This year's hottest AI trade may be shifting from 'hard technology' to a focus on 'application scenarios' for implementation.
From this year's market performance, North American AI application companies represented by AppLovin and Palantir have demonstrated this trend more strongly.$Applovin (APP.US)$The cumulative increase within the year has reached as high as 745%, with the latest market cap exceeding 100 billion dollars.$Palantir (PLTR.US)$The cumulative increase is 290%, while the AI chip giant's increase during the same period is 179%.$NVIDIA (NVDA.US)$The increase was 179%.
Goldman Sachs also noted in its previous report that by 2025, investors are expected to shift from ai infrastructure to a broader promotion and monetization of ai "third phase" applications.
Goldman Sachs categorizes the development of ai into four stages:
Stage 1: The most obvious beneficiaries of AI, represented by nvidia;
Stage 2: Beneficiary stage for companies focusing on AI infrastructure;
Stage 3: Beneficiary stage for companies focused on monetizing AI potential through generating incremental revenue;
Stage 4: Beneficiary stage for companies with the greatest potential for profit enhancement in widespread AI adoption and productivity improvements.
Related reading:The second half of AI has officially begun! How to find the next nvidia? Goldman Sachs has named these 30 stocks that are expected to stand out.
How to invest in AI application stocks by following nvidia?
As the current leader in "AI technology," nvidia is also participating in practical AI+ applications through investment and shareholding.
According to the form 13f report, as of the market close on November 27, within the past month, the best-performing stock in nvidia's third-quarter hold positions was nvidia's fifth largest holding.$SoundHound AI (SOUN.US)$It has accumulated a gain of over 56%; the second largest holding.$Applied Digital (APLD.US)$increased by over 40%; the third largest holding.$Recursion Pharmaceuticals (RXRX.US)$The performance is relatively weak.
At the same time, three AI+ application stocks, being small cap stocks, are also$Russell 2000 Index (.RUT.US)$resonating with the recent strong performance.
Specifically:
AI language assistant SoundHound Al
$SoundHound AI (SOUN.US)$is an independent voice ai platform providing proprietary voice-to-meaning and deep understanding technology. The company previously announced that its integrated ChatGPT voice assistant, SoundHound Chat AI, will be applied to car models from brands such as Alfa Romeo and Citroën. Data shows that the usage rate of the in-vehicle voice assistant surged 6 times, and the net promoter score increased 5 times, highlighting the strong demand from drivers and manufacturers for highly intelligent and multifunctional ai voice assistants.
The third-quarter performance shows that SoundHound's revenue reached 25.1 million USD, exceeding the analyst's expectation of 23.05 million USD; the adjusted eps was a loss of 6 cents, better than the analyst's expected loss of 7 cents.
At the same time, SoundHound raised its full-year revenue outlook for 2024 and 2025, expecting the total revenue for 2024 to be in the range of 82 million USD to 85 million USD; and for 2025, the total revenue is expected to be in the range of 0.155 billion USD to 0.175 billion USD.
AI + datacenter + bitcoin 'shoveler' Applied Digital.
$Applied Digital (APLD.US)$It is a service provider for datacenters and mining companies, mainly covering three major businesses: AI cloud computing service, high-performance datacenter hosting, and encrypted data hosting.
Currently, the company is not only building one of the world's largest datacenters but is also developing an additional 300MW datacenter capacity, as well as using advanced technologies such as closed-loop liquid cooling systems and idle electrical utilities sources to enhance efficiency. In addition, APLD, as nvidia's preferred cloud partner, provides GPU-as-a-service solutions, focusing on meeting the needs of high-demand workloads such as AI, machine learning, and rendering.
In a recent presentation, the company also reported three blockchain datacenters, which are expected to provide space for blockchain mining customers. The datacenters are located in Texas and North Dakota. The company expects the datacenter hosting market to have a compound annual growth rate of close to 7.25% from 2022 to 2028. APLD is a typical shovel sales company during the bitcoin gold rush.
The company's latest results show that its growth rate remains very strong, with Q1 2025 fiscal year revenue of 60.7 million USD, a year-on-year increase of 67%, surpassing the analyst's expectations of 54.85 million USD; the EPS loss was 15 cents, higher than the analyst's expected loss of 29 cents.
AI pharmaceutical company Recursion Pharmaceuticals
$Recursion Pharmaceuticals (RXRX.US)$is a pharmaceutical company that utilizes ai to create a human biology map, improve drug discovery, and reduce the cost of new drug development.
In September of this year, the company merged with another "ai pharmaceutical" company, Exscientia, in a stock trade. According to Reuters, the transaction was valued at approximately $0.688 billion, making it the largest in the ai pharmaceutical field.Merger。
Goldman Sachs pointed out that this merger aims to strengthen RXRX's ai/machine learning platform and pipeline, as well as acquire EXAI's precise chemical tools and precision oncology pipeline. The merger has been approved by both boards of directors and is expected to be completed on November 20, at which time RXRX shareholders will hold approximately 74% of the equity.
In addition, in terms of business development, RXRX has established partnerships with several companies, including nvidia and Bayer, to obtain patient data, accelerate ai foundational model training, enhance drug discovery capabilities, and develop therapies targeting neuroscience and gastrointestinal tumors. Furthermore, RXRX is committed to utilizing collaborative data to build large-scale causal ai models and develop new tools and techniques to enhance its capabilities in drug discovery and development.
In terms of performance, RXRX's eps for the third quarter was -0.34 dollars, with research and development, sales, and management expenses amounting to 0.11 billion dollars. The total cash, cash equivalents, and investments at the end of the period amounted to 0.4276 billion dollars. Goldman Sachs adjusted the eps forecast for 2024-2026 to -1.52, -1.70, and -1.80 dollars respectively based on the third quarter performance.
Editor/ping