The collapse of Super Micro Computer put an end to the AI hype, but 5 stocks can still survive the next tech bubble.
Here are 5 AI stocks that could help you survive the next tech bubble. The recent collapse of Super Micro Computer - with a loss of 23% in a single session and an overall decline of 45% from the March highs - has shaken the entire sector, generating fears of a deep correction like the one that occurred in 2000 with the dot-com bubble.
- Super Micro Computer daily graph
- Source: TradingView
However, these AI stocks could offer stability and resilience in a time of great uncertainty.
- Rally AI stocks 2024 vs dot-com 2000
- Source: Bloomberg, JPMorgan
The tech industry, however, continues to invest in artificial intelligence. According to PitchBook, global venture capital investment in AI increased 25% in the first three months of 2024 compared to the last quarter of 2023, reaching $25.87 billion. Giants like Microsoft, Meta, Apple , and Amazon continue to inject billions of dollars into AI, with aggressive hiring and new data centers.
- Big tech - EPS 2024
- Source: Bloomberg, JPMorgan
Nearly two years into the AI boom, there is clear evidence that interest is slowing, but not all stocks in the sector are at risk. Some companies are demonstrating greater resilience even in a volatile environment. Let’s see in detail which companies to keep under the lens.
1. Microsoft
- Microsoft daily graph
- Source: Tradingview
Microsoft Corporation (NASDAQ: MSFT) is a technology giant with a market capitalization of $2.96 trillion and a P/E ratio of 36.09. The one-year forward P/E ratio stands at 34.82, which indicates some room for future growth. The company is known for its product ecosystem, including the Windows operating system, the Microsoft Office suite, and the Azure cloud platform.
Microsoft has invested significantly in artificial intelligence, particularly through its partnership with OpenAI, the creator of ChatGPT. This relationship has put Microsoft at the forefront of the artificial intelligence revolution, with a clear strategy to integrate these technologies into different aspects of its business, from cloud computing to productivity solutions.
On April 25 the company will release its financial results for the third quarter of fiscal 2024, with high expectations from investors. So far, Microsoft stock has shown strength, with growth of 7% year to date and an impressive 40% increase over the past year. These results suggest that Microsoft is well-positioned to thrive even in the event of market volatility or a potential tech bubble.
2. Intel
Intel Corporation (NASDAQ: INTC) is a semiconductor giant with a market capitalization of $144.59 billion. With a P/E ratio of 87.69 and a forward P/E ratio of 57.44, the company is known for its processors, which underpin much of the computer industry. Intel has also ventured into the world of artificial intelligence, with the recent launch of the Gaudi 3 AI chip, demonstrating the company’s commitment to emerging technologies.
Intel is a key player in the data center and cloud computing industries, sectors that are experiencing rapid growth thanks to artificial intelligence. The company also announced plans to strengthen its presence in the Internet of Things (IoT), a sector expected to grow in the coming years.
Despite the potential, Intel’s stock price is down more than 28% year to date, providing a buying opportunity for long-term investors. Investors are now waiting for the first quarter 2024 financial results, which will be released on April 25. These results could provide an indication of the future performance of the stock and confirm whether Intel is on the right path to face the challenges of the market.
- Intel daily graph
- Source: Tradingview
The stock has lost over 30% from the highs at the beginning of the year, putting important price supports at around $35 to the test. The publication of accounts at these levels could give rise to sudden price movements: a stabilization above $35 could lead to exceeding $38 towards a target of at least 41 dollars. Below the $35 area, only the supports at $32 would remain to avoid sinking to $30.
3. Alphabet
- Alphabet (Google) daily graph
Alphabet Inc. (NASDAQ: GOOG, GOOGL) is the parent company of Google, the world’s most used search engine, and other popular services such as Gmail and YouTube. Alphabet has a market capitalization of more than $1.6 trillion and plays a major role in the artificial intelligence industry. AI is crucial to Alphabet, which uses it to optimize search results, improve YouTube recommendations, and drive its advertising business, which accounts for 77% of its revenue.
Alphabet also has a cloud computing division, Google Cloud, which is the third largest cloud provider globally, after Amazon and Microsoft. Google Cloud is growing and starting to generate profits, thanks in part to the adoption of generative artificial intelligence solutions. This advancement has allowed Alphabet to attract major customers such as McDonald’s and Verizon.
Alphabet’s cash reserves are another significant aspect. With a free cash flow of $69 billion over the past year, the company has the financial capacity to support AI-related innovation and initiatives. Analysts expect annualized earnings growth of nearly 17% long term, which could double the stock’s value over the next five years.
Alphabet will release quarterly results on April 25 after the market closes.
4. Nvidia
- Nvidia daily graph
- Source: Tradingview
Nvidia Corporation (NASDAQ: NVDA) is a leader in the semiconductor industry, known for its graphics chips and data center solutions. With a market capitalization of more than $1 trillion, Nvidia is in the spotlight for its role in artificial intelligence and data centers. The company has benefited from growing demand for AI chips, particularly after the launch of OpenAI’s ChatGPT in late 2022, which kicked off a round of investment in data center infrastructure.
Nvidia has seen impressive growth, with share value increasing three-fold in the last 12 months, but it still maintains strong return potential. The company controls the majority of the AI chip market, which has helped its revenue grow at record rates. Nvidia management expects revenue to triple in the first quarter of 2024 to $24 billion, driven primarily by data center products.
Growth forecasts are supported by ever-expanding demand, with large cloud companies such as Amazon and Microsoft increasing investment in AI infrastructure. According to Synergy Research, the average capacity of hyperscale data centers is expected to nearly triple over the next six years, suggesting that the market for Nvidia’s products will continue to grow.
Nvidia also has a solid presence in the gaming graphics card market, a sector that contributes significantly to its profits. The profitability of advanced data center chips gives Nvidia an annualized earnings growth rate of 35% over the next few years. With a forward P/E ratio of 34, Nvidia stock could easily double in value over the next five years.
5. CrowdStrike
- CrowdStrike daily graph
- Source: Tradingview
CrowdStrike Holdings Inc. (NASDAQ: CRWD) is a cybersecurity company offering cloud-based solutions and threat intelligence. With a market capitalization of $68.36 billion, CrowdStrike is a major name in the cybersecurity industry, especially amid rising concerns about online security and cyber threats.
The company has a high P/E ratio of 785.11 and a forward P/E ratio of 262.59. These high values indicate a high level of investor confidence in the company’s ability to grow quickly and generate profits. CrowdStrike has seen significant growth in its shares over the past 12 months, up 116%.
CRWD stock has shown remarkable resilience, hitting a high of $365 and a low of $115.67 over the past 52 weeks. CrowdStrike offers a highly efficient cybersecurity platform, used by many companies to protect their critical data and systems. The company’s success is due in part to its ability to adapt to new threats and develop advanced solutions quickly.
Analysts expect continued growth for CrowdStrike, thanks to the growing demand for cybersecurity solutions and the increase in online threats. The company is well-positioned to benefit from these trends and could be an attractive stock for long-term investors seeking exposure to artificial intelligence and cybersecurity.
|DISCLAIMER
The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader maintains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to the public for savings.|
Original article published on Money.it Italy 2024-04-24 19:00:00. Original title: 5 azioni AI per sopravvivere alla prossima bolla tecnologica
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