Tuesday, April 16, 2024

AI Tsunami: These 2 Software Stocks Are Primed to Ride the Coming AI Wave

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It’s been over a year since the revolutionary language model ChatGPT burst onto the scene, sparking a frenzied new tech boom around artificial intelligence. As businesses and consumers race to unlock AI’s potential, the biggest initial beneficiaries have been hardware makers like Nvidia, whose chips power many of the most advanced AI systems.

But the real promise of generative AI goes far beyond simply running computationally-intensive models. The ability of AI to understand and generate human-like text, images, code, and more is opening up vast new frontiers of possibility across industries. As AI moves beyond experimentation to real-world deployment, a new breed of software companies look poised to emerge as winners in this unfolding revolution.

At the vanguard is MongoDB, a leading database platform perfectly positioned to enable the rapidly evolving world of AI-powered applications. Traditionally focused on helping organizations better organize and access their unstructured data, MongoDB has quickly recognized generative AI’s game-changing implications for data infrastructure.

“There are three layers to the AI stack,” explained MongoDB CEO Dev Ittycheria on the company’s recent earnings call. “The first is the compute and large language models, the second is fine-tuning those models and building AI apps, and the third is deploying and running AI applications for end users.”

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MongoDB operates squarely in the second and third layers – arming companies with the tools not just to crunch numbers, but to inject intelligence into how that data gets surfaced, applied, and transformed. The company has already begun incorporating generative AI capabilities like its new Vector Search, which taps into the ability of modern language models to find conceptual connections between data points far beyond simple keyword matching.

But MongoDB believes this is just the tip of the iceberg. As Ittycheria puts it, “Our customers are still largely in the experimentation phase with generative AI. As they move from experimentation to production deployments of transformational AI applications on MongoDB, we expect to see incredible demand.”

It’s an prospect that has investors salivating. Though still unprofitable as it reinvests heavily in growth, MongoDB has seen its stock price double over the past year alone as the AI boom takes shape. With a vast ecosystem of over 35,000 customers across virtually every industry, the company looks wellpositioned to ride the AI wave as a core enabling technology.

Further illustrating AI’s democratizing potential is the breakout success of language-learning platform Duolingo. Just a year ago, some investors feared generative AI could pose an existential threat to the company’s human-powered education model. But rather than being disrupted, Duolingo has instead emerged as a prime example of how legacy businesses can transform by embracing the new AI paradigm.

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The company wasted little time integrating AI capabilities like OpenAI’s GPT models to augment its curriculum and practice exercises. Within months, it unveiled Duolingo Max – a premium subscription tier built around AI-powered conversational lessons. By offloading rote content generation to AI, Duolingo no longer needs to employ armies of human contractors while creating more personalized, interactive experiences.

“AI is already helping us produce content and sentences at a fraction of the cost,” gushed CEO Luis von Ahn, who previously helped develop CAPTCHA security tests to distinguish human from machine inputs.

But recent moves suggest Duolingo has even grander AI-driven ambitions. The company recently acquired some Pittsburgh-based AI and educational startups, hinting at bigger plans beyond just language learning. With generative AI automating and augmenting content creation at scale, Duolingo could rapidly expand into new subjects like math, music, coding and more.

Critically, their new AI-first approach not only supercharges their ability to create new learning experiences, but also provides a gateway to more lucrative markets. By making its exercises more dynamic, Duolingo will likely find greater traction selling into K-12 schools, universities, corporate training programs and other institutional buyers that have traditionally relied on static textbooks and learning platforms.

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“Generative AI gives us a real opportunity to redefine the learning experience across all ages and subjects,” says von Ahn. “And we’re just getting started.”

Against the backdrop of these transformative changes, it’s clear we’ve entered a new era where the leverage of AI will separate the leading software companies from the laggards. While hardware makers like Nvidia play a crucial role as the “pick and shovels” of the AI gold rush, the true winners will be those that empower businesses and individuals with powerful new AI-enabled applications.

For MongoDB and Duolingo, staying ahead of the curve on generative AI integration has allowed them to gain crucial early mover advantage. But the race is still wide open as every industry reckons with AI’s disruptive potential. In the years ahead, we’re sure to see many more innovators emerge as software eats the world yet again – this time with a heaping helping of artificial intelligence.

Mezhar Alee
Mezhar Alee
Mezhar Alee is a prolific author who provides commentary and analysis on business, finance, politics, sports, and current events on his website Opportuneist. With over a decade of experience in journalism and blogging, Mezhar aims to deliver well-researched insights and thought-provoking perspectives on important local and global issues in society.

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