Nvidia (NVDA) -) became Wall Street's chosen entry into artificial intelligence earlier in the year when the semiconductor giant reported first-quarter earnings that blew past analyst expectations. The company noted particular growth in its data center sector, indicating that the excitement over generative AI was real and importantly, monetizable.
Nvidia's market cap surged in the wake of that earnings report, pushing the company into the hallowed trillion-dollar market cap club.
Reporting second-quarter results, Nvidia posted a strong double beat for the second time, further strengthening its position. And despite its stock surges — the stock is up around 240% for the year — investors have identified Nvidia as the cleanest AI beneficiary.
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The company makes the chips necessary for everyone from software giants to startups to develop AI technology; whether or not the AI bubble bursts, Nvidia's value seems guaranteed. The AI its clients build doesn't have to work for a growing list of companies to seek out Nvidia's GPU chips to try their hand at building AI.
Nvidia is set to report third-quarter earnings after the bell Nov. 21, with analysts expecting to see revenue of $16.2 billion. The stock pushed down slightly Tuesday in the lead-up to the report.
Many analysts, including Susquehanna Financial Group's Christopher Rolland, expect Nvidia to beat expectations again.
The other AI king
With Microsoft recently unveiling its first foray into the development of AI-capable computer chips, and with its cloud sector surging and investor confidence building on the heels of its position with OpenAI, the software giant has likewise been identified as an early victor in the AI sector.
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The stock fell slightly more than 1% Tuesday.
Despite this, Evercore's Mark Mahaney believes that a third tech giant isn't being discussed enough when it comes to AI beneficiaries on Wall Street.
"I know the market's assigned two crowns here to Nvidia and Microsoft, but there's going to be broad-based applications," Mahaney told CNBC. "I think AWS and Amazon (AMZN) -) are going to be one of the biggest beneficiaries of the infrastructure layer. I think that's been hidden in the numbers."
Mahaney said that he expects accelerated growth out of Amazon over the next year, across its cloud computing sector as well as its advertising and retail business.
"It's just a really nice setup for a company" that Mahaney thinks is going to hit peak operating margins in 2024.
"AI is definitely part of the thesis here," he said.
Shares of Amazon, up around 70% for the year, fell close to 3% Tuesday to a per-share price of $142. Mahaney said that he expects the stock to be back in the $200 range by this time next year.
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