AI has already been with us for many years; we use it daily, yada yada… you know, I know, we all know. Nobody other than the insiders, though, could’ve predicted that in the first half of 2023, chatbot technology would suddenly send the stock market into a hysterical tech rally…
And, well, here we are. A lot of investors are leaning into it. But should we?
Many say yes, but the question is: to what degree? Should we be purely bullish and allocate our tech funds to one name? Not necessarily. ChatGPT is certainly a game-changer in many ways, but the stock exchange game hasn’t changed… not yet. Following trends, consider this a great list of options.
You likely know these names, but there’s a great reason you do: These are damn good ones…
Alphabet Inc (GOOGL)
Alphabet Inc. (GOOGL), the parent company of Google, recently introduced Bard, its own AI chatbot similar to ChatGPT. Bard leverages online information to provide quick and concise answers by accessing, compiling, and summarizing data. Rather than receiving a list of web pages from a search engine, users get a single, comprehensive solution. Although Bard encountered a misstep during its test launch, GOOGL has other AI offerings. GOOGL provides business AI tools and infrastructure through its Google Cloud Computing division. Considering GOOGL’s dedication to AI innovation, including the introduction of Bard and its existing AI solutions, it positions itself as a compelling AI stock investment opportunity.
GOOGL stock is currently up year-to-date by 37.67%, has a positive Simple Moving Average, and a 1.09 beta. GOOGL has TTM revenue of $58.59 billion at $4.45 per share, profiting more than $58 billion through its 20.58% net margin, and has an ROE (return on equity) of 22.76%. At its last earnings report, GOOGL reported EPS of $1.17 per share vs. $1.07 per share as predicted by analysts (a 20.58% surprise), and it has a free cash flow of almost $56 billion. GOOGL is forecasted to report $72.7 billion in sales at $1.33 per share for the current quarter. With a 10-day average volume of 32.4 million shares, GOOGL has a median price target of $130, with a high of $190.32 and a low of $100, representing a potential price upside of almost 57%. GOOGL has 48 buy ratings and five hold ratings.
NVIDIA Corp (NVDA)
The A100 chip by Nvidia Corp. (NVDA) provides the necessary computational power for chatbots like ChatGPT. However, NVDA is expanding its offerings beyond the A100 chip with DGX supercomputers, considered the ultimate hardware for machine learning. DGX supercomputers are actively deployed by NVDA worldwide, running continuously to refine data and process new forms of AI. NVDA CEO Jensen Huang refers to them as “modern AI factories.” Customers in various countries, including Japan, Ecuador, and Sweden, use NVDA’s DGX H100 supercomputer systems as intelligence manufacturing centers. These robust systems that NVDA is utilizing have already found applications in diverse fields such as legal research, healthcare, digital advertising, and higher education.
Recently hitting a market cap of $1 trillion, NVDA’s stock is up year-to-date by a resounding 193.18%. NVDA’s TTM revenue is $25.88 billion at $4.49 per share, and it made a net profit of $4.79 billion using its 18.52% net margin, and it has an ROE of 18.85%. NVDA has a PEG ratio of 2.45x and a D/E (debt to equity)
measure of 44.67%. NVDA has a modest dividend yield of 0.04% and a quarterly payout of 4 cents ($0.16/year) per share. NVDA, with a 10-day moving average of 53,23 million shares (people are catching on), NVDA has a median price target of $460, with a high of $600 and a low of $175, leaving room for more than 40% upside potential. NVDA has 47 buy ratings and seven hold ratings.
International Business Machines Corp (IBM)
International Business Machines (IBM) is a strong AI stock due to its Watson products offering AI and ML (machine learning) services. IBM’s solutions assist customers in enhancing decision-making and increasing profitability. With a portfolio of AI applications, IBM’s Watson enables improved customer service, cost reduction, outcome prediction, and workflow automation. Additionally, enterprise customers can utilize IBM’s Watson Studio to develop and expand their own AI applications. IBM’s strategic acquisitions, such as Turbonomic, Instana, and Databand.ai, further bolster its AI capabilities.
IBM is down year-to-date by 6.90% and has a 0.85 beta score. With $60.59 billion at $2.24 per share in TTM revenue, it made a net income of $2.05 billion via its 3.03% profit margin. IBM most recently beat analysts’ EPS forecasts by 9.73%, and it reports year-over-year revenue growth (+0.39%), net income (+26.47%), EPS (+24.69%), net profit margin (+25.97%), and operating income (+46.26%). IBM has an annual dividend yield of 5.06%, with a whopping quarterly payout of $1.66 ($6.64/year) per share through its generous 294.64% payout ratio. With a 10-day average volume of 4.79 million shares, IBM has a median price target of $140, with a high of $162 and a low of $110, suggesting a potential price jump of 23.5% from where it currently sits. IBM has five buy ratings and 11 hold ratings.
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