We recently published a list of 10 Stocks That Will Benefit From AI. In this article, we are going to take a look at where Broadcom Inc. (NASDAQ:AVGO) stands against other stocks that will benefit from AI.
Artificial intelligence has been the driving theme of the stock market over the past couple of years which have seen investors battle inflation and high interest rates. Ever since OpenAI publicly released ChatGPT in November 2022 and NVIDIA CEO Jensen Huang predicted the next year that there was a trillion-dollar market in play when it came to upgrading traditional computing hardware to accelerated computing, the stock market has seen no respite.
However, when it comes to AI stocks, not all of them have flourished. Apart from Huang's firm, the world's leading graphics processing unit (GPU) designer, shares of OpenAI's biggest backer, i.e., the firm known for the Windows operating system, were two of the biggest initial AI beneficiaries. Between December 2022 and H1 2024, their shares have gained 631% and 75%, respectively. Other technology stocks have also ridden the AI wave and have posted gains ranging between 42% to 308%. Within these, the stock that has gained 308% is Facebook's parent entity and its focus on GPU investments and success with the Llama open source model have caught investor attention.
These firms have primarily posted gains because the AI wave, as analysts would like to remind you, is in its early stages. This stage is characterized by investor interest in firms that are AI enablers. However, the next stage of AI investment could see investors broaden their horizons. Some of this diversification away from technology stocks has already taken place in the form of impressive performance by utility stocks in 2024. Their performance is evident through the utility component of the flagship S&P index gaining 28% from the start of the year to the end of November as it led the benchmark index by a percentage point.
We analyzed this stage in AI investment in great detail as part of our coverage of Goldman Sachs' Best Phase 2 AI Stocks: Top 24 High Conviction AI Stocks. Stocks in this list range from utility firms to computer hardware providers, semiconductor firms, and glass companies. Within this list, data center hardware firms were quite common, and as you read below, you'll find out why they might be the biggest beneficiaries of the next wave in AI investment.
Wells Fargo has extensively covered the topic of what other stocks apart from the most valuable in the world can benefit from artificial intelligence. Its research covers firms that benefit from AI spending and applications. Starting from stocks that might benefit from AI spending, the bank notes that these will primarily include areas where the money trickles from AI data spending. In 2025, it estimates that hyperscaler cloud providers' capital expenditures can sit around a cool $180 billion. This is more than twice the expected spending by oil majors, which is estimated to sit at close to $85 billion.