We recently compiled a list of 10 Hot AI Stocks According to Goldman Sachs. In this article, we’ll take a look at where Alphabet Inc. (NASDAQ:GOOG) stands compared to other booming AI stocks.
The Goldman Sachs Communacopia + Technology 2024 conference, held earlier this month, provided several important technology sector updates for investors, with a particular focus on innovation and financial growth in growth sectors. Key discussions focused on energy-efficient computing, artificial intelligence (AI), and advanced semiconductor technologies, which signal critical transformations in technology and telecommunications. At the conference, companies operating in the technology space presented their strategic outlooks, highlighting the role of energy-efficient computing in semiconductor growth, with sectors such as AI, IoT, robotics, and autonomous vehicles fueling multi-trillion dollar changes.
To learn more about these developments, go to The 33 Most Important AI Companies You Should Pay Attention To And 20 industrial stocks that are already riding the AI wave.
One of the highlights of the conference was NVIDIA CEO Jensen Huang joining Goldman Sachs CEO David Solomon to discuss the AI industry in detail. Asked about recent U.S. controls on chip exports to China and rising geopolitical tensions that could hurt supply, Huang stressed that his company is confident that if Taiwan Semiconductor Manufacturing Company, NVIDIA’s main Taiwanese supplier of advanced AI chips, were compromised, the chip supply would continue, albeit not as good. Huang stressed that NVIDIA has enough intellectual property to shift chip production from one fab to another, if necessary.
NVIDIA has lost more than 15% of its market capitalization since releasing its third-quarter guidance, which sparked concerns about slowing earnings growth. In particular, concerns have been raised about the concentration of hyperscalers in NVIDIA’s business model, with four large customers accounting for nearly half of the company’s revenue compared to the AI boom. Following Huang’s appearance at the conference, Goldman Sachs semiconductor analyst Toshiya Hari reiterated his buy rating on the stock, backing the company to grow its sales in the coming months as demand for accelerated computing continues to be very strong and extends to enterprises and sovereigns.
To learn more about these developments, go to 30 BlackRock’s Top AI Stocks And AI News You Can’t Miss.
Our methodology
For this article, we selected AI stocks by browsing the proceedings of the Goldman Sachs 2024 Communacopia and Technology conference. These stocks are also popular among hedge funds. Why are we interested in stocks that hedge funds are heavily invested in? The reason is simple: Our research has shown that we can outperform the market by mimicking the best stock picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A laptop and phone open to Google services in an everyday context.
Alphabet Inc. (NASDAQ:GOOG)
Number of hedge fund holders: 165
Alphabet Inc. (NASDAQ: GOOG) is a California-based technology company that owns and operates the Google internet search engine. Google Cloud CEO Thomas Kurian spoke at Goldman Sachs 2024 Communacopia and Technology Conference earlier this month, noting that his company has been way ahead of others in building AI infrastructure over the past decade. Kurian noted that those investments are now starting to pay off. For example, he revealed that 90% of AI unicorns run on Google-provided cloud services for training and inference. 60% of all AI-funded startups use Google-developed AI infrastructure for training or inference.
Kurian, who worked at software company Oracle before joining Alphabet Inc. (NASDAQ:GOOG), added that traditional companies are now building both powerful and generative AI models on Google’s cloud. Kurian gave the example of automaker Ford Motor Company, explaining that Ford is using Google’s deep learning technology to create wind tunnel simulations and for virtual wind tunnel simulation, replacing a traditional approach called computational fluid dynamics.
Overall GOOG ranks 4th among the hottest AI stocks to buy according to Goldman Sachs. While we recognize GOOG’s potential as an investment, our conviction lies in the belief that certain AI stocks have more promise to deliver higher returns, and in a shorter time frame. If you’re looking for an AI stock that’s more promising than GOOG but is trading at less than 5x earnings, check out our report on the the cheapest AI stock.
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Disclosure: None. This article was originally published on Insider Monkey.