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The Rise of Generative AI in Tech Stocks


Piper Sandler, a leading research firm, believes that more than a dozen technology stocks are poised to benefit greatly from the rise of generative artificial intelligence (AI). In a recent report, the firm’s analysts stated that they see generative AI as the next major revolution in technology, with far-reaching implications for both consumer and enterprise sectors.

The analysts highlighted the democratization of foundational large language models (LLMs) through application programming interfaces (APIs) as a key driver of innovation. They believe that this could lead to a rapid pace of development and progress that has never been seen before.

According to Piper Sandler’s recommendations, investors should consider shares of the following companies:

  1. Nvidia (ticker: NVDA)
  2. Microsoft (MSFT)
  3. Alphabet (GOOGL)
  4. Meta Platforms (META)
  5. Snowflake (SNOW)
  6. Oracle (ORCL)
  7. Intuit (INTU)
  8. Duolingo (DUOL)
  9. Arista Networks (ANET)
  10. Five9 (FIVN)
  11. NICE (NICE)
  12. Autodesk (ADSK)
  13. GitLab (GTLB)
  14. Doximity (DOCS)

Generative AI products utilize a brute-force approach to training on text, images, and videos in order to create content. For example, chatbots like ChatGPT leverage language models to generate humanlike responses by analyzing word relationships found in vast amounts of internet and other written content.

Interest in this type of AI has surged following OpenAI’s release of ChatGPT last year. In response, both Alphabet’s Google and Microsoft launched AI-powered conversational chatbot companions for their search engines in February.

Piper Sandler’s analysts point to traffic data that indicates ChatGPT exceeded 300 million visitors in March, which is triple the number from January. This impressive growth has led them to believe that the market for AI-enabled search advertising could reach $47 billion by 2030, up from a relatively small amount this year.

The emergence of generative AI is set to reshape the technology landscape, and investors have the opportunity to capitalize on this trend by considering the recommended stocks. With the potential for significant innovation and market growth, it’s an exciting time for both consumers and businesses operating in this space.

The Potential of AI in the Tech Industry

While concerns have arisen about Google falling behind in the field of AI, research firm Piper believes this trend will actually benefit the internet giant. According to Piper, generative AI has the potential to enhance core search capabilities by providing new use cases and improving overall user engagement. This technology has already demonstrated its proficiency in summarizing documents and taking notes from meetings.

Not only does generative AI offer advantages to search engines like Microsoft’s Bing, but it also holds promise for enhancing productivity applications such as Word, Excel, PowerPoint, and Teams. Piper expresses optimism about Microsoft’s position in leveraging AI to propel the future of work and productivity.

Piper identifies Nvidia as the primary player in the semiconductor industry that’s capitalizing on the AI opportunity. The analysts highlight Nvidia’s early leadership in the generative AI space and estimate that its chips are utilized in approximately 80% of all AI workloads. They regard Nvidia as offering the most comprehensive hardware solution for AI applications.

In addition to Nvidia, Piper asserts that Oracle could become a well-positioned provider of cloud computing services for AI. The company has demonstrated an aggressive approach in expanding its computing capacity using Nvidia chips and software technology.

Piper has set stock-price targets for several tech companies, including $300 for Nvidia, $290 for Microsoft, $117 for Alphabet (Google’s parent company), $250 for Meta (formerly Facebook), $194 for Snowflake, $104 for Oracle, $510 for Intuit, $127 for Duolingo, $162 for Arista Networks, $89 for Five9, $227 for NICE, $244 for Autodesk, $50 for GitLab, and $38 for Doximity.

While these predictions suggest significant gains for many of these stocks, Piper acknowledges that not all will experience the same level of success.

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