Wall Street's 'AI Tidal Wave' Will Benefit These Companies

Artificial intelligence has become a hot topic among tech enthusiasts and analysts since ChatGPT launched last year.

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With its investment in OpenAI, the creator of ChatGPT, and its additions to its search engine Bing which include AI, Microsoft seems to be leading the way so far in terms of pushing into this area. Baird believes that the Xbox maker is far from the only company that stands to benefit from the AI "tidal wave" that is sweeping through the investing community, according to the analyst.

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The firm said in a note to clients on Tuesday that 50 artificial intelligence and machine-learning companies across sectors are positioned to benefit from AI mania.

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“Although some of these select companies are not directly related to the hype surrounding generative AI and LLMs [large language models], they do offer a range of growth rates, margins, and market capitalization profiles,” wrote analyst Colin Sebastian.

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There are a number of big names on the list, including Apple and Nvidia. Artificial intelligence and machine learning have been used by both companies in order to enhance the quality of their products for years. Brad Gerstner, of Altimeter, revealed to Trade Algo earlier this month that he had been offered a new position at Nvidia due to Nvidia's huge role in artificial intelligence.

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Gerstner told Trade Algo in a recent interview that he had long admired Nvidia, its leader Jensen Huang, and the central position they play in the field of artificial intelligence. “There has been a massive acceleration in the field of artificial intelligence and machine learning over the past two years. This is evident in OpenAI and the work that Microsoft is doing, what Google is doing, etc.”

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The analyst noted that Apple is another possible front-runner that has spearheaded its own AI development for years, from Siri to its crash detection system to its Face ID technology and that the company has a lot to gain from it.

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The list also includes several software stocks, including Palo Alto Networks, which also made the cut. During the recent quarter, the cybersecurity provider surpassed analysts' expectations and the company's stock rose more than 11% after management raised earnings guidance and lifted its earnings guidance.

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From Tuesday's close, Baird's price target suggests that the stock will experience a 32% gain from Baird's price target.

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“AI/ML has increasingly found use-cases within cybersecurity/infrastructure software in order to enhance overall cybersecurity posture, as well as improve threat detection and response,” wrote analyst Shrenik Kothari, also highlighting CrowdStrike and Splunk as companies that have been able to benefit from AI.

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ADP, a payroll services company, was also included in the list of companies along with software stocks Adobe and Salesforce.

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