The artificial intelligence tidal wave continues to reshape the technology sector, with ripple effects felt across global markets. As AI's transformative power becomes increasingly apparent to society at large, savvy investors are scrambling to identify the companies best positioned to ride this technological tsunami to stratospheric heights.
Two names stand out as particularly strong buys for long-term investors: Semiconductor juggernaut Nvidia (NASDAQ: NVDA) and the upstart delivery technology firm Serve Robotics (NASDAQ: SERV) . These companies, now intertwined through Nvidia's recent strategic investment, stand at the epicenter of the AI revolution, and their stocks could be primed for even more explosive growth in the coming years. Read on to find out more.
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Nvidia: The company at the center of it all
Nvidia, the undisputed leader of AI chips, has seen its fortunes soar as demand for its cutting-edge processors reaches fever pitch. The company's graphics processing units (GPUs) are the lifeblood of AI systems worldwide, powering everything from autonomous vehicles to language models that can engage in human-like conversation.
Despite a hefty 8% pullback in the chipmaker's stock last week, a mere hiccup in its astronomical rise, Nvidia's long-term prospects remain blindingly bright. The company's trailing price-to-earnings ratio of 68.9 might make some investors balk, but this premium valuation reflects Nvidia's stranglehold on the AI chip market.
With global GDP potentially set to balloon by up to $4.4 trillion annually due to AI advancements, according to McKinsey's widely cited 2023 report, Nvidia stands to reap a king's ransom. Even more conservative estimates from Accenture and Goldman Sachs , which peg AI's annual impact at around $1 trillion, still represent a gold rush of epic proportions for the chip maker.
Nvidia's brain trust, on the other hand, seems to think these estimates are far too conservative. The chipmaker's CEO Jensen Huang has gone on record stating that AI could unlock $100 trillion in economic value in the coming years, thanks to the advent of AI-powered agents, auto factories, digital twins, and scores of other game-changing innovations.
The bottom line is Nvidia is a must-own stock for investors who want direct exposure to the AI revolution.
Serve Robotics: The AI-powered delivery disruptor
Serve Robotics, a relative newcomer to the public markets, has suddenly found itself thrust into the spotlight. The company's semi-autonomous delivery robots, already a common sight on the sidewalks of San Francisco and Los Angeles, represent the cutting-edge of last-mile-delivery innovation.
Nvidia's recent acquisition of a 10% stake in Serve Robotics sent the latter's stock into the stratosphere last Friday, as investors took note of the game-changing potential of this partnership. Nvidia's 3.7 million shares signal a strong vote of confidence in Serve's technology and growth prospects.
Serve Robotics' journey from Postmates subsidiary to independent public company has been nothing short of remarkable. Its recent public offering, which raised $35.7 million in net proceeds, has provided the company with a solid foundation to fuel its expansion plans.
However, investors should note that Serve Robotics is not without its challenges. The company's revenue stream is currently highly concentrated, with a single customer accounting for a whopping 90% of its revenue in the first quarter of 2024. This concentration risk underscores the importance of Serve's efforts to diversify its customer base.
Key takeaways
The AI revolution is not just coming. It's here, and it's reshaping industries at breakneck speed. Nvidia and Serve Robotics represent two sides of this technological coin: the established titan providing the computational muscle, and the nimble upstart applying that power to revolutionize last-mile delivery.
For investors looking to capitalize on the AI boom , this dynamic duo offers a potent combination of established market dominance and disruptive potential. While risks certainly exist, from Nvidia's lofty valuation to Serve's customer concentration, the potential rewards could be nothing short of extraordinary.
George Budwell has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Accenture Plc and Nvidia. The Motley Fool recommends the following options: long January 2025 $290 calls on Accenture Plc and short January 2025 $310 calls on Accenture Plc. The Motley Fool has a disclosure policy .
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