Decoding AI Potential

“Over time, it takes just a few winners to work wonders.”
— Warren Buffett, from the 2022 Berkshire Hathaway letter to shareholders

One big winner can make a fortune. No one knows this better than the Oracle of Omaha.

Take Apple, one of Buffett’s most famous investments. A $50,000 investment, made in 2007 — the same year the iPhone debuted — would have grown to a cool $3.5 million today, a mere 17 years later.

Are there any stocks out there today with that type of potential? Of course. Here are three that might have what it takes.

Image source: Getty Images.

Microsoft: The Giant’s Stride in AI

Topping the list is Microsoft (NASDAQ: MSFT). The company that made former CEOs Bill Gates and Steve Ballmer some of the richest men in the world is once again the largest company on the face of the Earth with a market cap topping $3 trillion. And thanks to its many artificial intelligence (AI)-related ventures…

Let’s start with the company’s cloud services business. It’s already a massive moneymaker for Microsoft, generating $25.9 billion in its most recent quarter (the three months ended Dec. 31, 2023). That makes it the second-largest cloud services vendor globally, trailing only Amazon Web Services.

As AI usage ramps up, Microsoft stands to benefit from increased cloud services. Indeed, after decelerating some in 2022, cloud spending appears to be reaccelerating as organizations explore how AI can improve their processes and generate efficiencies.

In addition, Microsoft’s longstanding partnership with OpenAI, the company behind ChatGPT, makes Microsoft a major player in the race to develop the next AI breakthrough.

Microsoft has multiple pathways to riches on the AI front. Given its outstanding track record and excellent management, Microsoft could be one AI stock that makes many fortunes going forward.

CrowdStrike: Safeguarding Fortunes with AI

Next is CrowdStrike (NASDAQ: CRWD). While nowhere near the size of Microsoft, CrowdStrike is still likely to make a number of fortunes in the coming years, thanks to its cutting-edge AI-powered cybersecurity offerings.

The company runs perhaps the premier cybersecurity platform available today, which protects networks, endpoints, and data through add-on modules that are tailored to its customers’ needs…

Financially, CrowdStrike is rocking and rolling. In its most recent quarter (the three months ended Oct. 31, 2023), the company reported $786 million in revenue, up 35% from a year earlier. Moreover, annual recurring revenue (ARR)…

In short, this means CrowdStrike is growing its subscription base, through bringing in new customers and by upselling additional security modules to existing customers.

At any rate, the company’s solid growth points to big things ahead, as the number of cyber threats continues to grow — meaning CrowdStrike’s growth curve could extend for many years to come.

Nvidia: Riding the AI Wave to Great Heights

Last, but by no means least, is Nvidia (NASDAQ: NVDA). Let’s face it: No company or stock has ridden the AI wave better or to greater heights than Nvidia. The company is now America’s third-largest public company…

The Unstoppable Ascendancy of Nvidia in the Tech Market

Nvidia’s Tremendous Growth Trajectory

Data from recent quarters shows Nvidia’s revenue has surged by an astounding 265% as of the three months ending January 28. With estimates predicting sky-high future growth, the technology giant is on a trajectory that few could have foreseen.

The Potential to Surpass Industry Titans

Despite seeming improbable, Nvidia stands on the brink of potentially surpassing industry giants like Apple and Microsoft in global market size. With a market cap that has skyrocketed from $279 billion to nearly $2 trillion in less than 18 months, Nvidia’s pace of growth is truly eye-watering.

Nvidia’s Dominance and Competitive Advantages

With the AI chip market’s potential size still a mystery, Nvidia holds a significant lead over its competitors. CEO Lisa Su of Advanced Micro Devices suggested the market could reach $400 billion, but Nvidia’s position and its CUDA software provide a substantial advantage that is likely to persist for the foreseeable future.

Investment Implications and Considerations

Given Nvidia’s trajectory and dominance in the tech market, the prospect of investing in the company raises intriguing possibilities for investors. While some analyses may overlook Nvidia in favor of other stocks, Nvidia’s track record and current standing as a powerhouse in the industry suggest potential for substantial returns in the future.

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