\n
![](\"https:\/\/content.fortune.com\/wp-content\/uploads\/2024\/02\/GettyImages-1508780671-e1708546973864.jpg?w=2048\")
<\/p>\n [ad_1]
\n<\/p>\n
The surge of investor interest in artificial intelligence has sent shares in leading companies skyrocketing in recent months.<\/p>\n
Microsoft<\/a> shares have spiked nearly 60% in the past year, while Nvidia<\/a> has seen its stock price soar 250%, making it the third most valuable U.S. company<\/a>, surpassing Amazon<\/a> and Alphabet<\/a>. Those jumps have put the shares out of range for many investors, who are left wondering: Did I wait too long to invest in AI?<\/p>\n Not necessarily. While AI chipmakers and innovators of generative AI platforms might be at record highs, the cost savings that AI promises could bring about significant ramps for the earnings, and perhaps share prices, of companies in a wide range of industries.<\/p>\n This halo effect of AI could be widespread, too. And analysts are starting to look at the companies (and industries) that could most stand to benefit.<\/p>\n One possible way to determine the businesses that expect the biggest results from AI is by seeing how frequently they discuss the technology. A DealHub analysis of the earnings calls<\/a> of more than 200 companies last November looked at how often an AI-related term (such as \u201cChatGPT\u201d or \u201cgenerative AI\u201d) was mentioned within 10 sentences of a sales-related phrase (i.e., revenues or earnings).<\/p>\n Broadcom<\/a> topped the list, with AMD<\/a> coming in second. Not surprisingly, both companies have seen their shares jump more than 100% in the past year, given their chipmaking interests. But if you dig a little deeper into the list, there are several companies that might not jump to mind when you think about AI.<\/p>\n Thomson Reuters, for instance, ranked fourth and incorporates AI and machine learning to ensure the reliability of its news, accounting, legal, and other services. Its stock is only up about 25% in the past year, though. And Chinese gaming company NetEase, which ranked ninth, plans to incorporate generative AI into its titles. Its stock also is up roughly 25% in the past year.<\/p>\n \u201cThe data uncovers intriguing insights into the companies that are exploring AI in the realm of sales,\u201d said Gideon Thomas, chief marketing officer of DealHub, in a statement.<\/p>\n Despite the gains of Nvidia and other chipmakers, a 2023 report from Ben Reitzes at Melius Research noted that there\u2019s still plenty of room for growth among other tech companies.<\/p>\n \u201cGenerative AI should drive an \u2018AI halo effect\u2019 on IT spending in 2024\u201326, accelerating growth in many tech categories,\u201d he wrote. \u201cThemes and trends that move stocks are not as sector-specific as before and have become more AI-specific in our opinion. While companies have been using AI for years by tapping into machine learning, generative AI is turning almost anyone into a software developer with applications that learn and get better as you use them.\u201d<\/p>\n Among the companies Reitzes was positive about was Cisco, which he said \u201cshould eventually benefit\u201d from the halo, as demand for networks increases. (The company\u2019s stock is slightly below where it was a year ago.) Reitzes said he expects Cisco to be a beneficiary of this AI halo either this year or next.<\/p>\n Acknowledging that overall consensus on the company is low, he argued Ethernet will see growth as AI workloads increase, which should serve it well.<\/p>\n \u201cIf they get anything right in AI, [the] stock can work,\u201d he wrote.<\/p>\n One of the roles many expect AI will play increasingly in coming years is assisting creative content companies in everything from developing ideas to script writing. So investors are likely to keep a close eye on how businesses from video game developers to TKO\u2019s WWE incorporate AI in the months and years to come.<\/p>\n Video game companies are being watched especially. At CES last month, Convai, a privately held firm, showcased its technology at Nvidia\u2019s press conference, blending generative AI with non-player characters (NPCs) and letting players have unscripted conversations with NPCs. Those same NPCs could also interact with the game environment, handing out objects or following orders.<\/p>\n It will likely be a few years before that sort of AI integration becomes standard for companies like Electronic Arts<\/a> and Take-Two Interactive Software<\/a>. But in the meantime, the technology can help in other ways.<\/p>\n \u201cThe near-term opportunity for video games is in things like testing games,\u201d says P.J. McNealy, CEO of Digital World Research. \u201cThey\u2019ll be able to do it a lot faster and quicker with AI, and that will result in more efficient game developments and ideally shorter cycles, which could mean better margins.\u201d<\/p>\n Overall global outlay on AI is expected to explode in the coming years. An IDC report<\/a> projects the total spend by 2026 will top $301 billion, with increased efficiency at the top of nearly every company\u2019s list of reasons for embracing it.<\/p>\n Globally, early adopters reported to IDC a 35% improvement in innovation and a 33% increase in sustainability from investing in AI over the past three years. That same survey says the banking and retail industries will be spending the most on AI by 2026, with professional services and discrete manufacturing also showing heavy spends.<\/p>\n Of course, just spending on AI doesn\u2019t mean a company or industry will see a stock surge. The real winners\u2014on Wall Street and in industry\u2014will be the ones who are able to use the technology to both realign their workflow and connect with customers, saving money and increasing revenue at the same time.<\/p>\n It\u2019s not something that will be a sea change, says McNealy. Both companies and consumers need to get used to AI\u2014and the technology has some growing to do as well. As a result, it will be a gradual change for many businesses.<\/p>\n \u201cYou see giant leaps in industry where they got from version 1 to version 2 to version 3 over the course of two to six years,\u201d he says. \u201cI think what you\u2019re going to see are a whole bunch of small steps in between \u2026 Where you\u2019re going to see it used in certain verticals with very specific finite steps that, when combined, will feel like a bigger step.\u201d <\/p>\n<\/div>\nLooking beyond chips<\/h2>\n
Creativity, automated<\/h2>\n
Subscribe to the Eye on AI newsletter to stay abreast of how AI is shaping the future of business. Sign up<\/a> for free.<\/div>\n