| The Second Phase of the AI Revolution Thanks to the chip-buying frenzy of 2023/24, companies are fully equipped to build and deploy next-generation AI models and applications in 2024/25. We’ll likely see hundreds of new applications emerge over the next 12 months. Those applications will proliferate throughout society. And by the end of 2025, we’ll be drowning in AI software.
Over the next 12 months, AI software will eat the world. We’re already starting to see early signs of this. C3.ai reported exceptional quarterly earnings in late May, with revenues surging 20% year-over-year and projected to increase by 23% in the following quarter. The company's management emphasized the intensifying demand for Enterprise AI, describing the interest in their applications as "staggering." Among its key achievements, C3.ai secured 13 C3 Generative AI pilots with big corporations such as ExxonMobil (XOM). It also improved its gen-AI capabilities, fine-tuning its large language models (LLMs) to be more accurate and efficient, support more than 130 languages, and introduced a visual interface to improve data integration. These advancements demonstrate C3.ai's commitment to innovation and its ability to meet the growing demand for enterprise AI solutions. Fellow AI software provider Palantir (PLTR) recently echoed the same sentiment, saying that demand for its Artificial Intelligence Platform (AIP) software is very strong. And just last week, Alphabet (GOOGL) reported strengthening growth in its core cloud business due to accelerating demand for its infrastructure and generative AI solutions. The company also reported that its core Search business is benefitting from new features like AI Overviews, which is proving very popular among younger users. What’s more, management mentioned AI about 100 times on the quarterly conference call, with CEO Sundar Pichai emphasizing that currently, the risk of Alphabet underinvesting in AI is far bigger than the risk of overinvesting. Our takeaway? One of the world’s largest tech companies is going all-in with AI – and has no intention of slowing down anytime soon.
It seems pretty clear to us that the AI software boom is kicking off. We think this boom will give rise to some huge stock winners. After all, the Dot-Com Boom – which we view as a great parallel for the AI Boom – also played out in two phases: an infrastructure boom followed by a software boom. The infrastructure boom occurred throughout the 1990s, as the telecom infrastructure necessary to power the internet was built out. Internet hardware stocks like Qualcomm (QCOM) soared during this era. This was followed by the software boom of the 2000s and 2010s. Internet applications and services were built atop the infrastructure that was established in the 1990s. And during this era, internet software stocks like Amazon (AMZN), Netflix (NFLX), and Microsoft (MSFT) soared.
The Final Word A year ago, I teamed up with investing experts Louis Navellier and Eric Fry to talk about how AI would impact every aspect of the economy and markets. Fast-forward to today, and everything we've predicted is playing out. Although AI continues to dominate the financial news and stock market, millions of investors remain in the dark about a new AI breakthrough. New research shows thousands of stocks could soon be impacted by this new breakthrough… The AI revolution is entering a new phase, shifting focus from hardware to software. Companies like Nvidia have already seen significant gains in this second phase... but the real opportunity lies in identifying the next Amazon, Netflix, or Microsoft of the AI era. This transition presents us with a unique investment opportunity — one that’s about to send shockwaves through the stock market. And we want to make sure you know about it. That's why, last Friday, I teamed up with Louis and Eric to hold an urgent AI discussion about this crucial shift where AI software stocks will outperform chipmakers and developers. We revealed the immediate steps to protect yourself from impending destruction while potentially multiplying your investment tenfold as the AI revolution enters “Phase 2.” You can watch a replay of our briefing here.
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