AI chip stocks like Nvidia (NVDA) were the hottest investment of 2023. In fact, NVDA stock itself soared more than 225% this past year.
But we’ve just begun a brand new year. And to prepare for the profits 2024 has in store, we’re focusing on a new top investment idea.
Move aside, AI chip stocks. It’s time for the AI software stock boom.
Approaching AI Software Stocks’ Day in the Sun
Of course, AI will remain the central investment theme in 2024. This isn’t a passing fad. It’s an economic paradigm shift as big as the internet. And back during the dot-com boom, internet stocks didn’t fizzle after a year – they were Wall Street’s hottest stocks for an entire decade.
We believe it’ll play out the same way with AI stocks. Broadly speaking, 2023 was just the start of this boom. AI stocks will likely stay hot for the next 10 years.
But throughout the 1990s, each sub-sector of the internet industry had its time to shine during the dot-com boom. One year, it was internet infrastructure stocks like Cisco (CSCO). Another, it was internet application stocks like Amazon (AMZN). Then internet hardware makers like Microsoft (MSFT) were passed the baton.
Similarly, each sub-sector of the AI industry will have its time to shine in the 2020s AI Boom.
In 2023, AI chip stocks were the big winners because they provided the picks and shovels for the AI industry. That is, in order for companies across the globe to build AI models, they first have to buy the AI chips to run them.
It’s the “first derivative” of the AI Boom, if you will.
But we believe that trend has now played out. Everyone went on an AI chip buying spree in 2023, and now, they have the chips. What are those companies going to do now?
They’re going to build AI models and applications – which is why we expect AI software stocks will boom in 2024.
Thanks to the 2023 chip-buying frenzy, companies are fully equipped to build and deploy next-generation AI models and applications. We’ll likely see hundreds of new AI applications emerge this year. Those applications will proliferate throughout society. And by 2025, we’ll be drowning in AI software.
2024 should be the year that AI software explodes.
The Final Word
We’re already starting to see early signs of this.
Several major enterprise software makers reported quarterly earnings in late 2023. They pretty much all smashed expectations and provided strong early guidance for 2024. The central theme? They all plan to launch a ton of new AI software services this year. And early demand signals for those services are very strong.
In December alone, Salesforce (CRM), Intuit (INTU), UiPath (PATH), Snowflake (SNOW), Workday (WDAY), CrowdStrike (CRWD), Zscaler (ZS), Zuora (ZUO), Elastic (ESTC), Samsara (IOT), and PagerDuty (PD) all beat quarterly revenue and earnings estimates. All provided strong guidance for 2024. And every stock popped thereafter.
I’ve been doing this stuff for a long time, and I’ve never seen something like this. Nearly every single major enterprise software firm with exposure to AI double-beat estimates this quarter and delivered strong guidance.
To us, the takeaway is crystal-clear.
An AI software spending tidal wave is coming in 2024. AI software stocks are going to soar.
Get prepared for this incoming boom with our top picks in the space.