Companies from three different tech sectors made headlines in artificial intelligence in the past week — a big information technology services firm, an enterprise software maker and a leading chipmaker not named Nvidia. For investors homing in on AI stocks, product announcements from Nvidia rival Advanced Micro Devices might matter the most near term.
But Accenture and Salesforce also made news among AI stocks.
Meanwhile, AMD faces an uphill battle to dethrone Nvidia as the leader in AI chips. But cloud computing giants usually want a second source for chips. That gives AMD an opening to take share. The major markets for AI chips are internet data centers and supercomputers.
AMD Takes On Nvidia AI Dominance
On June 13, AMD unveiled its new Instinct MI300 series chips that it says are fine-tuned for speeding up processing for generative AI — the technology used by ChatGPT and other chatbots.
AMD says it expects the new AI chips to generate sales in 2024.
"While lack of major customer announcements likely disappointed some, we believe AMD is working with multiple tier 1 customers and expect initial AI revenue from MI300 in Q4 2023," Raymond James analyst Srini Pajjuri said in a note to clients.
AI inference represents the next multibillion-dollar opportunity for AMD, Susquehanna Financial analyst Christopher Rolland said in a report. However, he envisions "a more gradual ramp and revenue opportunity than the most bullish prognostications."
Amazon Is Potential AMD AI Chip Client
AI startup Hugging Face, which trains large language models, took part in the AMD announcement. Hugging Face is a partner of Amazon.com's cloud computing unit, Amazon Web Services, which is a potential customer for the AMD MI300 series AI chips.
Large language models, or LLMs, are key to the rise of generative AI. While ChatGPT-maker OpenAI has forged ahead with the help of Microsoft in building LLMs, other players include AI21 Labs, Anthropic, Cohere and Hugging Face.
Artificial Intelligence News And AI Stocks To Watch
LLMs provide the building blocks to develop AI applications. These models process "prompts," such as internet search queries, that describe what a user wants.
AMD stock has climbed 93% in 2023. That's a sizable gain. But Nvidia stock has rocketed 170% this year. Nvidia's valuation has hovered near $1 trillion recently, fueled by a steady flow of AI news.
AI Stocks: Share Shift Coming For IT Services?
Meanwhile, IT services and consulting firm Accenture announced that it's spending an additional $3 billion on AI initiatives over the next three years. Accenture plans to increase hiring, training and AI-related acquisitions. It plans to double its AI-focused staff to 80,000.
"There is unprecedented interest in all areas of AI, and the substantial investment we are making in our data & AI practice will help our clients move from interest to action to value," Accenture Chief Executive Julie Sweet said in a news release.
Meanwhile, generative AI could roil the IT services industry, SVB MoffettNathanson analyst Lisa Ellis said in a June 13 report. Software coding, for example, is one of the leading apps for generative AI.
"We expect to see potentially significant market share shifts in IT services, as companies emerge that are better able to leverage generative AI in their own operations, and others struggle," Ellis said.
She added, "This is also what we saw in the offshoring era — overall demand for IT services remained robust, but we saw the industry leaderboard change completely, with offshoring specialists like TCS, Infosys, Cognizant, Wipro, HCL and Tech Mahindra emerging rapidly, while some onshore-centric players struggled."
Accenture stock has gained about 18% in 2023. But Salesforce has done better, with CRM stock up 57% this year.
AI Stocks: Salesforce Starter Pack
In other news for AI stocks, Salesforce updated analysts on its strategy for artificial intelligence on June 12. The company announced AI Cloud to bring generative AI to its enterprise customers.
As part of the initiative, Salesforce introduced an AI "starter pack" bundle that costs $360,000 annually. The bundle includes Data Cloud, MuleSoft automation, Einstein, Tableau analytics, Slack and other software tools.
"The $360,000 AI cloud starter pack seems expensive for existing customers," Jefferies analyst Brent Thill said in a report. "We expect more details on the usage vs. seat-based pricing mix. We believe it could take until 2024 or 2025 before we see revenue upside as it takes time to drive adoption and build referenceable customers."
Salesforce introduced its Einstein AI software cloud platform in September 2016. The tools help salespeople predict which deals are most likely to close based on a company's historical lead and account data.
In addition, Salesforce has integrated AI tools into other enterprise software offerings over the years. But Salesforce has yet to disclose financial metrics on how much revenue the Einstein AI platform generates, directly or indirectly.
But generative AI could be a game changer. Salesforce CEO Marc Benioff told analysts that its entire product line will be transformed by Dreamforce 2023 conference, slated for Sept. 12 to 14.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
