While artificial intelligence (AI) has been around for years, recent innovations have captured the public imagination. The introduction of next-generation chatbots, including ChatGPT and Alphabet's (GOOG 0.10%) (GOOGL -0.02%) Bard have made headlines the world over, sparking the next bull run in AI. Investors have been watching the ensuing zeitgeist and have sensed the potential to ride this ongoing trend to profits.

The next phase of AI development could be particularly lucrative and far-reaching. In fact, Cathie Wood's Ark Investment Management has done some calculations and estimates that artificial intelligence (AI) software could represent a $14 trillion revenue opportunity by 2030. 

Even some of Wall Street's most notable billionaires and hedge funds have been snapping up shares of AI-related stocks, expecting to benefit from the current AI gold rush. Let's look at two such stocks billionaires are buying hand over fist.

AI emblazoned on a cloud symbol above a circuit board.

Image source: Getty Images.

1. Alphabet remains a key player in the AI race

Hedge fund manager and billionaire philanthropist George Soros has made a name for himself by making savvy bets on Wall Street. He formerly managed the Quantum Fund, which generated decades of market-beating returns. Furthermore, reports suggest he made more than $1 billion in a single day by betting against the British pound, so his bona fides are well earned. 

Soros Fund Management is no stranger to Alphabet, first investing in the stock back in 2017. Late last year, however, Soros saw an opportunity and began betting heavily on the search giant and AI pioneer, adding another 743,160 shares of Alphabet stock to his position, bringing the total to more than 1.8 million shares currently worth more than $192 million and representing roughly 2.1% of his portfolio.  

The excitement surrounding OpenAI's ChatGPT has been palpable, leading some to believe that Alphabet is already lagging in the AI race, but digging a little deeper provides some fascinating context. Alphabet's Pathway's Language Model (PaLM), which was introduced in early 2022, could be scaled to 540 billion parameters. This runs circles around GPT-3.5 (the foundation for ChatGPT), which clocks in at 175 billion. 

To be clear, Soros likely invested in Alphabet for the company's dominant search business, which controls 93% of the worldwide market, and its industry-leading digital advertising business, with about 30% of the global online ad market. Alphabet's AI expertise is merely a delightful bonus.

2. Nvidia's products underpin AI technology

Ken Griffin, the founder and CEO of hedge fund Citadel Investment Group, made a name for himself by famously shorting the market ahead of the Black Monday market crash of 1987, securing his name in the annuls of investing history. That's not all. Citadel became the most successful hedge fund ever last year, generating gains of $16 billion. 

Citadel Advisors made a big bet on Nvidia (NVDA -2.61%) late last year, snapping up 1,588,987 shares, an increase of more than 500%. That brings the total to more than 1.9 million shares, currently worth more than $511 million. 

While Nvidia isn't a pure-play AI company, it does provide the underlying technology that allows AI models to thrive. Nvidia's graphics processing units (GPUs) harness the computational horsepower necessary to train and run AI models. The chips use parallel processing -- or the ability to do a multitude of complex calculations simultaneously -- and have been optimized to run more efficiently, so they're able to handle the massive datasets necessary to train and subsequently run AI programs.

It also doesn't hurt that Nvidia GPUs are the go-to for serious gamers everywhere and its semiconductors are a staple in each of the largest and most well-known cloud operators, including Amazon Web Services (AWS), Microsoft Azure, and Google Cloud, among many others. This gives the company a firm foundation to profit, even as the ongoing adoption of AI plays out.