I want to kick things off by discussing the sudden hype around AI stocks.
It’s turning into the next crypto where every company that adds a .ai to their domain or adds artificial intelligence to the business description sees a 10% pop.
This has the potential to form a bubble of some sort, and lift this market in the months ahead.
So, just putting it out there that this is something I’m watching closely from a broad market perspective, and we will touch on it a bit today.
The speed of development in AI is picking up thanks to OpenAI and ChatGPT.
Let’s dive in and learn what that means for AI stocks in general and the broader market.
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AI Stocks Driving Market Momentum
The hype is real.
AI, or computer-generated artificial intelligence, is booming and it will revolutionize the way we operate.
That is a bit of an exaggeration for where it stands today, but you can see the true potential here. ChatGPT’s advancements in recent weeks has been staggering and Microsoft (MSFT), is riding this wave.
I’ve been exploring its capabilities and I love it. It needs some work, but the way it can do a lot of the heavy lifting for you is going to help improve efficiencies like the industrial revolution, but for anything done on a computer.
In fact, the section below, giving you some insights on AI stocks, was 100% done by ChatGPT.
It gave me the headline and image for the article.
But that’s just the basics.
What is new to the ChatGPT world is designing your own GPT, that you can train permanently to do heavy lifting with a simple prompt.
That’s going to take a bit more time and effort to fine tune, but has huge potential to disrupt various industries and research roles. Writing is one of the basic prompts that ChatGPT will aide in. No more ghost writers or hours long discussions on what headline to use. ChatGPT can spit out dozens of high quality headlines in minutes to get your brain going.
With all of this technology aiding everyday employees, they still need to have access to it.
That’s where Microsoft comes in.
Microsoft is Changing the Game
Out of the AI stocks, Microsoft is going to be the huge winner for the consumer.
Bing search introduced Bing Chat, or now simply Copilot, which is ChatGPT with the functionaility of searching Bing to help you get your answers. It has already advanced to include some of the more popular additions to ChatGPT, such as creating images, reading PDFs and more.
This is going to take off.
No other AI is close yet and this jump start that Microsoft has will keep it ahead of the pact for the next decade. Along with incorporating GPTs right into its search, it is also becoming availability in its browser and in apps like excel and word.
So, your number one buy if you want exposure to the AI space, is going to be Microsoft. There’s no question about.
There will be other true winners though, not just hype plays for the stock trading frenzy.
More AI Exposure to Watch
Today, I’ll share three more AI driven stocks with you that I think will lead the pack and have a real impact using AI, not just hype.
(The analysis below is courtesy of ChatGPT)
Symbotic Inc. (SYM)
Business Overview: Symbotic is a leader in AI-enabled robotics technology, primarily for supply chain applications. They develop, commercialize, and deploy advanced, end-to-end technology solutions aimed at improving supply chain operations.
AI Transformation and Revenue Growth: Symbotic is expected to experience hyper-growth as it disrupts the retail and wholesale industries’ supply chain functions, a market worth over $1 trillion annually. The company’s revenue growth has been impressive, with a 136% increase to $593.3 million in the fiscal year 2022, and a 55% year-over-year growth to $189 million in Q3. In the third quarter of fiscal year 2023, Symbotic reported a revenue of $312 million.
C3.ai Inc. (AI)
Business Overview: C3.ai is an enterprise AI application software company. They offer a range of products including the C3 AI Platform for developing and operating enterprise AI applications, and a portfolio of industry-specific SaaS AI applications facilitating digital transformation.
AI Transformation and Revenue Growth: The company has forecasted a revenue outlook of $255-$270 million for FY23. Their total revenue for fiscal year 2023 was $266.8 million, a 5.6% increase from the previous year. Subscription revenue, a significant portion of their total revenue, grew by 11.4% over FY22. C3.ai has experienced periods of accelerated revenue growth, including a 42% year-over-year growth in the third quarter of fiscal 2022 and a total revenue growth of 38% in FY22.
Applied Optoelectronics Inc. (AAOI)
Business Overview: Applied Optoelectronics is a key player in fiber optic access network products for various markets, including cable broadband, internet datacenter, telecom, and fiber-to-the-home.
AI Transformation and Revenue Growth: The company saw a 13% year-over-year increase in total revenue for the fourth quarter, reaching $61.6 million. Their Q3 2023 revenue was $62.5 million, with significant growth in the data center sector. The revenue for the twelve months ending September 30, 2023, was $218.78 million, marking a 1.45% growth year-over-year. Applied Optoelectronics has shown promise in its data center segment with strong revenue growth rates and improving gross margins.
That’s all for today.
I’ll be back this week with a new Bank It or Tank It of stocks to watch.
Stay tuned.
Let’s get at it this week!
Regards,
Chad Shoop, CMT