The most favored investment in 2023 revolved around AI chip stocks such as Nvidia (NVDA), with NVDA stock alone surging by over 225% during the year. However, as we transition into a new phase, the focus is shifting towards a different investment avenue to capitalize on the anticipated growth in 2024.
Farewell to AI chip stocks, as the spotlight now turns towards the burgeoning realm of AI software investments.
Embracing the Rise of AI Software Securities
Undoubtedly, AI will persist as the primary investment theme in 2024, signifying not just a fleeting trend but a significant economic paradigm shift akin to the advent of the internet era. Drawing parallels to the dot-com era, where online stocks dominated Wall Street for a decade, we foresee a similar trajectory for AI stocks. The surge witnessed in 2023 merely marks the inception of this upward trajectory, with AI companies poised to exhibit resilience over the next decade.
Reflecting on the dot-com boom of the 1990s, each segment within the computer industry had its moment in the sun. Internet infrastructure stocks like Cisco (CSCO) had their glory, followed by internet application stocks exemplified by Amazon (AMZN), and subsequently, Microsoft (MSFT), a stalwart in internet hardware, took center stage.
Likewise, in the 2020s AI renaissance, every facet of the AI market will have its time to shine.
While AI device companies emerged victorious in 2023 by providing the essential artificial chips pivotal for AI model development, we believe the fervor surrounding this sector has waned. The rush to procure AI chips has subsided, prompting a shift towards the burgeoning market of AI software companies in 2024, tasked with advancing AI models and applications.
Buoyed by the groundwork laid in 2023 with the acquisition of AI chips, companies are now primed to unleash a slew of next-generation AI models and applications. The ensuing year is poised to witness a deluge of new AI programs, poised to proliferate globally, heralding an AI technology deluge by 2025.
The dawn of the AI technology era may well be 2024.
Epilogue
The initial tremors of this transformation are already discernible.
Towards the latter part of 2023, prominent business software developers unveiled their quarterly earnings, falling short of expectations but offering robust guidance for 2024, underpinned by plans to introduce a plethora of new AI technology ventures. Encouragingly, early demand indicators for these solutions have been robust.
Workday (WDAY), CrowdStrike (CRWD), Zuora (ZUO), Elastic (ESTC), Samsara (IOT), and PagerDuty (PD) all surpassed revenue and earnings estimates in December alone. Noteworthy mentions include Salesforce (CRM), Intuit (INTU), UiPath (PATH), and Snowflake (SNOW), all of which provided bullish forecasts for 2024, resulting in a surge in their stock prices.
While this landscape may be novel to some, the recurring theme is evident.
In 2024, brace for a tidal wave of AI technology investments, propelling the valuation of AI technology companies to unprecedented heights.
