Artificial intelligence (AI) has become the latest investing buzzword. Companies you'd never imagine using the phrase are attempting to utilize the technology to attract and impress investors. However, investors need to be wary of this as your attention should be focused on companies that are genuinely leading the way.
Two that come to mind as industry leaders are Nvidia (NVDA -3.89%) and Tesla (TSLA -1.80%). If you want a litmus test to see how a company utilizes this technology, compare it to these two leaders and see how it stacks up.
Nvidia
Nvidia is probably one of the most crucial companies in the AI revolution. Without its primary product, graphics processing units (GPUs), AI wouldn't be possible. But what do graphics have to do with AI?
It all has to do with computing power. GPUs were initially created to process intense calculations needed to create lifelike graphics for video games. However, their efficiency at processing calculations also lent themselves to other tasks like engineering simulations, cryptocurrency mining, and powering supercomputers. This paved the way for GPUs to be utilized for training AI models, as it takes an incredible amount of computational resources to accomplish this task.
For example, Meta Platforms announced a dedicated AI computing cluster that utilized 5,400 GPUs last year. It also has an additional cluster that is expected to utilize another 6,080 GPUs, with the ability to expand to 16,000 GPUs.
That's just one company (albeit a large one with a heavy AI focus), but it shows that Nvidia's GPUs are vital in this industry.
But what about the competition? Alphabet recently claimed its AI chip was more powerful than Nvidia's A100 chips. However, that's not Nvidia's latest and greatest GPU. It would be fairer to compare Alphabet's product to Nvidia's H100 chips, which claim a nearly 10x better performance than its predecessor when it's utilized to power large-scale AI computations.
Nvidia is at the top of the pack for performance and is the top choice for companies building their AI capabilities. If you can follow the company's innovations, you'll be well informed about how AI technology moves.
Tesla
Tesla may also not be top of mind regarding AI, but how the company utilizes it may soon have more effect on your daily life than any other company. Without AI, Tesla's full self-driving (FSD) technology wouldn't be possible.
As the company continues to train the model, it needs multiple facets of the AI industry to power its dream. With FSD chips to power cars and Dojo chips to train the model, Tesla's AI is heavily in touch with the chip industry. It also utilizes GPUs to train its Neural Network.
With millions of vehicles on the road, it's constantly taking in new information to train its AI model. The amount of information these cars generate is unprecedented and gives Tesla the upper hand compared to nearly every other car manufacturer.
Tesla is a high-profile company utilizing AI to make its goals a reality. But how it uses AI is similar to how Alphabet might train its next-generation search algorithm or how Amazon manages its commerce site.
AI can be used in multiple industries, but examining how companies like Tesla are using it and how Nvidia is powering AI helps keep investors informed of its use cases. It also helps create a good baseline for comparing a company when discussing utilizing AI.
Tesla and Nvidia are two of the industry's AI leaders, and investors need to know what these two are doing if they want to be informed on how the industry as a whole is utilizing this technology.
