Major tech companies like Amazon, Alphabet, and Meta Platforms are planning to spend over $500 billion on AI by 2026. This significant investment is driving strong growth for key players such as Nvidia and Broadcom. Both companies are expected to achieve impressive revenue growth of around 52% to 53% this fiscal year, positioning them as top AI stock picks.
A recent sell-off in AI stocks has created a rare buying opportunity for investors in Microsoft and Nvidia. Microsoft demonstrates robust cloud growth, reporting a 17% increase in revenue and a 23% rise in net income. Nvidia, a critical supplier of GPUs for AI workloads, anticipates a 53% revenue growth in the coming year, underscoring its central role in the expanding AI market.
Alphabet is also a leading AI stock, with its shares climbing 68% over the past year. The company's vast ecosystem, including Google Search, which generated $224.5 billion in revenue, and Google Cloud, which grew 48% to $17.66 billion, provides a strong foundation for its AI initiatives. Its Gemini AI now boasts over 750 million monthly active users.
The demand for AI computing and memory is fueling growth for companies like Applied Materials, a major chipmaking equipment supplier. The company expects its semiconductor equipment business to grow over 20% this calendar year, particularly for high-bandwidth memory used in AI systems. Samsung has also begun shipping its next-generation HBM4 memory chips to Nvidia to power its upcoming Vera Rubin AI accelerators.
The boom in AI data centers is creating opportunities for infrastructure providers. Fluence Energy supplies industrial-scale battery systems for reliable power, while Credo Technology offers high-speed copper cables that reduce power consumption. Additionally, Teradyne and MultiLane have formed a joint venture to develop advanced testing solutions for these rapidly expanding AI data centers.
Conversely, fears about AI's disruptive potential have caused sharp declines in commercial property service stocks, including Savills, International Workplace Group, CBRE, and Jones Lang LaSalle. Investors worry that AI could automate office tasks, reducing the need for physical office space. Similar concerns have impacted residential real estate technology firms like Opendoor.
Despite these fears, some analysts offer a more nuanced view. Jade Rahmani suggests the immediate risk of AI to complex deal-making might be overstated. CBRE's CEO, Bob Sulentic, believes AI will ultimately benefit their business in the long term, even as the company reported strong fourth-quarter revenue of $11.6 billion.
Key Takeaways
- Amazon, Alphabet, and Meta Platforms plan to spend over $500 billion on AI by 2026.
- Nvidia and Broadcom are top AI stock picks, both expecting around 52-53% revenue growth this fiscal year.
- Microsoft shows strong cloud growth (17% revenue, 23% net income) and is a leader in the AI market.
- Alphabet's Google Search revenue reached $224.5 billion, Google Cloud grew 48% to $17.66 billion, and Gemini AI has over 750 million monthly active users.
- Applied Materials expects over 20% growth in its semiconductor equipment business this year due to AI computing and memory demand.
- Samsung has started shipping HBM4 memory chips to Nvidia for its upcoming Vera Rubin AI accelerators.
- Fears of AI disruption caused significant stock drops for commercial property service companies like Savills, CBRE, and Jones Lang LaSalle, and residential tech firm Opendoor.
- Fluence Energy and Credo Technology are benefiting from AI data center demand by providing battery systems and high-speed cables.
- Teradyne and MultiLane formed a joint venture to create advanced testing solutions for AI data centers.
- Some experts believe the immediate risk of AI to complex real estate deal-making might be overstated, with CBRE's CEO expecting long-term benefits from AI.
Nvidia and Broadcom are top AI stock picks
AI spending remains strong, with major companies like Amazon, Alphabet, and Meta Platforms planning to spend over $500 billion by 2026. This significant investment benefits companies such as Nvidia and Broadcom. Nvidia produces GPUs for AI workloads, while Broadcom partners with hyperscalers like Alphabet to design custom chips, including the Tensor Processing Unit. Analysts expect both companies to achieve 52% revenue growth this fiscal year. Despite recent stock fluctuations, these companies are considered excellent buys due to their strong position in the expanding AI market.
Microsoft and Nvidia stocks offer rare buying chance
A recent sell-off in AI stocks has created a rare opportunity to buy shares in Microsoft and Nvidia. Microsoft shows strong cloud growth, with 17% revenue and 23% net income growth. Nvidia, a key supplier of GPUs for AI, expects 53% revenue growth this coming year. Both companies are leaders in the AI market and are currently trading below their all-time highs. Investors see this as a good time to invest in these powerful AI stocks.
AI fears cause property service stocks to drop
Shares of commercial property services companies fell sharply due to worries about AI disruption. Firms like Savills, International Workplace Group, CBRE, and Jones Lang LaSalle saw significant stock declines. Investors fear AI could automate office tasks and reduce the need for office space. However, analyst Jade Rahmani believes the immediate risk to complex deal-making might be overstated. CBRE reported strong fourth-quarter revenue of $11.6 billion and expects higher profits in 2026, with CEO Bob Sulentic believing AI will benefit the business long term.
Real estate stocks fall due to AI disruption fears
Office real estate stocks are falling sharply as investors worry about AI's impact. Companies like CBRE, Jones Lang LaSalle, and Hudson Pacific Properties saw significant drops. This follows similar sell-offs in software and financial firms due to AI disruption concerns. Experts like Matt Shumer and Elon Musk suggest AI could automate many white-collar jobs, potentially reducing demand for office space. However, some investors believe these fears might be too high.
Alphabet poised to be top AI stock for 5 years
Alphabet is seen as a leading AI stock, with its shares climbing 68% in the past year. The company's vast ecosystem, including Google Search, YouTube, and Android, gives it a strong advantage in AI. Its latest earnings report showed Google Search revenue soared to $224.5 billion and Google Cloud revenue grew by 48% to $17.66 billion. Gemini AI now has over 750 million monthly active users. Analysts expect Alphabet's earnings to grow by almost 16% annually over the next three to five years.
Applied Materials predicts strong growth from AI and memory
Applied Materials, a major US chipmaking equipment supplier, expects strong growth thanks to AI computing and memory demand. CEO Gary Dickerson stated that "acceleration of industry investments in AI computing" is driving results. The company anticipates its semiconductor equipment business to grow over 20% this calendar year, especially for high-bandwidth memory used in AI systems. Applied Materials also settled a US Commerce Department investigation for $252.5 million regarding past exports to China. The company reported better-than-expected first-quarter revenue of $7.01 billion and profit of $2.38 per share.
Samsung ships HBM4 memory to power Nvidia AI
Samsung has started shipping its next-generation HBM4 memory chips to Nvidia. These new chips will power Nvidia's upcoming Vera Rubin AI accelerators. This move highlights a shift in the AI hardware supply chain and affects competition among memory suppliers like SK Hynix and Micron. Nvidia's stock has seen a 40.5% return over the past year, showing strong investor interest in AI developments. This new supply link helps Nvidia support future demand and strengthen its supply chain.
Two companies benefit from AI data center boom
The growing demand for AI infrastructure is creating opportunities for companies like Fluence Energy and Credo Technology. Fluence Energy makes industrial-scale battery systems that provide reliable power for AI data centers. Credo Technology offers high-speed copper cables called Active Electrical Cables, which match fiber-optic performance with less power. Fluence Energy expects 57% annual sales growth in two years, driven by data center orders. Credo Technology's solutions help data centers reduce power use and cooling needs while maintaining fast network speeds.
Teradyne and MultiLane partner for AI data center testing
Teradyne and MultiLane have formed a new joint venture to create advanced testing solutions for AI data centers. This partnership aims to meet the high demand for testing equipment in these fast-growing facilities. Teradyne is known for its automated test equipment used in semiconductors and electronics. The venture combines MultiLane's specialized test assets with Teradyne's broad customer reach. This move shows Teradyne's focus on the expanding high-bandwidth, high-density hardware market for AI.
Opendoor stock drops amid AI real estate fears
Opendoor Technologies Inc. stock fell as fears about AI's impact hit the real estate technology sector. This follows a sharp sell-off in traditional real estate service stocks like CBRE Group and Jones Lang LaSalle. Investors worry that AI could disrupt the home-buying process, even for tech-first platforms like Opendoor. The company is set to report earnings next Thursday, which could either stabilize the stock or reinforce current concerns. Opendoor's stock was down 8.40% at $4.35 at the time of publication.
Sources
- 2 No-Brainer Artificial Intelligence (AI) Stocks to Buy Hand Over Fist in February
- The AI Sell-Off Created a Rare Buying Opportunity in These 2 Stocks
- Share values of property services firms tumble over fears of AI disruption
- Office real estate stocks tumble as AI disruption casualties in the stock market grow by the day
- Prediction: This Will Be the Best AI Stock to Own for the Next 5 Years
- Applied Materials Gives Rosy Forecast as AI, Memory Boost Demand
- Samsung HBM4 Shipments Put Nvidia AI Supply Chain In Focus
- The AI Infrastructure Boom Is Just Getting Started. Here Are 2 Stocks to Buy.
- Teradyne MultiLane Venture Targets AI Data Centers As Valuation Stretches
- Opendoor Stock Falls As 'AI Scare Trade' Hits Real Estate Tech
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