Stock Market Rebounds: Three AI Stocks to Consider Now
The S&P 500 index has rallied back from a recent decline, recovering most of its losses after falling 19% from its highs in April. As of now, the index is up 1% year to date. This recovery is partly attributed to efforts by the Trump administration to negotiate bilateral trade deals, easing concerns around trade wars and potential economic disturbances. Encouraging corporate earnings are also enhancing investor confidence, particularly due to the transformative role of artificial intelligence (AI) in economic growth.
1. Apple: Benefiting from Trade Developments
Recent announcements indicate that the U.S. and China will suspend retaliatory tariffs for 90 days while working on a broader trade agreement. This development reduces uncertainty for Apple (NASDAQ: AAPL), which relies on China for nearly 17% of its sales and manufactures over 80% of iPhones there. The temporary halt on tariffs and exemptions for electronics allows Apple to advance its AI-driven initiatives.
Through its Apple Intelligence initiative, the company is implementing machine learning models to enhance its AI capabilities across its ecosystem. In its fiscal second-quarter report for the period ending March 29, revenue increased by 5% year over year, with an 8% rise in earnings per share (EPS) to $1.65. Anticipation is growing for the upcoming iOS 19 and iPhone 17, which are expected to feature more AI-optimized functionalities, potentially boosting sales as users upgrade.
With shares currently trading about 18.5% below their 52-week high, Apple stock presents an attractive opportunity for investors looking to capitalize on the AI trend.
2. AppLovin: Innovating AI in Ad Tech
AppLovin (NASDAQ: APP) has seen its stock price rise by 339% over the past year, driven by rapid growth and impressive earnings. As a leader in advertising technology, AppLovin is leveraging AI to enhance its mobile advertising solutions. The Axon AI engine utilizes machine learning and advanced algorithms to increase ad engagement.
For the first quarter ended March 31, advertising revenue rose by 71% year over year, attributed to its AI improvements. EPS also surged by 149% to $1.67.
AppLovin is targeting the e-commerce sector, using its Axon platform for real-time analytics and AI-driven advertising strategies. Additionally, the company has plans to enter the video streaming market, expanding its reach beyond mobile gaming ads. The stock currently trades at a forward price-to-earnings (P/E) ratio of 33, indicating reasonable valuation supported by solid fundamentals.
3. Super Micro Computer: Poised for Growth in AI Infrastructure
Super Micro Computer (NASDAQ: SMCI) plays a crucial role in AI infrastructure, offering rack-scale server systems designed to support Nvidia’s graphics processing unit AI chips. Despite facing challenges in 2024—such as a Department of Justice probe into accounting issues—Supermicro has recently cleared its name, contributing to a rebound in its stock price.
The company specializes in direct liquid cooling technology, enhancing energy efficiency for high-demand AI processing tasks. Supermicro projects that over 30% of new data centers will adopt liquid-cooled structures by 2025, representing substantial growth potential.
With Wall Street forecasting a 48% revenue growth for 2025 and the stock trading at a forward P/E of 22, Supermicro offers a mix of growth and value, making it a strong candidate for long-term investment.
Should You Invest in Apple Right Now?
Before investing in Apple’s stock, consider this:
According to analysts, there are currently ten stocks they believe are better investment opportunities than Apple. These selections include stocks that have previously generated substantial returns. For example, an investment in Netflix recommended in December 2004 would have grown to $635,275, while an investment in Nvidia recommended in April 2005 would now be worth $826,385.
It’s worth noting that this analyst platform has produced an average return of 967%, outperforming the S&P 500’s average of 171%. Investors may want to evaluate the latest top ten list before making decisions.
Dan Victor has no positions in the stocks mentioned. The Motley Fool holds positions in and recommends AppLovin, Apple, and Nvidia. The Motley Fool has a disclosure policy.
The views expressed here are those of the author and do not necessarily reflect those of Nasdaq, Inc.
