The Artificial Intelligence (AI) Market Could Soar 820% by 2030: 2 AI Growth Stocks to Buy Now and Hold Long-Term
According to Grand View Research, artificial intelligence (AI) spending across hardware, software, and services totaled about $200 billion last year.
According to Grand View Research, artificial intelligence (AI) spending across hardware, software, and services totaled about $200 billion last year. But that figure is expected to soar 820% to exceed $1.8 trillion by 2030. In other words, the AI market is forecast to compound at 37% annually through the end of the decade.
Many companies will benefit from that rising tide, but Cloudflare (NET) and ServiceNow (NOW) stand out because they have strong footholds in relevant markets. Additionally, both stocks trade at reasonable valuations compared to Wall Street's growth expectations.
Cloudflare
Cloudflare operates a connectivity and security cloud. Its platform accelerates and protects software and infrastructure across private data centers and public cloud environments. The company also offers a developer platform that lets businesses tap its network to build and deploy websites and applications, and it's particularly focused on supporting inference for artificial intelligence applications.
Cloudflare reported excellent financial results in the fourth quarter. Customers increased 17% to 189,791, and the average customer spent 15% more. In turn, revenue rose 32% to $362 million, and non-GAAP (adjusted) net income soared 148% to $53 million. Additionally, management said close rates and average deal size improved markedly compared to the previous quarter, signaling an uptick in sales force productivity.
ServiceNow
ServiceNow is best known for its dominance in IT service and IT operations management. But industry analysts have also recognized its leadership in other software verticals, including artificial intelligence (AI) for IT operations, digital process automation, and low-code application development platforms.
The company reported solid fourth-quarter financial results. Revenue increased 26% to $2.4 billion, and non-GAAP net income jumped 36% to $3.11 per diluted share. In addition, the remaining performance obligation (contracted revenue that has not been recognized) climbed 29%, hinting at a possible acceleration in sales growth in the coming quarters. That momentum is due in part to the demand for generative AI.
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