AI may contribute as much as $15.7 trillion to the global economy within seven years. With so much money up for grabs, here are the likely winners.
Artificial intelligence has become 2023’s hottest investment trend. Investors are scanning the landscape for innovative companies, many of which are small and unprofitable. But the fact is, large, dominant technology companies are poised to get most of the AI pie.
Together they will spend tens of billions of dollars on building out their offerings, which will, in turn, propel semiconductor company revenues. Exhibit No. 1 is Nvidia NVDA . On May 24, Nvidia, the largest maker of AI chips, said a surge in demand prompted the company to predict sales would rocket 53% in the three months through July from the previous quarter, sending the stock up 22% in after-hours trading.
1. IBM: IBM IBM is known for having rebooted its main business line several times since it dominated mainframes during the 1960s. And now, the 112-year-old company just launched Watsonx, a milestone in the advancement of enterprise AI. Built on the Red Hat OpenShift platform, Watsonx offers a full tech stack for training, deploying and supporting AI across any company’s cloud system.
ServiceNow, which has acquired 11 AI-related companies since 2017, is injecting Gen AI technology into all workflow software. That means, for example, a company will benefit from the faster resolution of employee requests. Or a designer’s workflows are speeded up by text-to-code capabilities. Your morning coffee order might be processed by a bot, but its language will seem hyper-real.
Co-founder Larry Ellison said on the company’s earnings call in March that demand is outstripping available capacity. A difference among competitors, he said, is that Oracle has setups built around Nvidia chips that are part of a standard network and can be applied almost immediately. There’s no need for customization.
Elsewhere, Alphabet has been widely using AI in consumer products, including search, YouTube and Android. And that’s set to accelerate. That’s an advantage for Amazon, as it’s the largest cloud IaaS provider, meaning users can tap into a vast array of services without having to purchase expensive hardware. What’s more, the company’s pay-as-you-go model opens services to virtually any company, large or small.
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