Anticipated Outcome: The Top Two "Outstanding Seven" Shares Set to Triumph in AI's Dominance by 2030 (Note: Neither One is Nvidia)
AI has been making headlines for its potential to revolutionize numerous industries. Experts predict that this tech trend will significantly impact various sectors, and investors are eager to hop on the bandwagon.
When it comes to AI, one company that has consistently shone is Nvidia (NVDA -3.12%). Its share prices have soared, reaching a remarkable 2,270% increase over the last five years. As of Jan. 22, 2023, Nvidia holds the title of the world's most valuable company with a market cap of $3.6 trillion.
There's no denying that Nvidia has claimed its place as a front-runner in the AI market with its cutting-edge graphics processing units (GPUs) and the Cuda software platform. This hardware-software combo allows GPUs to run AI applications faster and more efficiently. However, the high prices of such solutions could prove to be a liability if more cost-effective alternatives become prevalent.
Moving forward, I believe that another group of "Magnificent Seven" companies will likely emerge as AI's biggest winners by 2030.
Picks and shovels
Nvidia's success can be attributed to its focus on GPUs that underpin AI infrastructure. Currently nestled in an uncontested market position for data center chips, its leading business line, Nvidia secured a giant 88% of its third fiscal quarter revenue in 2025, marking a remarkable 112% year-over-year growth. This trend highlights an insatiable market demand for powerful chips like those advanced by Nvidia.
This exceptional market position makes Nvidia an attractive and popular investment choice for those looking to capitalize on the AI trend. Its role is akin to providing "picks and shovels" – benefiting from the industry’s overall growth without being overly dependent on a single client or application.
While Nvidia's success is undeniable, it does face some potential threats. For instance, the so-called "hyperscalers" – notable tech giants such as Amazon, Alphabet, Meta, and Microsoft – are developing their own AI applications. If these companies excel in integrating upstream, it could significantly reduce demand for Nvidia in the future.
Another factor to consider is the economy's role in technology spending. A recessionary scenario would most likely result in a decrease in technology spending, which could be detrimental to companies focusing on this area, including Nvidia.
Billions of users
Based on my analysis, there are two companies that have the potential to surpass Nvidia in AI dominance by 2030: Alphabet and Meta Platforms. These two tech giants serve billions of users, providing a substantial and engaging audience for new AI features and improvements.
A robust user base ensures a continuous stream of feedback that can be used to refine and improve AI functionalities. Moreover, these tech giants boast millions of advertisers who can precisely target user demographics, aiding their ability to develop and tailor AI services to meet specific needs.
Both Alphabet and Meta possess powerful network effects. Utilizing their popular platforms across search, social media, and video, their services become more valuable with each additional user. Google's dominance in search and YouTube, for example, makes these platforms increasingly attractive to users and developers.
Financially speaking, both Alphabet and Meta are in strong positions, enabling them to invest aggressively in AI ventures. Each boasts substantial free cash flow every quarter, allowing them to maintain solid balance sheets that support future growth opportunities.
Access to a vast amount of data for AI model training is essential for continuous improvement. In this regard, Alphabet and Meta have an impressive advantage. Their databases, containing a wealth of search queries, social interactions, and even videos, provide ample resources for developing superior AI models.
When comparing their share prices to Nvidia's, both Alphabet and Meta trade at lower forward P/E ratios. This price difference sets a promising stage for Alphabet and Meta to emerge as the AI market's most significant winners in the upcoming years.
In light of Nvidia's success in the AI industry, some investors are actively looking for opportunities to diversify their portfolio and capitalize on this tech trend. Therefore, they might consider investing in companies with strong positions in AI, such as Alphabet and Meta Platforms, which have potential to surpass Nvidia by 2030. Their large user bases, robust network effects, and substantial free cash flow enable them to invest heavily in AI ventures and leverage their vast databases for model training, making them attractive choices for finance-focused individuals interested in investing in the AI sector.
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