What do you get when you combine depressed stock prices with an economic and technological niche poised to win as it becomes increasingly essential? You get stocks with a low cost of entry, plus high upside potential and Wall Street analyst approval.
The niche we’re talking about is AI, artificial intelligence, once a sci-fi pipe dream but now a computer technology that’s growing in importance. Artificial intelligence is powering the rapidly expanding Internet of Things, is the technology behind game changers like 3D printing, and has already transformed the world of online marketing. In its application to autonomous vehicles, it even promises to change the way we travel forever. No matter where you go, you can’t get away from AI.
Beat prices are an artifact of the current bear market and persistent supply chain grunts. We’ve been facing a shortage of semiconductor chips since last year, and it’s affecting everything from heavy industry to healthcare to high-end computing. But supply issues are beginning to resolve, and demand for AI-related technologies remains high.
So let’s dive in and look at a few AI stocks that are poised for growth in the months and years to come – and whose prices now represent a low entry point. We’ll take the latest data from the TipRanks platform, add analyst commentary on those stocks, and get the full picture.
Nvidia Corporation (NVDA)
The first is Nvidia, one of the leading names in the chip industry. Nvidia has long been known for its high market share – over 80% – in the graphics processing unit (GPU) segment, a major blow for this company, as high-end GPUs are in high demand. The chips, which were originally designed to enable sharper, more realistic graphics for computer games, have found applications in many other industries, where their high computing capacity has enabled AI and advanced technology. learning in data processing, medical imaging, smart home and city. tech and autonomous machines.
Nvidia has customers in all of these areas, and self-driving machines — particularly vehicles — turned out to be a bright spot in the company’s recent 2Q23 earnings report. The quarter, which ended July 31, saw Nvidia’s revenue and earnings fall sharply from the first quarter, but analysis shows there are positives to news from the company as well.
At the top, revenue fell sequentially from $8.3 billion to $6.7 billion. At the same time, second-quarter results were still up 3% year-on-year. The gains, however, weren’t as good. Diluted non-GAAP EPS fell from $1.36 to $0.51, down 51% year-on-year. And that’s only part of the bad news.
Nvidia’s revenue was well below expectations at $8.1 billion, a setback that was attributed to contractions in the computer gaming segment. And the company backtracked on its third-quarter guidance, spooking investors — and sending shares down sharply after the earnings release.
On the positive side, Nvidia has seen strong gains in its Data Center and Automotive segments, two areas where the company’s high-end AI-enabled chips have strong potential for expanding market share – they offer strong computing capability, backed by a company with a reputation for quality in these areas in particular. Data center revenue reached $3.81 billion in the fiscal second quarter, a year-on-year gain of 61%. The company’s auto business is smaller, generating $220 million in second-quarter revenue, but up 45% year-on-year and 59% quarter-on-quarter, showing not just gains, but accelerated gains .
Truist’s 5-star analyst William Stein acknowledges Nvidia’s declining gaming revenue, describing it as “bitter medicine”, but recommends the stock for its leadership in AI. He writes: “Bears will focus on the potential for spreading weakness in the data center. We recognize this possibility, but continue to view NVDA as best positioned to capture market share in the data center over the long term, as its GPU leadership is strong and its new products (DPUs and CPUs) line up. on emerging disaggregated computing architectures…. In CQ2, automotive revenue of $220 million was up about 45% year-on-year and hit a record high. Management noted strength driven by autonomous piloting and artificial intelligence solutions, partially offset by lower revenue from legacy cockpits. The long-awaited growth of NVDA’s automotive business finally seems to be happening. Data center revenues were also strong, driven by demand in vertical markets and hyperscale North American customers. »
In addition to a bullish outlook, Stein gives NVDA shares a buy rating; its price target of $198 implies a one-year upside potential of 50%. (To see Stein’s track record, Click here.)
Now on to the rest of the street, where the stock has 31 ratings on file, with 23 buys versus 9 taken for a moderate buy consensus rating. Nvidia shares are selling for $131.98, and their average price target of $206.71 indicates upside potential of 57% over the next 12 months. (See Nvidia’s stock forecast on TipRanks.)
Marpai, Inc. (MRAI)
From semiconductor chips, we’ll move on to the healthcare sector, where technology company Marpai saw an opportunity to bring AI technology to the third-party administrator (TAP) segment of the field. It’s a $22 billion market, and Marpai is using AI to design system features that will improve quality of care while reducing claims costs and stop-loss premiums. Marpai’s approach to TAP is based on using proprietary predictive algorithms to streamline processes.
This health administration technology company is relatively new to the public markets, having held its IPO just at the end of October last year. The offering, which opened on the 27th and closed on the 29th of the month, sold more than 7.1 million shares for $4 each and raised $28.75 million in gross proceeds, surpassing the $25 million initially planned. Since the IPO, however, the stock has fallen 78%.
Marpai has released 4 quarterly financial reports since its IPO and has consistently posted revenue between $4.8 million and $6.2 million. The most recent report, for 2Q22, showed revenue of $5.6 million, in the middle of that range — and slightly above expectations. On earnings, the company reported a net loss of $6.66 million, or 34 cents per diluted share. On a per share basis, this is a significant improvement over the diluted EPS loss of 54 cents recorded the previous year.
Taking an in-depth look at Marpai, Maxim Group analyst Allen Klee describes both the company’s product innovation and its potential: “MRAI is well positioned to drive innovation in the third-party administrator (TPA) space. . Employers who self-insure employee health care can use Marpai to process claims and administer benefits. The company’s technology uses artificial intelligence (AI) to predict and mitigate potentially costly health events, as well as automatically arbitrate claims, reducing costs. Technology can also reduce waste in the system by directing members to the most cost-effective vendors in advance. Through these efficiencies and by removing the overspending from traditional healthcare plans, Marpai believes employers can reduce healthcare costs by more than 25%. »
Believing that Marpai can offer investors, Klee is pricing the stock as a buy, and his 12-month price target of $2.50 implies a robust gain of 162%. (To see Klee’s track record, Click here.)
Some stocks fly under the radar on Wall Street and Marpai seems to be one of those names; Klee’s is the only analyst review published in the last 3 months. (See Marpai’s stock forecast on TipRanks.)
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Disclaimer: The opinions expressed in this article are solely those of the analysts featured. The Content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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