Big names like Google and Microsoft are generating a lot of the generative AI buzz, but there are other ways to play the theme. Here is a collection of generative AI stocks to keep an eye on.
- Autodesk hopes to corner generative AI design the way ChatGPT cornered text generation.
- IBM has been using a generative AI image generator tool to improve its marketing materials.
- Salesforce has launched a generative AI assistant for healthcare workers to improve their workflows.
ServiceNow
The Annual Contract Value Stock
ServiceNow [NOW] announced last week that it has agreed to work with Indian information technology outfit HCLTech [HCLTECH:NS] to develop generative artificial intelligence (AI) solutions. While the digital workflow company hasn’t yet quantified its revenue from generative AI, on the firm’s Q4 2023 earnings call in January, Chief Financial Officer Gina Mastantuono said that generative AI had driven the largest net new annual contract value contribution of any of its new products ever released.
Nutanix
The Federal Agency Contract Stock
Nutanix’s [NTNX] involvement in the generative AI space is GPT-in-a-Box, a turnkey solution designed to make it easier for enterprise customers to run large language model workloads. On the company’s Q2 2024 earnings call at the end of February, CEO Rajiv Ramaswami said they had secured a contract with a large federal agency, although he didn’t provide any details. “While it’s still early days, and the numbers remain small, I’m excited about the longer-term potential for GPT-in-a-Box,” he added.
Autodesk
The Generative (AI) Design Stock
Autodesk [ADSK] is aiming to become a market leader in generative AI design, just as it became the leader in generative design a decade ago. Speaking on the Q4 2024 earnings call earlier this month, CEO Andrew Anagnost explained that generative AI will enable customers to automate low-value, repetitive tasks and generate higher-value, complex designs more rapidly and with greater consistency. “Autodesk is getting closer to a transformational leap” that will see the company become to generative AI design what ChatGPT has become to text generation, said Anagnost.
IBM
The Marketing Material Stock
IBM’s [IBM] generative AI focus is on the business itself more than its customers. It’s been using Adobe’s [ADBE] generative AI image generator tool Firefly to improve the quality of its marketing materials — it found that AI-generated campaigns have had, on average, an engagement level 26 times that of the average non-AI campaign. “Generative AI provides us a path to effectively scale these [marketing] efforts,” said Ari Sheinkin, IBM’s Vice President of Global Demand, in a blog post published by Adobe last week.
Salesforce
The Healthcare AI Assistant Stock
Salesforce [CRM] launched a healthcare AI assistant last week. Einstein Copilot: Health Actions, available through the company’s Einstein 1 platform, allows doctors to book appointments and summarise patient information through conversational language prompts. “Healthcare organisations excited about generative AI — but nervous about clinical and security concerns — can confidently use these innovations in their everyday workflows,” said Amit Khanna, Salesforce’s Senior Vice President and General Manager for Health, in a statement.
Another Way to Invest in Generative AI
The Vanguard Information Technology ETF
The Vanguard Information Technology ETF [VGT] holds ServiceNow, Nutanix, IBM, Adobe and Salesforce. As of 31 January, systems software accounts for 26.3% of the portfolio, technology hardware & storage 21.9%, and application software 14.8%. The fund is up 48% in the past year through 11 March and up 19.4% in the past six months.
The SPDR S&P Kensho New Economies Composite ETF [KOMP] holds Autodesk and Adobe as of 8 March. The fund offers exposure to a few dozen sectors — the only one with a double-digit weighting is application software, accounting for 12.1% of the portfolio. The fund is up 14% in the past year and up 14.1% in the past six months.
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