AI has made a massive impact on Wall Street in a short time. While some may seek hidden gems among up-and-coming businesses in the field, the reality is that “Big Tech” has spearheaded the market.
AI’s potential applications are vast, but they all rely on quickly processing large amounts of data. Graphics chips are currently the favorites for this task but need more supply. Consequently, new entrants need help achieving the necessary scale and thereby end up resorting to renting computing power from established players. As a result, the big names still hold an edge against the competition.
These three names will most likely continue making money in the AI sector. Despite their already substantial gains, they’re just as promising today. That’s right, and it’s STILL not too late…
Microsoft Corp (MSFT)
Microsoft (MSFT) is an appropriate big tech name to get us started. With a history of exceeding analysts’ expectations, MSFT’s upcoming quarterly report will likely include a promising outlook. Focusing on software applications like MS Office and offering data storage, the company provides cost-effective cloud-based solutions. Software aside, MSFT’s expansion into the gaming industry and strategic early investment in OpenAI position it now at the forefront of the AI transformation. By integrating OpenAI into its products and launching applications like CoPilot, Microsoft demonstrates its commitment to innovation. MSFT offers substantial growth potential as AI continues to shape the future of computing.
MSFT is up year-to-date by 37.90%, with a positive SMA (simple moving average), a positive ROE (return on equity), TTM (trailing twelve-month) asset growth of 12.92%, and a surprisingly safe 0.91 beta score. For the current quarter, MSFT is projected to report $55 billion in sales at $2.59 per share, with a 3-5 year EPS growth rate of 21.3%. With more than $42 billion in free cash flow, MSFT has a 0.82% annual dividend yield and a quarterly payout of 68 cents ($2.72/year) per share. With a 10-day average volume of roughly 40 million shares, MSFT has a median price target of $400, with a high of $450 and a low of $232, indicating enough room for its price to jump by 36%. MSFT has 44 buy ratings and nine hold ratings.
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Alphabet Inc (GOOGL)
Alphabet Inc. (GOOGL) is an attractive tech stock with a leading position in AI, despite occasional perceptions of falling behind its competitors. GOOGL’s price is influenced by economically sensitive Google search-based ad revenues, leading to concerns about its future in the age of interactive AI. However, Alphabet has been quietly investing in AI for years and holds a significant presence in the cloud sector, becoming a strong player after Amazon (AMZN) and MSFT.
Currently, GOOGL is up year-to-date by 46.70%, recently hitting a new 52-week high. For the current quarter, GOOGL is expected to report sales of $74.4 billion, with an EPS of $1.36 per share, and has a projected 3-5 year EPS growth rate of 22%. With a free cash flow of $55.8 billion, GOOGL has a PEG (price/earnings to growth) ratio of 1.49x. A 10-day average trading volume of 42.14 million shares has been assigned to GOOGL, as well as its median price target of $150, with a high of $200 and a low of $120. This new range represents a potential price upside of more than 54%. GOOGL has 42 buy ratings and ten holdings.
Alphabet remains steadfast by integrating AI research across its products and launching new AI tools for users. And, with a solid balance sheet and a lower valuation compared to its peers, GOOGL presents a compelling long-term opportunity for investors seeking exposure to AI, Big Tech, or both.
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NVIDIA Corp (NVDA)
For the last pick, I think it’s essential to look at the best chipmaker; Nvidia Corp (NVDA) is considered by many to be the foremost top-notch AI and tech investment, given its pioneering role in microchip design. Dominating the market with an 80% share, NVDA’s high-speed chips are in high demand, driving strong sales and pricing. Its recent bullish profit announcement showcased a remarkable 53% surge in just three months, propelling NVDA’s value to over $1 trillion. As AI’s multi-year trend unfolds, its chips will continue to be sought after for building AI infrastructure, making NVDA a compelling long-term hold.
NVDA stock is currently up by a staggering 214.08%, has a positive SMA, and a positive ROE, and is projected to report sales of $11.1 billion at $2.06 per share; it also has a 28% 3-5 year projected EPS growth. With $5.47 billion in free cash flow, NVDA has a modest annual dividend yield of 0.04% and has a quarterly payout of 4 cents ($0.16/year) per share. With a 10-day average volume of 53.31 million shares, NVDA has a median price target of $492, with a high of $767 and a low of $370; this suggests the potential for an over 67% price upside. NVDA has 44 buy ratings and six hold ratings.
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