to its huge addressable market. If the primary purpose of new technology is to automate processes, aid decision-making, or increase productivity, the potential uses are almost limitless. That’s exactly what AI is aiming for, and investors are wisely considering investments in this space.
So which will be the biggest AI stocks by 2030? Let’s take a look at some of the candidates. You’ll see which company I think can take the title.
Multiple companies may be considered AI investments
The addressable market for AI is huge. It is expected to be worth nearly $2 trillion by 2030, according to Statista. It’s a huge pie, with multiple companies vying for these revenue streams.
There are two ways to invest in AI. First, you can invest in application companies such as: Palantir (NYSE:PLTR) again cloud strike (Nasdaq: CRWD) We use AI in software to create products that continuously learn.Training these AI models requires massive amounts of computing power and data, so hardware companies NVIDIA (NASDAQ: NVDA) data collection services such as snowflake (NYSE: Snow) is also a strong investment candidate.
But there is one company that I believe will be the biggest AI company by 2030, with a hand in nearly every corner of AI. alphabet (GOOG 3.76%) (Google 3.78%) has invested in AI capabilities for years and has a large workforce dedicated to making AI pervasive.
Giving investors exposure to multiple AI areas
Starting with AI applications, Alphabet has multiple tools that developers can use to build AI solutions. For example, there are machine learning toolkits for mobile developers that can program text recognition, language translation, and face detection that would otherwise be nearly impossible.
As mentioned earlier, training an AI model requires a huge amount of data. If developers don’t have access to the exact data set they need, Alphabet’s vast data library may be able to provide it. If Alphabet doesn’t have the right data for you, it also has a Google search engine specifically designed to find other data sets.
Finally, building a computer to train an AI model can be very expensive, and the computer becomes a sunk cost if the model doesn’t need to be continuously updated.
Another option is to outsource your computing to Google Cloud. Google Cloud provides the infrastructure and analytics developers needed to build AI models. This option is gaining popularity because it gives developers access to computational power they would otherwise not have.
Alphabet has dabbled in the entire AI space, but it doesn’t make a ton of money from it.
AI is not currently helping Alphabet finance
DeepMind (Alphabet’s AI lab) now reports revenue through the ‘Other betting’ segment, and will continue to be an item to watch in 2023 and beyond. However, AI is also integrated into Google services and Google Cloud.
But for the time being, Alphabet is still an advertising company. In the fourth quarter, advertising accounted for his 78% of Alphabet’s total revenue. The advertising industry has always been a volatile industry, as businesses tend to cut back on spending in the face of economic downturns.
Therefore, if the economy recovers, Alphabet could see a significant increase in revenue. And diversifying into the AI space should help Alphabet weather these storms and become an even stronger company.
But despite its bright prospects and the temporary nature of its struggles, the market is treating Alphabet as if its future has failed and its advertising revenue won’t come back.
GOOGL PE ratio data by YCharts
A profit of 23x is a bargain multiple for a tech giant whose revenues have been temporarily constrained and is developing another business in AI.
Alphabet’s $1.3 trillion market capitalization puts it ahead of nearly every other AI company, but it’s also arguably one of the most committed to the technology. . Alphabet is well positioned to lead this emerging sector, and I think investors should consider stocks for that reason.
Alphabet executive Suzanne Frey is a member of The Motley Fool’s board of directors. Keithen Drury has held positions at Alphabet, CrowdStrike, Nvidia, and Snowflake. The Motley Fool has positions in and recommends Alphabet, CrowdStrike, Nvidia, Palantir Technologies and Snowflake. The Motley Fool’s U.S. headquarters has a disclosure policy.
