These 2 Winning Artificial Intelligence (AI) Stocks Share 1 Key Quality

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“Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.”

— Former General Electric CEO Jack Welch

The stock market is complicated. Stock prices rise and fall based on countless figures: sales, earnings, cash flows, debt levels … the list goes on and on.

Yet, aside from all the numbers behind a company’s stock price, there’s something much harder to quantify: the skills of the people running it.

Great leaders produce great companies. And similarly, poor leaders produce poor companies.

So let’s examine two companies at the forefront of the artificial intelligence (AI) revolution to see how outstanding leadership has shaped them and why it makes them such terrific investments.

As Huang put it in a recent interview, “It wasn’t my idea, it was theirs. Chris and Curtis wanted to leave. … They had their own reasons. And I was doing really well … [but] they wouldn’t stop hounding me, and they said, ‘Hey, we want to start this company, and we really need you to come along.'”

Nvidia is now the fifth-largest U.S. company, boasting an eye-popping market cap of $1.4 trillion. However, there wasn’t much demand for its products at its founding.

“At the time, the way of designing computers was rather split between general-purpose computing versus using accelerators,” Huang said. “And about 99% of the value was believed in general-purpose computing, and about 1% believed in acceleration.

“For 25 years, 99% was right. We decided to start a company on accelerated computing. And at the time, the only thing you could really do with accelerated computing was find applications or find problems that were barely solvable or unsolvable by general-purpose computing.

“So, that’s what we dedicated our company to do, to solve problems that normal computers can’t. And if you follow that mission to its limit, it led us to self-driving cars. It led us to robotics. It led us to climate science problems, digital biology, and, of course, one of the most famous ones is artificial intelligence.”

Since Nvidia went public in January 1999, shares have gained 74,000% — meaning a $1,000 investment made on its IPO date would be worth a staggering $744,000 today, with most of that gain coming in the last year and a half as AI has captured the world’s attention.

Numerous companies have announced plans to purchase tens of thousands — or even hundreds of thousands — of Nvidia’s advanced AI chips to their servers in order to power AI applications like chatbots, the metaverse, and autonomous vehicles.

Indeed, you could say that Huang’s long-term bet on accelerated computing has finally paid off — thanks in no small measure to his vision and execution.

Born in Taiwan in 1969, Lisa Su immigrated to the U.S. when she was 3. Interestingly, Su and Huang — the CEOs of arguably the two most important AI chip companies — are first cousins once removed.

Su attended the Massachusetts Institute of Technology, earning her B.S., M.S., and Ph.D. in electrical engineering. She then took a series of jobs at Texas Instruments, IBM, and Freescale Semiconductor, before taking the helm at AMD in 2014.

In a 2020 interview, Su shared her thoughts on how management is about focusing teams on a vision: “What you can do as a single person is great, but what you can do when you can bring 10 smart people together, or 100 smart people together, or 10,000 smart people together, aligned on a vision, it’s incredible.”

She’s also noted how her background doesn’t include the formal business training that many CEOs possess. Su, however, has turned this potential weakness into a strength by embracing the challenge of learning new things: “I didn’t get an MBA or anything like that. I think the advice that I was given, which I actually give to people now, which is actually very good advice is to try many different things.”

And given AMD’s financial performance under her tenure, it’s hard to argue with her approach. Shares of AMD have skyrocketed by almost 5,000% since she was named CEO in 2014.

Like Nvidia, AMD is riding a tidal wave of demand for advanced semiconductors. The company recently debuted its new MI300 series of accelerators, which are meant to compete head-to-head with Nvidia’s cutting-edge chips. While it’s too soon to say whether AMD’s products will gain significant market share, several high-profile companies have already announced plans to use them, including Microsoft, Oracle, and Meta Platforms.

In summary, both AMD and Nvidia are fantastic companies at the forefront of a technological revolution. In part, that’s down to the visionary leadership of their CEOs — and while that’s difficult to quantify, it’s hugely important nonetheless.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Jake Lerch has positions in International Business Machines and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, Microsoft, Nvidia, Oracle, and Texas Instruments. The Motley Fool recommends International Business Machines. The Motley Fool has a disclosure policy.

These 2 Winning Artificial Intelligence (AI) Stocks Share 1 Key Quality was originally published by The Motley Fool

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