HomeMost PopularTech StocksLooking for Artificial Intelligence (AI) Exposure? Here are 3 Stocks to Consider

Looking for Artificial Intelligence (AI) Exposure? Here are 3 Stocks to Consider

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Artificial intelligence (AI) has become a hot topic on Wall Street in 2023, with companies generating a growing buzz around the technology. One standout in this field is NVIDIA (NVDA), which has showcased its AI chips’ strong demand through robust quarterly results.

However, there are other stocks besides NVIDIA that investors can consider for AI exposure. Let’s take a closer look at three companies: Palo Alto Networks (PANW), Arista Networks (ANET), and Microsoft (MSFT).

Palo Alto Networks: A Leader in AI-Driven Security Products

Palo Alto Networks operates Cortex XSIAM, a suite of AI-driven products for Security Operations Centers (SOCs). The company has a highly-coveted Zacks Rank #1 (Strong Buy), and its earnings have been on the rise following strong quarterly results.

The forecasted growth for Palo Alto is solid, with earnings expected to climb 20% in the current year on 19% higher revenues. Looking ahead to FY25, estimates suggest a further 20% earnings growth coupled with an 18% sales increase.

Palo Alto has consistently outperformed expectations, as demonstrated by its ten consecutive quarters of exceeding the Zacks Consensus EPS Estimate. In its latest release, the company surpassed bottom line expectations by 12%.

Arista Networks: Driving AI/ML Workloads through IP/Ethernet Switches

Arista Networks specializes in providing solutions for GPU and Storage interconnects that drive AI/ML workloads using IP/Ethernet switches. The company currently holds a Zacks Rank #2 (Buy), and its revisions trend for the current fiscal year is particularly notable.

Arista Networks has experienced robust top-line growth, which has recently accelerated. For its current fiscal year, ANET is projected to expand its revenues by an additional 18% year-over-year. Strong sales serve as the foundation for meaningful earnings growth.

Investors should keep an eye out for the company’s next quarterly release scheduled for October 30th. The Zacks Consensus EPS Estimate of $1.58 suggests 26% growth from the year-ago period, with a consensus revenue estimate of $1.5 billion, 25% higher than the previous year.

Microsoft: Azure AI and a History of Dividend Growth

Microsoft’s AI platform, Azure AI, offers best-in-class, enterprise-scale, and trusted solutions. Data scientists and machine learning engineers can utilize Azure Machine Learning to build, train, deploy, and operate large-scale AI models.

In addition to AI exposure, Microsoft shares provide a passive income stream with an annual yield of 0.8%. Over the last five years, the dividend payout has grown at a rate of nearly 10% annually.

While Microsoft shares come at a premium, with a forward 12-month earnings multiple slightly above the five-year median, the current value is well below the highs seen in 2022.

Bottom Line

Artificial intelligence has become a permanent fixture in the market, with NVIDIA leading the way. However, investors looking for more options can consider Palo Alto Networks, Arista Networks, and Microsoft as alternative ways to gain exposure to AI technologies.

Disclaimer: The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.

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