TLDR
- Nvidia dominates the AI data center chip market with a $4.4 trillion market cap and 63% year-over-year net profit growth.
- Alphabet’s Google Gemini AI model drives growth for consumer and enterprise services with $115 billion in annual net profit
- Tesla is developing its own AI chips (AI5 and AI6) to drive its ambitions for autonomous driving and robotics
- Wedbush analyst Dan Ives believes Tesla is the most undervalued large-cap AI stock despite its $1.5 trillion valuation
- Tesla’s Full Self-Driving software and Optimus humanoid robot represent two potential trillion-dollar business opportunities
Nvidia continues to maintain its position as the world’s most valuable company with a market capitalization of $4.4 trillion. The company’s dominance in the data center chip market has driven net profit growth of 63% year over year to $86 billion.
The chipmaker supplies AI processing units to all major cloud service providers. Wall Street analysts are predicting 23% annual earnings growth over the next five years for the company.
Nvidia recently announced a partnership with Oracle to build a high-performance computing cluster. The system will deliver up to 16 zettaflops of peak AI computing performance.
The company faces competition from Broadcom and Advanced Micro Devices. However, all three chipmakers are reporting strong growth as demand for AI infrastructure increases.
Nvidia estimates data center spending will reach $4 trillion by 2030. Data center chips are expected to account for about half of that spending.
The stock trades at a lower forward price-to-earnings multiple than Walmart. This suggests that the shares may be undervalued relative to the company’s growth prospects.
Google’s AI integration drives revenue growth
Alphabet powers Google services used by over 2 billion people daily, including Search, Gmail, Maps and YouTube. The company generated $115 billion in net profit on $371 billion in revenue in the past year.
Advertising revenue makes up 74% of Alphabet’s business. The company’s Google Gemini AI model powers features in both consumer and enterprise products.
AI insights in Google Search led to increased usage and strong year-over-year revenue growth last quarter. Google Cloud offers both proprietary Tensor Processing Units and Nvidia chips to customers.
Alphabet has invested billions in data centers and AI infrastructure for several years. Analysts expect the company’s earnings to grow at a 15% annual rate.
The stock trades at a forward price/earnings ratio of 24. Revenues and earnings are growing at double-digit rates.
Tesla’s AI Transformation Beyond Electric Vehicles
Wedbush Securities analyst Dan Ives calls Tesla the most underrated large company AI stock. The company is developing its own AI chips called AI5 and AI6 for its autonomous systems.
Tesla’s Full-featured self-driving software uses neural networks trained on billions of miles of real-world driving data. The company plans to launch a robotaxi network using autonomous Tesla vehicles.
Elon Musk envisions the robot taxi service disrupting the ride-sharing and delivery industries. The company could enable millions of vehicles equipped with autonomous technology.
Tesla’s Optimus humanoid robot has demonstrated coordinated movement and object manipulation. Musk suggests that Optimus could eventually represent 80% of Tesla’s long-term value.
The robot uses the same vision-based neural network that controls Tesla’s self-driving cars. Competitors include Boston Dynamics and Figure AI in the human robotics space.
Tesla trades at a forward price-to-earnings ratio near 256 with a market cap of $1.5 trillion. The Robotaxi business currently generates minimal revenue while Optimus continues to develop.