Artificial intelligence (AI) is predicted to be a major driver of growth, with the global AI market projected to grow at a compound annual growth rate (CAGR) of 30% to 40% by 2030, reaching market sizes ranging from $800 billion to over $1 trillion. The AI revolution accelerated in 2023 with the emergence of generative AI, which expanded the potential use cases for AI. Investing in AI can be done through companies that develop and supply semiconductors and other technologies for enabling AI capabilities. Two notable stocks in this space are Nvidia and Arm Holdings. Nvidia is dominant in the AI chip market, with a significant market share for AI GPU chips in data centers. The company is considered a close-to-pure play on AI in the semiconductor industry. It has seen significant revenue growth, particularly in its data center market platform, which supplies chips and related technology for AI and high-performance computing. Arm Holdings, based in the UK, designs CPU architectures and licenses them to customers, including major tech companies like Apple, Nvidia, and Qualcomm.

Arm has a strong presence in the smartphone market, and its chip architecture's energy efficiency has contributed to the growth of smartphones. The company has expanded into data center servers, AI accelerators, and smartphone applications processors, driven by the growth of AI. Arm reported strong financial results, with revenue and profit both increasing year over year. In terms of valuation, Nvidia's stock trades at 47 times its projected earnings for the current fiscal year, which is reasonable considering the expected earnings growth of 46. 4% over the next five years. Arm's stock is more expensive, trading at 86 times its projected earnings for the current fiscal year, but there are reasons to believe that Wall Street is underestimating Arm's earnings growth potential. Investors may want to closely monitor Arm's performance in the coming quarters to assess whether it continues to achieve strong growth and surpass earnings estimates before making an investment decision. Overall, both Nvidia and Arm are considered strong AI technology stocks to consider.