We recently published a list of 17 trending AI stocks according to the latest news and analyst ratings. In this article, we take a look at where Alphabet Inc. (NASDAQ:GOOG) stands compared to other trending AI stocks.
One of the biggest breakthroughs in artificial intelligence in recent years has been advances in natural language processing. These AI models in language are now making their way into the business world and society as a whole. Sound estimates from Goldman Sachs investment advisors suggest that these AI tools could lead to a 7% increase in global GDP, worth nearly $7 trillion, over the next decade and increase overall productivity growth by 1.5 percentage points. Economists Joseph Briggs and Devesh Kodnani wrote in a recent report that the ability of AI tools to generate content indistinguishable from human-created products and to break down communication barriers between humans and machines represents a major advance with potentially large macroeconomic impact.
Some of these macro factors are easier to see in numbers. A recent study on artificial intelligence by Stanford University in the US shows that companies are already overtaking science in training AI models. For example, the AI industry was able to train almost 51 notable machine learning models in 2023 (read more about these companies at Top 33 AI companies to watch out for), compared to just 15 in academia. This is despite the fact that the costs associated with training the models have increased. For example, training ChatGPT 4, the latest version of the popular ChatGPT that sparked the AI wave in late 2022, cost nearly $80 million. Computing Gemini Ultra, an AI tool developed by Google, also cost $191 million. The number of AI patents is also increasing, as evidenced by the fact that the number of AI patents granted has increased more than 31 times since 2010.
This exciting phase in the world of technology has ushered in a new boom for the global economy, which was previously plagued by inflation concerns, geopolitical conflicts and stagnant demand numbers. The bullish sentiment around AI needs to be balanced with caution. In the long term, investors should prepare for significant changes in the way the world works, as AI could automate nearly 300 million jobs. Previous automation cycles have created new jobs and opportunities to replace them. Identifying these opportunities (read more about them by clicking on 20 industrial stocks that are already riding the AI wave) could go a long way toward balancing the risk profiles of high-growth portfolios. Recent research suggests that 60% of people employed today are in jobs that didn’t exist half a century ago, supporting the claim that over 80% of job growth since then can be explained by technology-driven innovation.
Our methodology
For this article, we selected AI stocks based on the latest news and analyst ratings. These stocks are also popular with hedge funds. Why do we care about the stocks hedge funds invest in? The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (read more details here).
A laptop and a phone open to Google services in an everyday environment.
Alphabet Inc. (NASDAQ:GOOG)
Number of hedge fund owners: 165
Alphabet Inc. (NASDAQ:GOOG) is a California-based technology company that owns and operates the internet search engine Google. The company has invested heavily in AI technology in recent years. According to recent reports, Google Cloud, one of the products marketed by the company, allows startups in the AI space access to high-tech NVIDIA graphics processors and customized Google chips to build their AI models. This opening of the cloud to AI startups is currently limited only to startups funded by Y Combinator, a venture capital firm based in California near Google’s headquarters. However, the tech giant may grant a larger group of AI companies access to the cloud in the coming months.
Even though AI-powered search engines are disrupting Alphabet Inc.’s (NASDAQ:GOOG) core business, analysts like Wedbush’s Scott Devitt, who rates the shares at Outperform with a $205 price target, believe the internet giant has a defensible moat in search. According to the analyst, the company’s search advances are underestimated by the market. Devitt points out that the company has several advantages over its peers, including unmatched breadth of data to develop and train AI models, a large user base, AI-optimized computing infrastructure, access to technical talent, and a track record of monetization.
Total GOOG 5th place on our list of trending AI stocks according to the latest news and analyst ratings. While we recognize GOOG’s potential as an investment, we believe some AI stocks promise higher returns and do so in a shorter time frame. If you’re looking for an AI stock that’s more promising than GOOG but trades at less than 5x its earnings, read our report on the cheapest AI stock.
READ MORE: Michael Burry sells these stocks and Jim Cramer recommends these stocks.
Disclosure: None. This article was originally published on Insider Monkey.
