3 AI-powered stocks that could deliver stunning gains in 2024

By | December 23, 2023



Artificial intelligence (AI) made a huge splash in 2023 and will likely continue to make waves in 2024. After all, according to industry forecasts, the global AI market will grow from approximately $208 billion in 2023 to nearly $300 billion in 2024 and continue to expand through 2023, reaching $1.8 trillion by 2030.

When it comes to investing in AI, you want companies where the technology is essential to their business. This positions them to benefit from the growth of the AI ​​industry in the long term. This trio of stocks falls into that bucket. Each of these companies represents different aspects involved in creating an AI solution.

It starts with Nvidia (NASDAQ: NVDA), which provides the graphics processing units (GPUs) necessary to meet the computing requirements of an AI system. Next up Amazon (NASDAQ: AMZN), as the Amazon Web Services (AWS) division provides the data centers and other IT infrastructure needed to house and run AI programs. Finally there is UiPath (NYSE: PAD)that illustrates the types of powerful AI apps being produced today.

1. AI processing power: Nvidia

Nvidia had a banner for 2023, thanks to the popularity of its GPUs used in AI and cloud computing technologies. The company is positioned to repeat its success in 2024.

AI systems require powerful processing power, given the complex calculations they have to perform. Nvidia’s GPUs met expectations, leading to $18.1 billion in revenue in the company’s fiscal third quarter ended Oct. 29. That’s a staggering 206% increase from last year’s $3.8 billion.

The company expects its fiscal fourth quarter to bring in $20 billion in revenue, a huge jump from 2022’s $6.05 billion and set for an impressive start to 2024.

Nvidia’s chips are used not only in AI, but also in other popular industries, such as electric vehicles and robotic systems. Moreover, the company has entered into a partnership with Foxconn to build data centers specifically tailored to the demands of AI using Nvidia technology.

In describing these new data centers, Nvidia CEO Jensen Huang said, “A new type of manufacturing has emerged: intelligence manufacturing.” As the 2023 results show, Nvidia has the technology and partnerships to succeed long-term in this new era of AI manufacturing.

2. AI infrastructure: Amazon

Nvidia built the chips that make AI possible. Amazon’s AWS provides the computing infrastructure needed to run AI programs.

AWS provides the servers that house AI apps and the mountains of data they need to make decisions. Businesses can use AWS tools to implement AI systems, and companies like United Airlines do exactly that.

AWS is already the world’s largest cloud computing provider and is strengthening its leadership position through 2024. AWS and Nvidia are teaming up to boost AWS data centers with Nvidia’s latest AI technology, making Amazon an attractive supplier for businesses who are interested in the implementation of AI apps.

And AWS isn’t the only area where AI is playing a role in Amazon’s success. The company has introduced AI in some of its businesses.

For example, Amazon now offers third-party sellers AI capabilities on its site to help them create product listings. These sellers generated $34.3 billion of Amazon’s $143.1 billion in third-quarter revenue, exceeding the $23.1 billion provided by AWS.

Amazon’s third-quarter revenue was up 13% year-over-year, and the company expects at least 7% year-over-year growth in the fourth quarter. As Amazon continues to add AI capabilities, these improvements should help the company continue to grow sales into 2024.

3. AI applications: UiPath

Now let’s look at UiPath, a company that uses Amazon’s AWS. UiPath helps companies increase automation of their operations by using AI to analyze current workflows and then automate many of those steps.

For example, UiPath’s AI can automatically fill out online forms, streamlining data entry. Several US government agencies, including the Internal Revenue Service, use UiPath’s AI to automate tasks.

As a result, the company’s revenue grew 24% year over year to $326 million in the fiscal third quarter ended Oct. 31. UiPath’s revenue growth has also contributed to its free cash flow (FCF).

The company’s adjusted FCF in the third quarter was $43.7 million, a dramatic improvement over the prior year’s FCF of negative $24.1 million. And the balance sheet is strong. UiPath had total assets of $2.8 billion, of which more than $1 billion in cash and equivalents exited the third quarter. Total liabilities were $825.8 million.

With strong financials, UiPath has the resources to expand its business, and its revenue growth illustrates the success of its AI offering.

Nvidia, Amazon and UiPath are all entering 2024 with excellent financial results. With the growing AI market acting as a tailwind, these companies are poised to continue driving success into 2024.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Robert Izquierdo has positions at Amazon, Nvidia and UiPath. The Motley Fool holds positions in and recommends Amazon, Nvidia, and UiPath. The Motley Fool has a disclosure policy.

3 AI-Backed Stocks That Could Deliver Stunning Gains in 2024 was originally published by The Motley Fool

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