The global artificial intelligence market could grow at a whopping 46.2% annual growth rate between 2019 and 2025, according to Grand View Research, becoming a $ 391 billion market. Investors wanting to take advantage of that market, which encompasses a wide range of hardware, software and services, should take a closer look at three technology giants that are expanding their AI portfolios: NVIDIA (NASDAQ: NVDA), Apple (NASDAQ: AAPL)and Baidu (NASDAQ: BIDU).
1. NVIDIA
NVIDIA (NASDAQ: NVDA) It is primarily known for its gaming GPUs, but the chipmaker also produces high-end GPUs for data centers. These GPUs can generally process AI tasks faster than standalone CPUs.
Image source: Getty Images.
NVIDIA data center revenue increased 80% annually last quarter, to $ 1.14 billion, or 37% from its top line. He attributed that explosive growth to “broad-based” demand from its vertical and hyperscale industry customers, who use their GPUs for artificial intelligence and high-performance computing (HPC) applications.
NVIDIA’s new A100 data center GPU, which is up to 20 times more powerful than its predecessor, also started generating “significant” revenue shortly after its launch last quarter, according to the company. Its acquisition of network company Mellanox, which closed in late April, will also continue the expansion of its data center unit.
In the automotive market, NVIDIA’s ARM-based Tegra CPUs power infotainment units and driverless cars. Its auto revenues declined 7% to $ 155 million in the last quarter, or 5% of its top line, due to macro headwinds, but it could bounce back with the auto industry generally as auto companies update their technologies for automobiles.
NVIDIA’s core gaming GPU business remains its main growth engine, but the strength of its data center business, which already serves cloud giants like Amazon, Microsoftand AlphabetGoogle is a solid game in the AI market.
2. Apple
Apple generates most of its revenue from the iPhone and other hardware devices, so it is generally not considered an artificial intelligence game. However, Apple quietly acquired more than 20 artificial intelligence companies in the past decade, according to CB Insights, beating the number of acquisitions of artificial intelligence by Google, Microsoft and Facebook. Apple even hired Google’s head of intelligence and search, John Giannandrea, in 2018.
Unlike Google and Facebook, which use artificial intelligence to create targeted ads, Apple’s growing list of artificial intelligence acquisitions, which includes Siri in 2010 and computer vision company RealFace in 2017, was primarily focused on adding new functions to iPhone.
Image source: Apple.
Apple’s recent acquisition of Xnor.ai, which runs image recognition tools locally rather than in the cloud, could add better face-tracking capabilities to the iPhone without compromising user privacy. Integrating Xnor.ai’s artificial intelligence engine with Apple’s own Bionic chips, which also process artificial intelligence tasks with its neural engine, could allow its devices to process other artificial intelligence tasks offline.
Looking further, Apple could integrate its artificial intelligence technologies into connected cars through CarPlay, the digital healthcare marketplace through apps on Apple Watch, and the augmented reality marketplace through its ARKit platform.
Apple is certainly not a pure game in the artificial intelligence market, but improving artificial intelligence technologies will strengthen its hardware and software, while also strengthening the “walled garden” surrounding its high-growth service segment.
3. Baidu
Baidu (NASDAQ: BIDU), which owns the largest search engine in China, generates most of its revenue from online ads. However, all the data it accumulates from users, along with its expansion to virtual assistants, smart speakers and driverless cars, have made it a powerhouse in the artificial intelligence market.
Baidu’s DuerOS processed 6.5 billion voice queries monthly in March, nearly tripling the year before, and hosted more than 3,800 “skills” across a wide range of industries. In the field of natural language processing, Baidu’s AI ERNIE (Enhanced Representation Through Knowledge Integration) model recently outperformed Google’s BERT (Two-way Transformer Encoder Representations) model in a closely watched competition. in natural language processing.
More than 100 automotive and technology companies have joined Baidu’s Apollo platform for driverless cars, and it has already deployed more than 100 autonomous vehicles in 17 cities in China. All of those artificial intelligence investments still don’t generate significant revenue for Baidu, but they will expand its search ecosystem far beyond the saturated PC and mobile device markets.
Baidu’s shares have declined approximately 30% in the past three years, due to concerns about competition in the advertising market from more nimble rivals such as ByteDance, its increasing dependence on its unprofitable streaming video affiliate iQiyi for revenue growth and disruptive growth of monolithic applications like TencentIt is WeChat.
Baidu needs to address all of those challenges, but its ambitious investments in artificial intelligence should expand its moat and strengthen its business. Investors who buy Baidu before those growth engines kick in could be well rewarded.
