We recently compiled a list of the 10 AI News Investors Should Not Miss. In this article, we will look at where Penguin Solutions, Inc. (NASDAQ:PENG) stands against the other AI stocks investors should not miss.
Artificial Intelligence is a game changer. According to a PwC report, it could contribute up to $15.7 trillion to the global economy by 2030. Of this, $6.6 trillion is likely to come from increased productivity while $9.1 trillion is from consumption-side effects. The report also reveals that global GDP will be up to 14% higher in 2030 due to the accelerating development of AI. The greatest productivity gains are likely to go to North America and China, with the former expected to realize the AI benefits faster.
READ ALSO: Top 10 Trending AI Stocks to Watch in November and Top 10 Trending AI Stocks in Q4.
However, the surge in artificial intelligence will require a huge number of data centers, and it is significantly going to impact how much the world consumes power, and how much that is going to cost. To have an idea, on average, a ChatGPT search needs as much as 10 times more electricity to process as a Google search. That said, AI gathering steam is only going to make the power hunger crazier. According to estimates from Goldman Sachs, the data center demand is going to grow 160% by 2030. Presently, data centers consume about 1-2% of overall power, but the percentage is likely to rise to 3-4% by the end of the decade.
The Latest Developments in AI
As we examine the increasing energy demand of data centers stemming from the surge in AI, it’s worth noting how these advancements are manifesting in practical applications. In its latest breakthrough, Anthropic, an artificial intelligence company that builds reliable, interpretable, and steerable AI systems, has launched Claude 3.5 Sonnet—their first release in the forthcoming Claude 3.5 model family. The Claude 3.5 Sonnet sets new industry benchmarks for graduate-level reasoning (GPQA), undergraduate-level knowledge (MMLU), and coding proficiency (HumanEval), demonstrating marked improvement in grasping nuance, humor, and complex instructions, and is exceptional at writing high-quality content with a natural and relatable tone.
Another exciting news is how Runway, an AI company shaping the next era of art, entertainment, and human creativity, has launched a new set of advanced AI camera controls for its Gen-3 Alpha Turbo video generation model. These tools allow the user generating videos from text prompts, upload images, or even their footage, to have greater control over the AI-generated settings and characters. Users can even zoom in or out of the scene and subjects without disrupting their realism, creating a more immersive experience of a seemingly 3D world.
In other news, a highly anticipated release that many have been waiting on is seemingly delayed, as per the latest reports. On Thursday, OpenAI CEO Sam Altman revealed that his company’s next big model won’t likely be released this year. According to Altman, the company is “prioritizing” shipping existing models focused on reasoning and difficult questions.
“All of these models have gotten quite complex and we can’t ship as many things in parallel as we’d like to”. He said the company faces “limitations and hard decisions” when it comes to allocating compute resources “towards many great ideas.”
– Altman wrote during a Reddit AMA.
When asked about the release of ChatGPT-5, Altman stated that the company has some very good releases this year but “nothing that we are going to call GPT-5.”
Our Methodology
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A data centre room with cloud technology, illustrating the enterprise application software services.
Penguin Solutions, Inc. (NASDAQ:PENG)
Penguin Solutions, Inc. (NASDAQ:PENG) is a technology company engaged in the design and development of enterprise solutions worldwide. The company is a leading AI infrastructure provider for organizations looking to build and operate state-of-the-art generative AI facilities.
On Friday, November 1st, Goldman Sachs initiated coverage of the enterprise AI company, Penguin Solutions, Inc. (NASDAQ:PENG), with a “Buy” rating and a $21 per share price target.
“PENG is well positioned to address the growing enterprise AI compute opportunity through its Penguin Computing integrated solution, where the company has 25 years of experience designing, building, deploying and managing high-performance computing projects”.
-Goldman analyst Michael Ng.
As per the analyst, even though the company’s LED and memory businesses are cyclical and face drawbacks, they believe that the potential growth runway due to generative AI can more than makeup for any decline in revenue.
“We are encouraged by PENG’s exposure to enterprise AI demand, which should help drive PENG revenue to grow at a 13% 5-yr CAGR (F2024-29) and expand operating margins, driven by growth in its compute business and a recovery in the more cyclical memory and LED markets”.
-Ng added.
Overall PENG ranks 10th on our list of the AI stocks investors should not miss. While we acknowledge the potential of PENG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PENG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.