Lisa Su, president and CEO of AMD, during an interview with Mad Money, broadcast from the CNBC bureau in San Francisco on November 21, 2019.
Jacob Jimenez | CNBC
While Nvidia accounted for the bulk of the profits — net income during the first three quarters of the year jumped sixfold since 2022 — it wasn't the only stock to attract Wall Street's attention in the race to make money from artificial intelligence.
Software vendors CrowdStrike, HubSpot and Salesforce have at least doubled this year, far outperforming the Nasdaq, which was up 43% through Friday's close. These companies got a boost after announcing improvements based on generative AI.
But when it comes to the hardware and infrastructure underpinning advances in AI and ensuring there's enough capacity to move forward, investors are looking at who will benefit, other than Nvidia. The iShares Semiconductor ETF is up 64% this year. The data center is another source of optimism, and a few cloud providers are positioned to win business as organizations ramp up spending on technology to help them run generative AI services.
Here are three other stocks gaining momentum due to the generative AI wave:
As the company whose technology is seen as most likely to challenge Nvidia's monopoly on AI chips, AMD has a large cheering section in the software developer community. The stock is up 116% for the year as of Friday's close.
AMD just launched its MI300X AI processors, pursuing a market for AI chips that CEO Lisa Su expects to reach $400 billion over the next four years. Meta announced in December its plans to use the new processors, and Microsoft is also one of the committed customers.
Su pointed out the performance advantages over the Nvidia H100 chip.
“AMD remains very well positioned to capitalize on rapidly expanding TAM AI, as it continues to stack up on customer partnerships and roll out products with impressive (and highly competitive) performance metrics,” Deutsche Bank analysts wrote in a note to clients afterward. Announcement earlier this month.
The stock rose nearly 10% the day after the launch.
Since its debut on the public market nearly a decade ago, Arista has gained ground on Cisco in the data center networking equipment market. Excitement around its position in artificial intelligence has helped push the stock up 96% this year.
In October, Arista added AI to a key customer segment, so it's now called Cloud and AI Titans. More than 40% of the company's 2022 revenue came from Meta and Microsoft. The following month, Arista CEO Jayshree Ullal announced a target of $750 million in AI networking revenue for 2025, prompting Citi analysts to raise their price target for the stock to $300 from $220.
Companies choose Arista devices to connect their GPUs to the Internet. As models get larger and workloads become more complex, Arista has an opportunity to link GPUs together to help scale the technology.
Arista executives expect a moderation in enterprise spending in 2024 after years of cloud expansion, as organizations test systems ahead of large-scale AI deployments that could begin in 2025.
For years, Cloudflare has ensured that online content can be delivered quickly to end users by creating a global network of data centers that protect websites from takedown attempts.
One major customer is OpenAI. When a user tries to access OpenAI, Cloudflare's technology verifies that they are a person and not a bot on the other end. The company now aims to become part of the fabric to power AI models and ensure rapid response. In September, the company announced a service called Workers Amnesty Internationalwhich runs on Nvidia GPUs and will be rolled out in 100 cities.
“With a consumption pricing model, these services could drive significant revenue growth with adoption ramping up through 2024,” Morgan Stanley analysts, who have the equivalent of a hold rating on the stock, wrote in a November report.
Cloudflare shares have jumped 87% so far in 2023.
He watches: One senior Bernstein analyst says Nvidia is the “cheapest” AI toy out there
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