The $1 trillion market cap club is seeing interest in AI stocks, with two candidates emerging as potential additions.
Artificial intelligence (AI) stocks have performed remarkably well, with several major companies achieving $1 trillion market caps. The “Magnificent Seven” stocks are heavily invested in AI, and the technology is still evolving. This presents opportunities for investors seeking the next big stock in the industry.
Among several contenders, two AI stocks stand out due to their revenue growth, outlooks, and long-term potential.
Palantir’s Annual Recurring Revenue Continues to Compound
Companies with annual recurring revenue models offer strong opportunities for investors. Palantir Technologies has performed well, boasting more than 600% gains over the past five years. Initially, the company’s growth stemmed from government contracts critical for counterterrorism. Recently, Palantir has expanded its services to commercial businesses, allowing them to develop custom AI applications using its software. This software helps customers analyze large datasets and make informed decisions.
Palantir’s third-quarter results showcase impressive growth, with revenue soaring 63% year over year and net income more than tripling. The boost largely comes from U.S. commercial businesses, which have seen substantial increases. The continued demand for annual recurring revenue will encourage customer growth and expansion of revenue streams.
Palantir’s market capitalization exceeds $400 billion. While significant future gains may not mirror the past five years, the company’s momentum suggests a $1 trillion valuation is within reach.
Advanced Micro Devices is Gaining Ground on AI Chipmakers
AI chipmakers have been key players in the tech sector’s transformation. While Nvidia leads as the most valuable publicly traded company, Advanced Micro Devices (AMD) is making strides that could lead to a $1 trillion valuation. AMD reported a 36% year-over-year revenue growth in the third quarter, with net income increasing by 61%.
While AMD has not fully capitalized on the AI boom compared to its competitors, its stock has risen 115% over the past five years. The company’s market cap is close to $350 billion. If AMD can maintain growth and improve profit margins, it may experience a surge similar to that of Nvidia and Broadcom in previous years.
Both Palantir and AMD demonstrate significant potential in the AI industry, making them noteworthy stocks for investors to consider.
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