Two Stocks Poised to Skyrocket with the Next Wave of AI Technology

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Two Stocks Poised to Skyrocket with the Next Wave of AI Technology

It’s been just over 15 months since ChatGPT launched, and it’s clear who the early winners of the AI ​​revolution are.

AI Hardware Stocks Like Nvidia have been by far the leaders of the new technological boom. Nvidia’s GPUs are the core component required to run intense models like ChatGPT, and demand for them has been enormous, increasing Nvidia’s revenue by more than 200% and its profits by an even greater multiple. Companies that partner with Nvidia to sell hardware have also become winners. These include Super microcomputerspecializing in the sale of high-density servers and storage equipment that works well to run AI applications; Arm holds, which licenses its power-saving chip designs to Nvidia for use in running AI models; And Oraclewhich has seen strong growth in its cloud infrastructure business as demand for Nvidia-based superclusters increases.

Even other chip stocks, like AMD And Intelhave soared in anticipation of increased demand, even though these companies have yet to see significant growth in revenue from the AI boom.

However, cloud infrastructure giants, AI startups and others are not stockpiling GPUs for hoarding. They aim to run new applications and software, and it’s a safe bet that software companies will be the next winners of the AI ​​revolution. Keep reading to see two that could capitalize on the new tech boom.

Two Stocks Poised to Skyrocket with the Next Wave of AI Technology

Image source: Getty Images.

1. MongoDB

MongoDB (NASDAQ:MDB) has established itself as a leader in NoSQL databases. It helps organizations organize data that does not conform to a strict spreadsheet grid.

As a database tool, there is a natural overlap between the usefulness of MongoDB and the potential of Generative AImaking it easier to find information, apply it, run models, or transform it as needed.

MongoDB has started integrating some generative AI features into its software. For example, in December the company launched Vector Search, which uses generative AI to help customers build applications with MongoDB data. However, the biggest AI tailwinds are yet to come for MongoDB.

During the recent earnings conference call, CEO Dev Ittycheria explained to investors the implications of AI for the business, saying: “It’s important to understand that there are three layers to the AI ​​stack . The first layer is the underlying computation and LLMs, the second layer is fine-tuning models and building AI applications, and the third layer is deploying and running applications that end users interact with .

MongoDB operates in the second and third layers of this stack, and Ittycheria said MongoDB customers are still experimenting with their AI applications. As experimentation moves into action, the company appears well-positioned to benefit from a surge in demand once businesses are confident they can harness the power of AI. It could take several quarters, but the company will likely be a long-term winner from AI. At the same time, MongoDB continues to grow rapidly, with revenue up 27% in its most recent quarter.

2. Duolingo

Duolingo (NASDAQ:DUOL)the leading language learning app, has overcome some initial fears that AI could disrupt its business model rather than complement it.

Last spring, the stock briefly fell when the educational platform Chegg said it was losing customers to ChatGPT, but investors have since realized that Duolingo appears to be an AI winner, and its shares have surged in recent months on impressive growth.

Duolingo quickly integrated AI tools into its application. A year ago, it unveiled a new chat mode based on OpenAI’s GPT4, which served as the basis for its new next-level product, Duolingo Max. The company has also started using AI to create sentences for its courses and has laid off some contractors as it relies more on AI and less on humans.

Looking ahead, it’s easy to imagine how Duolingo can take full advantage of the potential of generative AI. It could develop an AI conversation partner so users can practice a new language in real-life conversation. It could offer customizable AI-powered lessons so users can focus on context or a certain set of vocabulary based on their needs, and it could use AI to accelerate its expansion beyond languages in areas such as early literacy, mathematics and music.

Not only will this help Duolingo reach more users at a lower cost, but it could also help it be more widely adopted in K-12 and university education, tapping into a potentially very lucrative revenue stream.

Duolingo executives are well-versed in AI and technology, as CEO Luis von Ahn previously sold reverse image search technology to AlphabetGoogle, and also helped develop CAPTCHA and ReCAPTCHA, tools that prevent bots from connecting to a website.

Duolingo stock is expensive, but the company is growing rapidly, its profitability is improving, and generative AI is significantly expanding its addressable market.

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Suzanne Frey, an executive at Alphabet, is a member of the board of directors of The Motley Fool. Jeremy Bowman has positions in MongoDB. The Motley Fool holds positions and recommends Advanced Micro Devices, Alphabet, Duolingo, MongoDB, Nvidia and Oracle. The Motley Fool recommends Chegg and Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.

2 Stocks That Will Rise in the Next Wave of AI was originally published by The Motley Fool

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