Microsoft, Tesla & Amazon Among 110 S&P 500 Companies Discussing AI: 2 More AI Stocks To Buy Hand Over Fist | The motley fool

Every quarter, listed companies publish an update for investors with their latest financial results and operational milestones. An analysis of the last quarter (ended March 31) showed that a common theme emerged in the discussions around each title: artificial intelligence (AI).

According to FactSet, 110 S&P 500 companies have discussed artificial intelligence in their earnings calls. It was a record and an 80% increase over the same time last year.

Microsoft, Tesla and Amazon were among the most prominent

Microsoft (MSFT 0.85%) is a shareholder of ChatGPT creator OpenAI, and the two companies have already completed a long list of integrations with the former’s various product offerings. In Microsoft’s recent earnings call, management said 2,500 enterprise customers had already signed up to use OpenAI on its Azure cloud platform, a whopping 1,000% increase in just three months.

Tesla (TSLA 3.11%) management told investors the beta version of its fully autonomous self-driving software had officially traveled 150 million real-world driven miles. CEO Elon Musk said that’s a data advantage none of its competitors could match, suggesting the EV specialist will be able to train its AI models better (and sooner) and perhaps help it win the race for fully autonomous operation.

Amazonia (AMZN 1.21%) Management has discussed AI extensively, saying it plans to build every aspect of its business on top of large language models to reinvent customer experiences, from online shopping to advertising to entertainment.

While they are some of the most popular AI stocks among investors, I will share two more in the S&P 500 that speak to the technology and could offer significant upside from here.

Two halves of a digital brain connected by an AI chip in the center.

Image source: Getty Images.

1. Advanced Microdevices: Selling picks and shovels during the AI ​​Gold Rush

Advanced Micro Devices(amd -1.35%) The stock price is up 86% this year despite relatively slow financial results for the first quarter. AI is certainly playing a role in investor enthusiasm, especially after the main rival Nvidia (NVDA -1.11%) recently revealed the impact the technology could have by dramatically raising its financial forecast for the next quarter.

Nvidia has an estimated 90 percent market share in data center semiconductors (chips) that enterprises need to train AI models, and AMD is working to erode that dominance. In its first-quarter earnings call, management revealed that the LUMI supercomputer powered by AMD in Europe was used to train the largest finished language model to date. But here’s the kicker: LUMI runs on the AMD MI250X data center chip, and the company’s new MI300, which is slated for release later this year, will deliver up to 8x the performance.

It will be the world’s first advanced processing unit (APU) for data centers, combining CPU and GPU technologies. CEO Lisa Su said the new chip will power the new El Capitan supercomputer at Lawrence Livermore National Laboratory, becoming the organization’s first exascale platform, with an estimated two exaflops of performance.

El Capitan is predicted to be the world’s fastest supercomputer when it launches, and here’s a mind-boggling statistic: If all 7.7 billion people on Earth completed one calculation every second, it would take the world’s population eight years to do what they El Capitan can do. do in a second.

Additionally, AMD has consolidated some of its AI teams into a single department to accelerate its progress in this area. It’s likely that over time the company will capture Nvidia’s market share, and I think that could pave the way for AMD to become a $1 trillion company within the next 10 years.

2. Meta platforms: AI means less social networking and more entertainment

Metaplatforms (HALF) is the parent company of some of the largest social media platforms in the world, including Facebook, Instagram and WhatsApp. When Facebook launched in 2004, it was designed to connect college students with their online friends, but it has evolved several times since then. It now helps family members stay connected around the world and helps businesses reach their customers.

Today it is undergoing another transformation together with Instagram, which not only prioritizes video content over photos and text, but also focuses on entertainment over social networks. The trend was sparked by ByteDance’s TikTok platform, which uses AI algorithms to learn what users like in order to provide them with the video-based content they are most likely to engage with.

Meta’s version is called Reels. He’s now active on both Facebook and Instagram, and Q1 2023 has been a watershed period for the feature. During the company’s earnings call, management told investors that rapidly improving AI algorithms have led to a 24% increase in the amount of time users spend on Instagram, and that AI was also ramping up. monetization efficiency for Reels. In other words, the algorithms were getting better at targeting ads to specific users, which could be a harbinger of companies spending more money on Meta’s platforms.

CEO Mark Zuckerberg recently said that AI is currently Meta’s single largest investment, and the company is taking an open source approach, which he hopes will lead more developers to adopt its large language models. This would help Meta stay ahead of the pack, because more data equals better and more accurate AI models.

Given improved monetization and increased time spent on Instagram, AI was a major catalyst in pushing Meta’s revenue back into growth territory in Q1 after spending most of 2022 contracting (Year 2022). after year). Combined with a series of cost cuts, Meta’s shares are up 112% in 2023 so far. But the company’s AI journey is only just beginning, so investors could expect further strengthening in its financials and a further rise in its shares.

John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, serves on the board of directors of The Motley Fool. Randi Zuckerberg, a former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, serves on the board of directors of The Motley Fool. Anthony Di Pizio does not hold any positions in any of the stocks mentioned. The Motley Fool fills positions and advises Advanced Micro Devices,, Meta Platforms, Microsoft, Nvidia and Tesla. The Motley Fool has a disclosure policy.

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