Stocks to play in Generative AI include Nvidia, Microsoft, and 12 others

The rise of generative artificial intelligence will benefit more than a dozen technology stocks, Piper Sandler believes.

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The analysts at the firm wrote in a report on Friday that Generative AI is the next major technological revolution with broad implications for consumers as well as companies. A rapid pace of innovation may occur at an unprecedented pace as foundational LLMs [large language models] become democratized via APIs [application programming interfaces].

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They recommended shares of 

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• Nvidia 
• Microsoft
• Alphabet
• Meta Platforms 
• Snowflake 
• Oracle
• Intuit 
• Duolingo
• Arista Networks 
• Five9 
• NICE
• Autodesk
• GitLab
• Doximity 

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To create content, generated AI products use brute force on text, images, and videos. As a result of digesting what has previously been written online or elsewhere, chatbots like ChatGPT create humanlike responses, or attempts at them, by analyzing word relationships.

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A number of companies have introduced AI-powered conversational bots for their search engines since OpenAI released ChatGPT late last year.

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In March, ChatGPT was visited by more than 300 million people, triple the number it had in January, according to Piper's analysts. Because of that growth, they predict the market for AI-enabled search advertising will reach $47 billion by 2030, up from $48 billion now.

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In spite of concern among investors that Google may be falling behind in AI, Piper believes the trend will benefit it instead. According to them, generative AI will likely augment core search by providing new use cases and likely improving engagement in the process.

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The ability of collective intelligence to sum up documents and take notes from meetings has also already been demonstrated. Furthermore, analysts believe that artificial intelligence will enable new features in Microsoft’s productivity applications, including Word, Excel, PowerPoint, and Teams, that will benefit Microsoft’s Bing search business.

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"Microsoft is best positioned to take advantage of AI's promise of transforming productivity," they wrote. "AI could transform the world of work," they added.

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NVidia NVDA +1.11% is Piper's recommendation for semiconductors to take advantage of the artificial intelligence opportunity. The company is "clearly leading in generative AI," they wrote. According to the analysts, the company's chips provide the most comprehensive hardware solution for AI applications. They are used in 80% of all AI workloads.

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The analysts note that Oracle has a history of using Nvidia chips and software to expand its computing capacity. This could position Oracle well for cloud computing for AI services, Piper stated.

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Among the stocks, Piper targets are Nvidia at $300, Microsoft at $290, Alphabet at $117, Meta at $250, Snowflake at $194, Oracle at $104, Intuit at $510, Duolingo at $127, Arista Networks at $162, Five9 at $89; NICE at $227; Autodesk at $244; GitLab at $50; and Doximity at $38.

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Some of those stocks are expected to gain significant amounts as a result of that set of calls.

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