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Numerous companies flaunt their AI prowess, seducing shareholders with tales of innovation and integration. AI captivates investors, promising a future brimming with technological wonders. But amidst the AI frenzy, which companies will emerge victorious in this high-stakes race?
Diving deeper, we encounter AI stocks that lurk beneath the surface, poised for disproportionate gains. These hidden gems might not boast immediate recognition for their AI prowess, but they hold the potential to outshine their competitors. Here are three stocks deserving of your attention:
Palo Alto Networks (PANW)
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Based in Santa Clara, cybersecurity titan Palo Alto Networks (NASDAQ:PANW) presents a compelling choice for AI investors. With a comprehensive suite of security solutions, PANW caters to diverse needs, from cloud security to firewalls. Boasting a formidable $93 billion market cap, the company is weaving AI into its core offerings with increasing fervor.
Recent milestones underscore Palo Alto’s prowess. Robust growth in Annual Recurring Revenue (ARR) for its Secure Access Service Edge (SASE) division and heightened adoption of multi-modules within Prisma Cloud paint a rosy picture. In network security, PANW sustained fifth consecutive quarter of 50% ARR growth in SASE, with fresh SASE clients comprising over 30% of the customer base.
While PANW’s stock price suggests a modest 16% upside to around $335 per share in 2024, CEO Nikesh Arora’s strategic acumen fuels optimism. Palo Alto Networks shows promise for sustained value creation, leveraging its subscription model and AI integrations. Despite short-term hurdles, this stock beckons as a beacon of potential growth in the years ahead.
ServiceNow (NOW)
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A recent alliance with AI behemoth Nvidia (NASDAQ:NVDA) has propelled ServiceNow (NYSE:NOW) to fresh heights. Collaborating to enhance efficiency in 2024, the partnership aims to optimize large language model deployments. Leveraging Nvidia’s NIM inference microservices, ServiceNow targets scalable generative AI (GenAI) enterprise applications. The integration of NIM into ServiceNow’s Now LLMs, notably Now Assist, heralds a broader GenAI rollout across various client scenarios.
ServiceNow’s AI integration across its suite, spanning IT, HR, and customer service functions, distinguishes it as a digital transformation front-runner. Despite a 73% surge over the past year, analysts foresee a 10% near-term upside, setting a target price of $851.67. Such forecasts hint at a promising trajectory for long-term growth.
Advanced Micro Devices (AMD)
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In recent benchmark tests, Advanced Micro Devices (NASDAQ:AMD) showcased the prowess of its Ryzen 7 7840U APU. Surpassing the Intel Core Ultra 7 155H in AI tasks, AMD’s chip delivered 14% and 17% faster performance in Llama 2 and Mistral AI, respectively.
Mizuho analysts upped AMD’s stock price target to $235 from $200, affirming a Buy rating, banking on the AI chip market’s growth and multiple expansions. AMD’s launch of a new AI chip tailored for the Chinese market, compliant with U.S. trade regulations, hints at potential earnings and stock price boosts, if approved. With a 30% surge in 2024, AMD harbors further upside potential.
Although AMD faces challenges due to its premium valuation, the stock remains enticing for long-term investors. Anticipating potential market share gains against Nvidia, AMD stands poised to capitalize on the industry’s growth trajectory. As innovation drives higher chip performance, AMD eyes a lucrative slice of the market share pie, replete with opportunities for sustained growth.
On the date of publication, Chris MacDonald did not hold (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.
Chris MacDonald’s passion for investing spurred him to pursue an MBA in Finance and assume various management roles in corporate finance and venture capital over the past 15 years. His tenure as a financial analyst and keen eye for undervalued growth prospects shape his conservative, long-term investing philosophy.
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