Investing in mid-cap stocks amid the AI revolution
Investors have their sights set on the burgeoning artificial intelligence revolution, as the applications for AI-powered software continue to gain traction. Within this gold rush, a number of hidden gems are poised to take advantage of the AI wave and stand out as compelling investment opportunities within the mid-cap sector.
As the total addressable market for enterprise software continues to expand, these 3 exciting mid-cap companies’ forward-thinking approaches and innovative offerings place them in a prime position to yield exceptional returns.
Now, let’s delve into the 3 most promising mid-cap stocks set to capitalize on the ongoing AI revolution!
Qualys (QLYS)
Qualys (NASDAQ:QLYS) is a market leader in cloud security and compliance, poised for a compelling trajectory in 2024. The company touts over 10,000 customers and its TruRisk platform is highly esteemed in the cybersecurity sector.
Its cloud-based platform provides a comprehensive suite of solutions, streamlining tasks such as vulnerability threats, web application scanning, and more. Notably, Qualys’ VDMR stands out, empowering teams to measure, communicate, and eliminate risks across their IT infrastructure. Furthermore, the acquisition of Blue Hexagon’s AI and machine learning platform has enabled customers to leverage the power of AI, identifying relationships and patterns utilizing highly integrated data that go unnoticed by traditional signature-based solutions.
In FY23, Qualys witnessed a 13% year-over-year revenue increase to $554.5 million, with net income surging to $151.6 million, or $4.03 per share. Gross margins also remained robust, climbing to 81% in comparison to 79% in 2022. The company is guiding double-digit revenue growth in Q1 FY24, with GAAP EPS expected to range between $0.84 and $0.92. Given the escalating cybersecurity threats, Qualys retains its position as a top stock poised to benefit from the ongoing AI revolution.
Science Applications International (SAIC)
Science Applications International (NYSE:SAIC) is an aerospace and defense contractor that has been crafting a unique AI strategy, aligning with strong industry fundamentals and positioning it for sustained growth.
As an enterprise software company primarily serving the aerospace and defense industry, SAIC offers a unique portfolio of cybersecurity solutions, cloud solutions, and digital transformation services. Additionally, the company boasts deep expertise in immersive technologies, program management, and climate solutions. Its recent acquisition of Koverse has further bolstered its AI and analytics capabilities, enhancing its ability to serve clients such as the U.S. Department of Defense.
In Q3 2023, SAIC witnessed flat revenue, while experiencing continuous improvements on the bottom line, with net income and EPS rising by 16% and 21%, respectively. More recently, SAIC secured an $80 million U.S. Navy contract for heavyweight torpedo test sets. With a healthy backlog amounting to $23.1 billion, SAIC stands out as one of the best mid-cap stocks for potential investment in 2024.
Allegro MicroSystems (ALGM)
Allegro MicroSystems (ALGM) is a leading provider of sensor and power semiconductor technologies that play a vital role in enabling the development of advanced intelligent systems.
Allegro MicroSystems: Leading the Charge in Sensor and Power Integrated Circuits
The Powerhouse of Integrated Circuits
Allegro MicroSystems (NASDAQ:ALGM) stands tall as a global pacesetter in sensor and power integrated circuits (ICs), calling New Hampshire, United States its home. Developing the very cornerstone of contemporary electronic applications, electric vehicles, and data centers, Allegro’s technology is simply unmissable.
Defining Excellence in Product Portfolio
Exceeding the colossal milestone of shipping over 11 billion integrated circuits, Allegro vaults as the champion in magnetic sensor ICs. Its product repertoire spans an array of sophisticated diodes, MOSFET, and gate drivers, catering extensively to a diverse customer base from the automotive, industrial, and commercial domains.
Embracing Technological Advancements
As the world hurtles toward the AI revolution, data centers are poised for an exponential surge over the forthcoming decade. Allegro remains steadfast in steering the course towards this uncharted territory.
The recently disclosed quarterly results set the stage alight, with ALGM reveling in a staggering 16% year-over-year revenue surge to $276 million. Furthermore, the growth in the E-Mobility sector shot up by an awe-inspiring 60% year-over-year, even amidst the broader deceleration in the global electric vehicle market.
In a time when merely keeping pace with technological advancements is deemed insufficient, Allegro continues to radiate pioneering vibes with avant-garde technologies like Tunnel Magnetoresistance. This dynamism received an added surge following the acquisition of Crocus Technology, solidifying ALGM’s standing as one of the most promising mid-cap stocks, poised to etch its mark in the near future.
On the date of publication, Terel Miles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Terel Miles, a seasoned hand with over seven years of experience in financial market investments, is a contributing writer at InvestorPlace.com.
