Venture capitalist Marc Andreessen has observed that "software is eating the world," reshaping industries through automation. Similarly, AI promises to transform software.
But Jefferies analyst Brent Thill warned in a note that some software companies could be negatively affected.
"As AI increases productivity, companies will limit headcount growth while increasing consumption of chatbots and AI-generated queries," Thill said.
"We believe that companies will be forced to move to consumption-based models or hybrid approaches, rather than just seat-based pricing, to offset the computational costs of AI queries."
For many companies, reaping the benefits of AI requires sustained investment in compute, networking, and data center infrastructure.
Nvidia announced a broad AI portfolio at its GTC conference, including new graphics processing units, data center hardware, AI software models, and AI-as-a-Service. NVDA stocks belong to the IBD Ranking, which is IBD's curated list of leading stocks that stand out on technical and fundamental indicators.
Bank of America, Morgan Stanley and Barclays ranked chipmakers Nvidia and Arista Networks (ANET) as top AI stocks.
Internet data centers will require more computing power and network bandwidth to handle AI workloads.