AI shook 2023 investing, fetch big wins with 2024 stock trends.

  • Artificial intelligence (AI) investment took off in 2023, with AI chipmakers, such as Nvidia and Advanced Micro Devices, and tech giants, like Microsoft and Alphabet, leading the charge.
  • Experts expect the next wave of AI investment to broaden beyond these major players in 2024, including undervalued companies in the software industry and cybersecurity firms.

The investment world saw an explosion of interest in AI in 2023, following the late 2022 launch of the AI chatbot, ChatGPT. This AI revolution has often been compared to the launch of the iPhone and the 1990s PC craze. Key players in the market like Nvidia and Advanced Micro Devices capitalized on the wave due to their extensive background in chipmaking. Tech giants such as Microsoft and Alphabet also strongly invested in AI, competing to dominate the AI chatbot market.

The growth and success seen in AI in 2023 is expected to continue into 2024, with investment expected to expand beyond the major tech firms. According to Deepwater Asset Management’s Gene Munster, investors will become more excited as tangible examples of AI’s efficiency-enhancing capabilities increase. Software companies and cybersecurity firms are predicted to find themselves in the AI spotlight, with managing director of thematic research at Oppenheimer, Bill Bird, predicting that software applications companies like Cloudflare, Amazon, Snowflake, and Shopify, will begin to benefit. Among these, Salesforce is viewed as an underappreciated player in the AI space with potential for improved profitability and a strong long-term strategy.

Cybersecurity companies like Palo Alto Networks might also surge to the forefront of AI investing as the sophistication of cyber attacks continues to grow and the need for data security intensifies. This is expected to encourage enterprise cloud workloads and trigger increased IT budgets to store data and acquire new hardware.

There are some industry experts, however, such as Bernstein analyst Stacy Rasgon, who suggest caution may be needed. While these experts remain optimistic about the long-term prospects of AI companies like Nvidia, they are not as confident that the market is ready for the next AI wave. Despite these concerns, most analysts agree that the expanding impact of AI on investment is undeniable, with Paul Meeks suggesting the industry is “just beginning in the AI gold rush.”

The rapid surge in AI investment has invited comparisons to the internet bubble of the late 1990s, but many experts believe the AI field is far from reaching bubble status. When such a bubble does burst, companies that struggle with profitability are predicted to be the likely victims. However, many analysts believe we are still years away from this eventuality, supporting the continued growth and excitement in AI investment throughout 2024.