These AI stocks are ready to explode

Artificial intelligence (AI) is undoubtedly one of the most disruptive technologies of our time, but when it comes to investing in AI companies, there is no clear-cut sector.

Many of the companies that are benefiting enormously from the evolution of AI tools are not necessarily in the business of developing AI themselves, but rather in supporting the infrastructure or tools that are essential to its implementation.

A case in point is Nvidia, which has seen its stock price explode thanks to the growing demand for high-performance chips needed to train AI models.

However, Nvidia does not produce AI per se, but its semiconductors are crucial to powering the data centers and technology infrastructure used by AI systems. So, what are the parallel sectors that could benefit in an increasingly AI-driven future?

Data Centers: A Pillar of AI Infrastructure

One of the primary beneficiaries of the AI expansion is data centers, facilities that house the servers and computing systems needed to process, store, and transmit the massive amounts of data that fuel AI. As enterprise adoption of AI increases, the demand for computing power is growing exponentially, and data centers are becoming critical to supporting that growth.

One market that is looking to capitalize on the increased demand for data centers is Digital Realty Trust (DLR), a company that has caught the attention of many analysts, including Richard Choe of J.P. Morgan, for its growth potential in the AI space, but is positioning itself to the investing public as a REIT rather than a true technology company.

With a price-to-earnings (P/E) ratio of around 80 and a profit margin close to 10%, Digital Realty looks set to become an increasingly important player in the future of REITs focused on the data center market. The company also offers a 3% dividend yield, making it attractive to dividend-minded investors as well.

DLR, 1W

Source: Baha.com

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Cloud: Driving AI Expansion

The cloud computing industry is closely tied to data centers and is seeing tremendous growth, fueled by the need for scalable solutions for companies that want to leverage artificial intelligence. The cloud offers the flexibility and computing power needed to run AI models without having to invest in expensive physical infrastructure.

Among the major players in this space is Amazon, which with its Amazon Web Services (AWS) service is one of the world’s leaders in the cloud industry. AWS offers a wide range of cloud services that support the training and execution of AI models.

A lesser-discussed "gem" with significant potential is Oracle. This company, traditionally associated with databases, has recently stepped up its presence in the cloud sector, aiming to become a leader in providing cloud solutions to enterprises around the world. Oracle’s P/E stands at around 35, with a profit margin of over 20%, highlighting a solid and highly profitable business model.

Recently, Oracle saw a strong increase in its shares after announcing a partnership with Amazon Web Services to offer new database services, marking an important strategic move in consolidating its position in cloud computing.

ORCL, 1W

Source: baha.com

Original article published on Money.it Italy 2024-10-28 12:25:00. Original title: Queste azioni AI sono pronte ad esplodere