From the mid-1990s onwards, the internet revolutionized the way individuals and companies engaged with each other. While it took some time for this new technology to become widely accepted and develop, the internet ultimately transformed the path of growth for businesses in the United States in a beneficial manner.
For thirty years, Wall Street and investors have been eagerly anticipating the next big advancement in technology that would revolutionize businesses in a similar way to how the internet transformed in the mid-1990s. Finally, after a prolonged anticipation, machine intelligence It appears that this is the solution.
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The extensive potential market for AI is due to software and systems being able to acquire knowledge independently. This capability of machine learning enables AI systems to improve their performance in tasks or even acquire new abilities as they progress.
Wall Street institutions, analysts, and money managers recognize the significant impact that AI could have. Many experts believe that this innovative technology will lead to increased wealth for investors, with some predicting larger gains than others.
According to the predictions of three financial experts from Wall Street, these three popular artificial intelligence stocks could potentially increase in value by up to 1,200%.
Nvidia is expected to have a potential increase of 91%.
The initial stock in the field of artificial intelligence that is predicted by a Wall Street expert to experience a significant increase in value is the leading company in data-center hardware. Nvidia ( NVDA 1.67% ) .
Hans Mosesmann, an analyst at Rosenblatt Securities, is optimistic that Nvidia could potentially be the first company on Wall Street to reach a market value of $5 trillion, despite already seeing a significant increase of over $2.2 trillion since the beginning of 2023. Price target of $200 per share on the stock. that was released after Nvidia is undergoing a significant forward split, with a ratio of 10 new shares for every one existing share. , indicating that there is a potential increase of 91% from the closing share price of $104.75 on Aug. 9th.
Mosesmann, along with many other supporters of Nvidia, is confident that the company will continue to lead in the market for AI-focused graphics processing units (GPUs) utilized in high-performance data centers. Due to the high demand for Nvidia’s chips exceeding the available supply, the company has been able to effortlessly raise the prices of its GPUs and enhance its adjusted gross margin.
Mosesmann is also enthusiastic about Nvidia’s CUDA platform, which is a software tool used by developers to create extensive language models. He believes that Nvidia’s software will collaborate closely with its AI-GPUs to retain customers in its ecosystem.
Mosesmann’s forecast is being challenged by historical trends. For the past three decades, there has not been a major innovation that has avoided experiencing an initial hype bubble. The majority of companies do not have a well-defined strategy for implementing AI, indicating that this technology is still in its early stages of development. In summary, it is clear that there is a long way to go before AI reaches its full potential. There is a strong likelihood of a bubble bursting occurrence. Artificial intelligence will be implemented sooner rather than later.
Nvidia’s impressive growth also depends on perfect execution, which is not something that can be maintained indefinitely. Recently, it was revealed that the launch of the company’s upcoming GPU platform, Blackwell, would be postponed by a minimum of three months due to design issues. Despite high demand for this chip extending until 2025, any delay creates opportunities for competitors. external and internal rivals competing to acquire valuable data center space.
It is highly probable that we have already seen the highest point of Nvidia’s stock value.
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Super Micro Computer is expected to have a potential increase of 195%.
According to a Wall Street analyst’s prediction, another top AI stock that has the potential to experience a significant increase in value is a company specializing in customizable rack servers and storage solutions. Highly compact computer ( SMCI 1.70% ) .
In a time frame of fewer than 30 days following the inclusion of Super Micro in the benchmark. S&P 500 Ananda Baruah from Loop Capital set a high price target of $1,500 for the company. Despite Super Micro’s shares falling to around $508 at the end of trading on August 9, Baruah’s price target suggests that the stock could almost triple in value.
Baruah thinks that the company is in a great position in the field of artificial intelligence to take advantage of the increasing need from businesses for powerful data centers that can support advanced AI applications and train complex language models.
Moreover, being included in the S&P 500 is expected to increase the company’s valuation, potentially leading to a rise in its stock price to $1,500, or $150 after adjusting for stock splits. This change is set to take effect on August 6th. Super Micro recently joined the ranks of prominent companies by revealing a stock split. .
Although it is impressive that a well-established infrastructure company has experienced triple-digit year-over-year sales growth, there are concerns that investors should be aware of. One reason for caution is that Super Micro Computer uses Nvidia’s highly sought-after H100 GPUs in its rack servers. However, a challenge for Super Micro is that Nvidia is unable to fulfill all of its orders. This situation leads to It is reliant on its suppliers. .
There’s a There is a tendency for expectations to exceed reality when it comes to Super Micro Computer. Additionally, the firm’s stock experienced a significant increase in the mid-2010s due to the belief that it would play a crucial role in the growth of enterprise cloud technology. However, the company failed to meet the high hopes of both Wall Street and investors.
Even though Super Micro Computer may still exceed expectations in the near future, I believe it is very improbable that Baruah’s ambitious target of $1,500 will be achieved.
Tesla is expected to have a potential increase of 1,200%.
Nevertheless, the top target prices for AI stocks are provided by Cathie Wood, the CEO and Chief Investment Officer of Ark Invest.
In June, Ark’s Monte Carlo analysis predicted a $2,600 price target. an electric car manufacturer Tesla ( TSLA -3.10% ) By 2029, this would mean a market capitalization of around $8.3 trillion, exceeding the current value of the world’s largest publicly traded company by over twofold.
Wood and her team determined this ambitious price objective by giving great importance to Tesla’s autonomous taxi service powered by artificial intelligence In five years, Wood predicts that Tesla will achieve $1.2 trillion in yearly sales, with 63% of the revenue and 86% of the projected $440 billion in earnings before interest, taxes, depreciation, and amortization. EBITDA ), originating from autonomous taxis.
Regrettably, there is a significant issue with Ark Invest’s Monte Carlo model. Specifically, despite CEO Elon Musk’s announcement in April 2019 that Tesla would have “over a million robotaxis on the road” the next year, the company does not currently have any robotaxis operating on public roads. Tesla has not progressed beyond Level 2 autonomy, which will severely hinder its ability to fulfill the ambitious projections made in Wood’s Monte Carlo analysis.
Maybe the more significant concern here is the valuation of Tesla. boosted by commitments made by Musk that have not been fulfilled Musk has not been able to meet the goal of providing “over a million robotaxis” and has continuously claimed that Tesla’s electric vehicles will achieve full autonomy within a year, which has been repeated for ten years. If we remove the unmet promises and exaggerated claims, such as Optimus, from the assessment of Tesla’s worth, the company’s shares could potentially drop by 75% or even more.
Furthermore, the competition has intensified significantly for the company’s electric vehicle (EV) business, which has traditionally been the main source of cash flow and operating income. This is due to the price competition initiated by Tesla in 2023 to stimulate demand for its EVs. The company’s operating margin has significantly dropped and they have been unsuccessful in stopping the increase in global electric vehicle stock. .
Finally, it is worth noting that Tesla’s income before taxes has started to heavily depend on sources that are not sustainable. Around 66% of the company’s income before taxes in the quarter ending in June came from selling regulatory tax credits to other car manufacturers and earning interest on its cash reserves.
In simple terms, Tesla’s current price of $200 is not supported by any valid reasons, especially considering Wood’s prediction of $2,600 for the stock.
