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.
