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Over the past three decades, investors have been captivated by a continuous stream of investment opportunities promising to be the next big thing.
Innovations like the internet have significantly altered the growth trajectory of the U.S. economy.
Currently, the artificial intelligence (AI) revolution is the most exciting investment trend.
AI involves using software and systems to perform tasks typically handled by humans. Machine learning (ML) is a key component of AI, enabling software and systems to improve over time.
AI is expected to have applications in nearly every sector and industry, with researchers at PwC predicting a $15.7 trillion increase in global gross domestic product (GDP) from AI by 2030.
Wall Street and analysts are excited about the potential of artificial intelligence.
Price targets for most AI stocks have surged, especially for leading AI stock Nvidia (NASDAQ: NVDA).
Recently, Rosenblatt analyst Hans Mosesmann set a Street-high price target of $1,400 per share on Nvidia, suggesting a 59% increase and adding roughly $1.3 trillion to its market capitalization if accurate.
However, there are concerns brewing.
Competition in the AI-GPU sector is increasing, and Nvidia's four largest customers—Microsoft, Meta Platforms, Amazon, and Alphabet—are developing their own AI-GPUs, potentially reducing their reliance on Nvidia.
Moreover, Nvidia's rapid growth could be its own downfall in the current and upcoming fiscal years.
GPU scarcity has been a driving factor behind Nvidia's data-center sales growth, but as competition ramps up and production increases, GPU scarcity is expected to diminish, impacting Nvidia's GPU pricing power and gross margin.
Despite the bullish outlook for Nvidia, other AI stocks might offer even more lucrative returns based on high-water price targets set by select Wall Street analysts.
JD.com: Potential upside of 100%
China's JD.com (NASDAQ: JD) is a company relying on AI solutions for growth that could surpass Nvidia in terms of returns.
Analyst Fawne Jiang of Benchmark recently set a price target of $55 on JD's shares, implying a 100% upside from the stock's closing price on March 15.
JD made a significant move into the AI arena last summer with the introduction of its large language model (LLM) ChatRhino, aiming to use it in industrial settings to accelerate innovation timelines and reduce supply chain issues in finance, health, retail, and logistics.
SentinelOne: Potential upside of 68%
Endpoint cybersecurity company SentinelOne (NYSE: S) is another AI stock that offers more upside than Nvidia, according to Bernstein analyst Peter Weed.
He expects SentinelOne to reach $37 per share, implying a 68% upside if he's correct.
SentinelOne's platform, Singularity, uses AI and ML to improve its threat detection and response capabilities over time.
Despite some uneven growth, key performance indicators suggest that its platform is resonating with businesses.
Baidu: Potential upside of 102%
China-based Baidu (NASDAQ: BIDU) boasts a high-water price target suggesting it could outperform Nvidia in terms of returns. Analyst Fawne Jiang of Benchmark, who believes JD.
com could double, has set a $210 price target on Baidu, implying a 102% increase in value.
Baidu operates one of the largest AI cloud infrastructure service platforms in China and is the parent company of Apollo Go, the world's most successful autonomous ride-hailing service.
These AI-driven segments are boosting Baidu's organic growth rate, along with its core business, its internet search engine.
In conclusion, while Nvidia remains a prominent player in the AI space, investors may find more lucrative opportunities in other AI stocks such as JD.
com, SentinelOne, and Baidu, based on the high-water price targets set by select Wall Street analysts.