Artificial intelligence continues to shape the landscape of the global economy, with predictions from the International Data Corp. estimating an addition of $19.9 trillion to the economy by 2030. Spending on AI-related hardware, software, and services is expected to soar at an annual rate of 36%, as reflected by Grand View Research’s findings.
Investors looking to benefit from this AI revolution have turned to stocks like Palantir Technologies (PLTR), which has seen remarkable growth. Since the introduction of its generative AI orchestration tool, AIP, two years ago, Palantir has experienced consistent revenue growth for seven consecutive quarters. Its share price has skyrocketed 1,500% since May 2023, transforming a $5,000 investment into approximately $80,000.
Another notable company in the AI sector is CoreWeave (CRWV), which recently held its initial public offering (IPO) and has seen its stock rise by 150%. CoreWeave, a provider of AI infrastructure, differentiates itself with a GPU cloud designed for high-performance computing workloads. It is recognized as the leading GPU cloud by research firm SemiAnalysis and has a close partnership with Nvidia, allowing it to roll out the latest GPU technology promptly.
Despite impressive revenue growth—420% increase to $981 million and a 550% rise in adjusted operating income to $162 million—CoreWeave has not yet turned a profit, reporting a non-GAAP net loss of $150 million in the first quarter. This financial strain largely stems from significant interest payments on its $7.8 billion in long-term debt and lease obligations, which consumed over a quarter of its revenue.
CoreWeave’s recent acquisition of Weights & Biases, an AI developer platform, further expands its capabilities by providing essential tools for developers working on AI projects. With its current trading position at 18 times sales, CoreWeave’s stock lies in a middle ground compared to competitors, such as Cloudflare at 31 times and Microsoft at 13 times sales.
Given the volatility associated with AI stocks, potential investors should exercise caution and be prepared for significant fluctuations in share value. However, the rapid growth potential in AI and the resulting infrastructure improvements from investments like those from CoreWeave create a compelling narrative for the future of AI technologies.