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Since OpenAI’s ChatGPT chatbot became the fastest-growing consumer app in history, big tech companies have been spending money furiously in hopes of profiting from the coming artificial intelligence (AI) revolution or at least avoiding being disrupted by it.
“I am telling you, the world’s first trillionaires are going to come from somebody who masters AI and all its derivatives and applies it in ways we never thought of.” ~ Mark Cuban
Despite Wall Street’s concerns of an AI bubble or an overhyped innovation, several of the world’s brightest tech minds, and those who participated in the last meteoric technological revolution have weighed in. Everyone whose anyone in tech, from Peter Thiel to Bill Gates to Elon Musk has weighed in on AI and believes the hype is real.
Mag 7 AI Spending Explodes
“Magnificent Seven” stocks have trounced the broader market regarding earnings growth and stock prices. The success of America’s big tech juggernauts has led to massive cash hoards.
Nevertheless, big tech CEOs are not resting on their laurels regarding the next big revolution. In fact, the largest tech firms spent an eye-popping $100 billion on AI during the first six months of 2024 alone (up nearly 50% vs. 2023). However, with little in the way of revenue to show for the spending, many analysts on Wall Street are wondering if the expenditure will slow down, leading to an AI stock correction.
Jensen Huang Blackwell Update
To answer those concerns, no better AI proxy exists than Nvidia, the undisputed AI leader. In a television interview Thursday, CEO Jensen Huang quelled concerns. Huang updated investors on Blackwell, Nvidia’s most sophisticated and next generation chip, saying that demand for it is “insane.” He also divulged that Blackwell is in “full production” after a brief delay attributed to Nvidia supplier Taiwan Semiconductor.
Accenture, Nvidia Ink Landmark Partnership
Huang’s primary reason for making the TV appearance was to tout the company’s deal with consulting giant Accenture. Accenture will leverage Nvidia’s AI suite to scale its AI applications, spur innovation, drive efficiency, and cut costs.
OpenAI Valuation Swells to $150 Billion
In other news, OpenAI officially changed its business structure from a non-profit to a for profit entity last week. This week, OpenAI announced a successful fresh round of funding that values the start-up at $150 billion. Cathie Wood’s Ark is one notable investor who reportedly participated in the round.
Ark, best known for investing in disruptors, invested $250 million in OpenAI. A recent chart shared by Ark Invest shows that large language models like ChatGPT, Claude, Perplexity, and Bing are potentially eating into Google’s dominant search engine share.
Bottom Line
Many Wall Street analysts are concerned that the AI spending sugar high will wear off. However, Nvidia’s “insane demand” and OpenAI’s massive valuation suggest that the bull market in AI spend is unlikely to subside soon.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: Nvidia, Taiwan Semiconductor and Accenture
For Immediate Release
Chicago, IL – October 4, 2024 – Today, Zacks Investment Ideas feature highlights Nvidia (NVDA - Free Report) , Taiwan Semiconductor (TSM - Free Report) and Accenture (ACN - Free Report) .
AI News: Blackwell Demand, OpenAI Raise
Will the AI Sugar High Wear Off?
Since OpenAI’s ChatGPT chatbot became the fastest-growing consumer app in history, big tech companies have been spending money furiously in hopes of profiting from the coming artificial intelligence (AI) revolution or at least avoiding being disrupted by it.
“I am telling you, the world’s first trillionaires are going to come from somebody who masters AI and all its derivatives and applies it in ways we never thought of.” ~ Mark Cuban
Despite Wall Street’s concerns of an AI bubble or an overhyped innovation, several of the world’s brightest tech minds, and those who participated in the last meteoric technological revolution have weighed in. Everyone whose anyone in tech, from Peter Thiel to Bill Gates to Elon Musk has weighed in on AI and believes the hype is real.
Mag 7 AI Spending Explodes
“Magnificent Seven” stocks have trounced the broader market regarding earnings growth and stock prices. The success of America’s big tech juggernauts has led to massive cash hoards.
Nevertheless, big tech CEOs are not resting on their laurels regarding the next big revolution. In fact, the largest tech firms spent an eye-popping $100 billion on AI during the first six months of 2024 alone (up nearly 50% vs. 2023). However, with little in the way of revenue to show for the spending, many analysts on Wall Street are wondering if the expenditure will slow down, leading to an AI stock correction.
Jensen Huang Blackwell Update
To answer those concerns, no better AI proxy exists than Nvidia, the undisputed AI leader. In a television interview Thursday, CEO Jensen Huang quelled concerns. Huang updated investors on Blackwell, Nvidia’s most sophisticated and next generation chip, saying that demand for it is “insane.” He also divulged that Blackwell is in “full production” after a brief delay attributed to Nvidia supplier Taiwan Semiconductor.
Accenture, Nvidia Ink Landmark Partnership
Huang’s primary reason for making the TV appearance was to tout the company’s deal with consulting giant Accenture. Accenture will leverage Nvidia’s AI suite to scale its AI applications, spur innovation, drive efficiency, and cut costs.
OpenAI Valuation Swells to $150 Billion
In other news, OpenAI officially changed its business structure from a non-profit to a for profit entity last week. This week, OpenAI announced a successful fresh round of funding that values the start-up at $150 billion. Cathie Wood’s Ark is one notable investor who reportedly participated in the round.
Ark, best known for investing in disruptors, invested $250 million in OpenAI. A recent chart shared by Ark Invest shows that large language models like ChatGPT, Claude, Perplexity, and Bing are potentially eating into Google’s dominant search engine share.
Bottom Line
Many Wall Street analysts are concerned that the AI spending sugar high will wear off. However, Nvidia’s “insane demand” and OpenAI’s massive valuation suggest that the bull market in AI spend is unlikely to subside soon.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.