AI software revenue is a rapidly growing industry, and two firms in particular are well poised to capitalize on that growth — Tesla and Nvidia. Tesla, the world leader in electric car sales, has leveraged AI software to enhance its vehicles’ features and drive up operating margins. Meanwhile, Nvidia, the inventor of the graphics processing unit, is branching out into cloud services, allowing businesses easy access to AI and data. Both firms are worth considering for any risk-tolerant investor.
Tesla is the leading automaker in the electric vehicle market, outstripping its competition in battery-electric car sales and racking up a 16.8% operating margin to boot. The firm credits this success to its use of AI software, specifically its Full Self-Driving platform, which Musk has characterized as the most efficient inference computer and most advanced safety system. That software is already available on the market, and offers a gross margin of 100%. With virtually free licensing and the potential to dominate the ride-hailing industry, Tesla stands to benefit substantially from the boom of AI software. Investors should consider picking up a small position in Tesla now and holding it for the long term.
Nvidia is well-known for its GPU, which serves as the foundation for many AI applications. However, Nvidia is now branching out into cloud services, specifically Nvidia DGX Cloud. This platform provides on-demand access to AI infrastructure and software frameworks, such as generative AI services for text, visual content, and drug design. With its comprehensive library, Nvidia makes AI technology exceedingly accessible to businesses and stands to benefit from the anticipated growth of the AI software market to the tune of $1 trillion over the next decade. Investors should consider investing in Nvidia for its cloud services, as the company is well-positioned to dominate the AI software industry.
The driving force behind both Tesla and Nvidia is the already multi-billion-dollar AI software industry, which asset manager Ark Invest expects to reach $14 trillion in revenue by 2030. Elon Musk, the visionary CEO of Tesla, and Jensen Huang, founder and longtime CEO of Nvidia, are at the helm of these two firms. Both have made significant technological strides in their respective sectors, ensuring a bright future for both companies.
