2 AI-Focused Stock-Split Contenders with Potential to Soar in 2024

As we look towards the future of the stock market, particularly in 2024, forecasters are keenly observing the performance of two tech behemoths: Amazon and Alphabet, both known for their significant strides in the field of Artificial Intelligence (AI) largely through their cloud computing services. Investors see cloud computing as a double advantage for AI development—it empowers the creation of AI models with necessary computing power and provides storage for the vast data these models consume. It's this sector that holds promise for potential stock gains in the coming year.

Amazon's AI and Cloud Computing Might

In 2022, Amazon enacted a stock split, turning each share into 20 and it's currently speculated that after a strong 2023, there might be another split on the horizon, although the shares trade at a considerable distance from the traditional split territory. Amazon's e-commerce is well-known, but the real service star in recent years is Amazon Web Services (AWS), their cloud platform which boasts about 32% of the market share.

Despite a slowdown in growth in 2023, attributed to customers optimizing their AWS use, thereby causing revenue growth headwinds, Amazon reported signing significant new deals that could propel their growth in 2024. With AWS being a high-margin sector for Amazon, generating 30% operating profit margins, future growth could significantly bolster Amazon's overall profitability and set the stock up for a potential uptick.

Alphabet's Google Cloud and AI Prospects

Alphabet, the parent company of Google, also underwent a similar stock split as Amazon did in 2022. Although Google Cloud's growth slightly decelerated in 2023, it wasn’t as significant compared to AWS. With a strong AI footing—over half of generative AI startups utilize Google Cloud services—its 22% growth rate looks robust.

Unlike AWS, Google Cloud still has room to improve in optimizing profits, with a current operating margin of just 3.2%. Nonetheless, Alphabet's long game focuses on capturing a sizeable chunk of the cloud market, which if successful, could yield significant operating profit contributions. With other AI endeavors, such as the Gemini generative AI model, Alphabet is positioning itself for a strong performance in 2024.

In a nutshell, both Amazon and Alphabet are making strategic AI and cloud computing advancements. Investors and market analysts are keeping a watchful eye, as these companies have the potential to significantly outperform the market in 2024, given the growing reliance on AI technologies and the cloud infrastructure needed to support them.

Amazon, Alphabet, AI