Investing in Tech: Two Stocks to Watch as AI Evolves
The U.S. stock market has experienced impressive gains over the last five years, highlighted by the S&P 500 achieving double-digit returns in four of those years. Underpinning this bullish trend have been advances in artificial intelligence (AI) and specialized semiconductor technologies. Nevertheless, the premium valuations of many leading tech companies might cause some investors to reconsider their positions.
Take a look at the dominant players in today’s marketplace. For instance, Nvidia, a powerhouse in semiconductor technology integral to the AI movement, currently trades at a forward price-to-earnings (P/E) ratio of over 31. Meanwhile, Microsoft, with its strategic partnership with OpenAI aimed at developing artificial general intelligence (AGI), boasts a forward P/E ratio exceeding 34. To put that in perspective, the average forward P/E ratio for the S&P 500 stands at 24.1, which indicates that these tech juggernauts may be overpriced.
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This eye-popping valuation scenario has encouraged many savvy investors to explore growth opportunities outside of established giants. Rather than paying hefty premiums for AI leaders, funds are being allocated towards adjacent sectors that stand to gain from AI’s integration, such as energy infrastructure, enterprise software, industrial automation, high-performance computing, and robotics.
Spotlight on Quantum Computing
IonQ (IONQ) is a standout player in the realm of quantum computing. This innovative technology exploits the principles of quantum mechanics to tackle problems that are beyond the capabilities of current supercomputers. IonQ’s share price has surged an impressive 173% as of December 13, 2024, reflecting growing recognition of its trapped-ion technology, which is poised to unleash significant commercial potential.
Industry forecasts suggest that the quantum computing market could grow to a staggering $173 billion by 2040, driven by its potential to transform various fields such as drug discovery, financial modeling, cryptography, and advanced AI. Although IonQ’s market capitalization of $7.32 billion sets a high bar, its commitment to developing cutting-edge technology and forming partnerships with major industry players suggests the company is on a promising trajectory.
Transforming Delivery with AI
On the practical side of AI, Serve Robotics (SERV) exemplifies how technology can enhance everyday experiences through its autonomous delivery robots. These smart machines utilize advanced AI algorithms for navigation, obstacle avoidance, and route optimization, continuously improving as AI capabilities advance.
Serve Robotics has made significant strides recently, raising $32.3 million in new capital in Q3 2024 while expanding its collaboration with Uber Eats to deploy 2,000 robots by the end of 2025. As the market for autonomous delivery robots is projected to reach $450 billion by 2030, Serve’s focus on sophisticated AI integration positions it well to capture a substantial portion of this burgeoning market.
The Road Ahead
Both IonQ and Serve Robotics present investors with unique opportunities to get in on the action as AI continues to evolve. IonQ’s quantum computing innovations could drastically enhance the processing capabilities of AI systems, while Serve Robotics illustrates AI’s potential to streamline everyday services like food delivery. While both companies are still at early stages in their growth, they are targeting massive markets that could yield significant rewards for patient investors willing to endure short-term fluctuations.
As we witness the remarkable possibilities of technology like AI unfold, the journey is just beginning. The AI Buzz Hub team is excited to see where these breakthroughs take us. Want to stay in the loop on all things AI? Subscribe to our newsletter or share this article with your fellow enthusiasts.
