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The launch of ChatGPT has triggered an unprecedented surge in artificial intelligence stocks, with companies such as Nvidia and Palantir leading the charge and delivering considerable returns to investors. While established players have already multiplied investments, the broader market believes that the artificial intelligence revolution is still in its early stages, spurring both startups and tech giants to accelerate the development of powerful artificial general intelligence systems.
Among the new wave of artificial intelligence stocks, Upstart and CoreWeave stand out for their transformative potential. Upstart made a significant impression in 2021 when its stock soared amid the pandemic, though it later plunged due to rising interest rates and tightened credit markets. Despite this, Upstart´s core business remains robust. Its advanced lending models consistently outperform traditional FICO scores, delivering strong loan performance even in challenging economic conditions. Notably, a new artificial intelligence model has dramatically improved its loan approval accuracy and conversion rates, helping originations and revenues accelerate. Upstart has historically been profitable and anticipates a return to GAAP profitability in the near future, with a strategic focus on entering larger markets like home and auto loans. The company currently trades at a modest price-to-earnings ratio and boasts a market cap underlining its growth runway.
CoreWeave, a recent market entrant, operates the only pure-play cloud infrastructure platform tailored specifically to generative artificial intelligence workloads. Its business model centers on renting cloud computing power for artificial intelligence applications, resulting in explosive revenue growth—over a hundred-fold from 2022 to 2024—driven by demand from major clients such as Microsoft and Nvidia. However, rapid expansion comes with high debt and short-term unprofitability under GAAP due in part to high interest expenses and recent IPO costs. Despite these challenges, CoreWeave reported a healthy adjusted EBITDA margin and continues to take significant market share in cloud computing for artificial intelligence. The company faces customer concentration risk, but expects to diversify, and its rapid stock appreciation—buoyed by Nvidia’s stake—suggests strong investor interest. If CoreWeave sustains its growth trajectory and manages its capital efficiently, market valuations suggest its upside potential is significant, driven by continued demand in the artificial intelligence sector.
