"Significant disruption." That's the impact that Goldman Sachs thinks artificial intelligence (AI) will have on the labor market over the next few years. The Wall Street firm projects that generative AI could enable 300 million jobs globally to be fully automated, with as many as two-thirds of U.S. jobs partially automated by AI.
But Goldman Sachs also thinks this significant disruption will lead to significant productivity gains. It estimates that AI could drive a 7% increase in annual global gross domestic product (GDP) over the next 10 years. This translates to an economic impact of close to $7 trillion.
As you might expect, the AI market presents huge opportunities for investors. Here are four top AI stocks to buy now (listed in alphabetical order).
Image source: Getty Images.
1. Alphabet
Don't think for a second that Alphabet (GOOG 1.07%) (GOOGL 1.36%) will be a second-tier player in AI. The company has invested heavily in AI technology and could be a big winner on multiple fronts.
Alphabet already benefits from AI incorporated into its search algorithms. The better these algorithms are, the more advertising revenue the company could potentially make. Its Google Cloud unit will almost certainly pick up additional business as companies scramble to adopt AI.
NASDAQ: GOOGL
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Sure, self-driving cars might have been overhyped in the past. However, they're coming -- and Alphabet's Waymo subsidiary is one of the leaders in developing the AI technology required to make autonomous vehicles a reality.
Last, but not least, Alphabet is a pioneer in quantum computing. This technology holds the potential to kick AI into a higher gear with its powerful processing capabilities. I view Alphabet's quantum computing effort as perhaps the most overlooked reason to buy the stock.
2. Amazon
Speaking of overlooked, Amazon's (AMZN 1.10%) AI initiatives come to mind. The company has also invested heavily in AI.
Like Alphabet, Amazon's current business incorporates AI in several ways. Examples include the company's e-commerce platform's recommendations and, of course, its Alexa virtual assistant.
NASDAQ: AMZN
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I suspect the biggest way that Amazon will win with the AI explosion, though, is with its Amazon Web Services (AWS). AWS ranks as the top cloud provider based on market share. It's Amazon's fastest-growing and most profitable business. AWS teamed up with innovative AI company Hugging Face in February to make it easier for customers to create generative AI applications.
Amazon also has its foot in the door of the self-driving car market. The company acquired Zoox in 2020. Zoox hopes to enable autonomous ride-hailing services. Amazon could potentially use the technology for its own use in delivering products to homes as well.
3. Microsoft
Microsoft (MSFT 0.47%) has been a top player in AI for a long time. The company's partnership with and investment in OpenAI, though, has been a game changer. There are two main ways that Microsoft should benefit from its OpenAI integration.
First, it's integrating OpenAI's ChatGPT throughout its Microsoft 365 product suite. Microsoft 365 competes neck and neck with Google's G Suite in the office productivity market. While Google plans to introduce its own rival generative AI technology, Microsoft has an opportunity to gain an early-mover advantage.
NASDAQ: MSFT
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Second, Microsoft has its own cloud services unit called Azure. Like Google Cloud and AWS, Azure seeks to attract customers by making AI development as easy as possible. Microsoft hopes to leverage its ChatGPT integration with Azure to gain ground on AWS, the current market leader.
4. Nvidia
While Alphabet, Amazon, and Microsoft battle against each other in AI, Nvidia (NVDA 1.28%) stands to win regardless of which tech giant comes out on top. The chipmaker has announced a string of deals with all three AI leaders in addition to a couple of other AI collaborations.
Nvidia and Amazon are working together to build a large-scale infrastructure on AWS for building AI apps. Google Cloud is using Nvidia's L4 Tensor Core graphics processing unit (GPU), which is ideal for building big generative AI models. Microsoft and Nvidia are teaming up to make Nvidia's supercomputing service DGX Cloud available on Azure.
Of course, lots of other tech companies are already using Nvidia's AI platform as well. Nvidia also has developed AI platforms for self-driving cars and other intelligence devices including drones and robots.
Nvidia's valuation is the richest of these four AI stocks. As such, it's likely to be the most volatile of the stocks. Over the long term, though, I expect that Nvidia will be among the biggest winners from the AI explosion.
