JPMorgan Chase CEO Jamie Dimon is widely regarded as one of the most prescient business leaders. From his perch atop the financial services powerhouse, Dimon can see trends develop before most others.
In his annual letter to shareholders published earlier this month, Dimon urged investors to prepare for the coming impact of artificial intelligence (AI).
While we do not know the full effect or the precise rate at which AI will change our business -- or how it will affect society at large -- we are completely convinced the consequences will be extraordinary and possibly as transformational as some of the major technological inventions of the past several hundred years: Think the printing press, the steam engine, electricity, computing and the Internet, among others.
Prudent investors will heed Dimon's warnings and begin to adjust their investment strategies to account for AI's potentially profound effects on the global economy. Here are two stocks you can buy today to position your portfolio to profit from the coming AI revolution.
1. Palantir Technologies
The biggest winners in the AI race will be the companies that help their customers make the most of their ever-growing mounds of data. Palantir Technologies (PLTR 1.07%) excels in this increasingly vital domain -- and business is booming.
Palantir built its reputation as a valued partner to the U.S. intelligence community. The CIA reportedly used Palantir's tools during the search for Osama bin Laden.
Palantir continues to provide crucial services to the U.S. government and its allies today. The U.S. Army awarded Palantir a contract valued at $178 million in March to help build next-generation sensors and intelligence-gathering stations. Palantir is also assisting Ukraine with its humanitarian demining operations, as well as its efforts to provide safe access to in-person learning areas for school-age children.
Businesses are also flocking to Palantir for a chance to reap the tremendous potential benefits of its new Artificial Intelligence Platform (AIP). By marrying its proven machine learning technology to the most advanced AI models and real-time data, Palantir says it can help its customers complete certain tasks up to 10 times faster -- and with fewer resources.
The effects of these stunning productivity gains for its clients are just beginning to show up in Palantir's financial results. The data analytics leader's U.S. commercial revenue soared by 70% year over year to $131 million in the fourth quarter, fueled by a 55% surge in customers.
Yet Palantir ended 2023 with only 221 U.S. commercial customers. Investors can expect this figure to continue to grow rapidly in the coming years. Palantir recently forged a new partnership with cloud software giant Oracle. The deal should make it easier for businesses to access Palantir's AI-powered solutions on Oracle's fast-growing cloud computing platform, and the two companies will work together to cross-sell their services.
2. Super Micro Computer
The booming demand for AI software is driving sales of the hardware that powers the groundbreaking technology. Yet while Super Micro Computer's (SMCI 15.81%) high-performance servers and data storage systems are selling like hotcakes, its shares are currently on sale.
Supermicro (as the company is known) saw its revenue soar by 103% year over year to $3.7 billion in the quarter ended Dec. 31, 2023. Profit growth was also strong, with net income up 68% to $296 million. The AI hardware maker is gaining market share due in part to its close ties to Nvidia. The torrid demand for the semiconductor titan's AI chips is boosting sales of the related computing equipment Supermicro offers.
Yet Supermicro's stock price has retreated from the highs it reached in March. Some investors were apparently miffed that Supermicro didn't preannounce its earnings results for the quarter ended March 31, as it had in some prior quarters. That sparked a steep sell-off in mid-April, and shares are now down roughly 30% from their 52-week highs.
Still, KeyBanc analysts see Supermicro's share of the server market more than doubling in the year ahead as more companies shift to AI-accelerated computing systems. Supermicro's sales and earnings should rise sharply as it claims a larger portion of an AI server industry that could grow more than fourfold to $177 billion by 2032, according to Global Market Insights. Buy shares today, and you could profit alongside this AI infrastructure leader as it works to meet its customers' needs for high-performance computing.
