Nvidia, Broadcom, Palantir Technologies, Advanced Micro Devices, Snowflake and Super Micro Computer could be the best AI stocks to watch. These stocks are selected as the top % shares in the iShares Future AI and Tech ETF.
artificial intelligence
Nvidia, Broadcom, Palantir Technologies, Advanced Micro Devices, Snowflake and Super Micro Computer could constitute the six best AI stocks to watch in Q4 2024. These companies are selected as the top % shares included in the iShares Future AI and Tech ETF.
Artificial Intelligence (AI) could become the latest investing theme of choice — the tech world has seemingly had enough of disruptive tech, cryptocurrency, Web3, Blockchain, and the Metaverse — and is ready to set its hopes on the next big thing.
Of course, while these former concepts are on the backburner as the days of ultraloose monetary policy have ended, AI is becoming the driving force for big tech. Indeed, almost all of the S&P 500’s gains in 2024 have come from just seven companies, all of whom are potentially riding the AI wave to some degree.
There may be a difference between AI and the rest though. Artificial Intelligence is already in use across a wide variety of real-world applications, including in entertainment, social media, art, retail, security, sport analytics, manufacturing, self-driving cars, healthcare, and warehousing alongside dozens of other sectors.
Every Netflix recommendation, every supermarket rewards purchase, and every football match is analysed ever more relentlessly in order to provide more and better data. And while consumers have always understood — even peripherally — that AI was taking over more and more of the heavy lifting; the sector’s investment catalyst has finally arrived.
This catalyst is of course ChatGPT, the OpenAI-developed chatbot which garnered over 1 million users in just five days. It took Facebook 10 months, and Netflix three and a half years to hit the same milestone.
Taking the world by storm, it now boasts over 200 million active users a week, and investors are now considering whether the innovation could make entire careers in areas such as copywriting, accounting, personal training, and even software development entirely redundant.
Whisper it, but some even believe ChatGPT could be instrumental in taking on Google’s dominance in the internet search space.
If this sounds fanciful — and there’s been no shortage of fanciful tech-related claims in the recent past — consider both the pace of technological change over the past 50 years, the hundreds of once vibrant and now abandoned career paths, and the fact that Google itself usurped Yahoo’s search crown.
AI development is exceptionally expensive, and for every ChatGPT breakthrough, there are hundreds of costly failures. Therefore, the best AI stocks could be predominantly the larger blue chips — which also helps to diversify any investment in the event that their AI projects fail.
Best AI stocks to watch
Nvidia
Broadcom Inc
Palantir Technologies
Advanced Micro Devices
Snowflake
Super Micro Computer
1. $NVIDIA(NVDA)$
Nvidia is well—known as one of the world’s most valuable chipmakers, used in electronics ranging from smartphones, to cars, to high—end computing. It’s worth noting that Nvidia shares have risen by more than 120% year— to— date to $136 and its Q3 revenue of $35.1 billion also increased by 94% year— on— year.
But their most advanced deep learning chips might mean that the NASDAQ company is still undervalued. They’re already in use at clients such as Alphabet and Facebook owner Meta to power both internal and user facing AI applications.
As AI becomes ever more mainstream, demand for these chips could surge, and importantly, there is a high barrier to entry — Nvidia has a wide economic moat surrounding its market position as the ‘bricks and mortar’ AI choice.
Our analysts have given the stock a strong buy rating anticipating a potential upside of 27.41% in the next 12— month period.
2. $Broadcom(AVGO)$
Broadcom Inc is a global technology company who specialise in semiconductor solutions and infrastructure software. Its solutions help manage data and optimise operations in areas such as broadband, networking, wireless and enterprise software.
The company reported strong Q3 results which were largely driven by AI demand. Revenue from these productsis expected to reach $12 billion by the end of the year.
Looking ahead to Q4, the company expects to bring in a revenue of $14 billion and an adjusted EBITDA of around 64% of its projected revenue.
Our analysts have given the stock a strong buy rating with an average price target of $200.32 in the next 12—month period, up 23.59% from its current price.
3. $Palantir Technologies Inc.(PLTR)$
Palantir Technologies is a software company which specialises in data analytics and AI. Its core product was first used by the US government as a counter terrorism tool, but it has since expanded its services to local governments and private corporations.
The company’s Q3 results for 2024 reported a revenue increase of 44% year—on—year reaching $499 million, with its US commercial revenue growing by 54% bringing in $179 million. Its EPS also grew by 100% to $0.06 compared to the same time last year.
Following this report, Palantir Technologies has raised its full year revenue guidance to $2.8 billion, with US commercial revenue reaching $687 million, up 50% year—on—year.
4. $Advanced Micro Devices(AMD)$
Advanced Micro Devices is a semiconductor company which focuses on high performance computing and graphics visualisation, both of which are important in the advancement of AI technology. Its introduction of 3—D V— Cache technology in the AMD EPYC processors has improved how data is stored and increased performance up to 66%, helping to significantly advance AI workloads.
The company’s Q3 results saw revenue increase by 18% reaching $6.8 billion, which was mostly driven by its Data Centre and Client division. Operating profit was up 34% year—on—year to $1.7 billion.
Despite this, lower than expected guidance for Q4 has negatively impacted investor sentiment.
AMD are one of the few companies with chips capable of powering AI technology. As AI continues to develop, there’s big opportunities as large tech companies such as Alphabet, Meta and Microsoft look to increase their AI budget.
Our analysts have given the stock a strong buy position, with an average price target of $184.46 in the next 12—month period, up 35.19% from its current price.
5. $Snowflake(SNOW)$
Snowflake is an AI and cloud computing company that helps businesses analyse data, streamlining it into a single source of truth so it’s easier to gain useful insights. Its tool ClearQuery makes this process easier as users can use natural language to search and analyse data.
The company reported strong Q3 results with revenue reaching $941 million up 28% year—on—year, with product revenue up 29% to $903 million. Snowflake currently has 754 Forbes Global 2000 customers, up 8% from the year before.
CEO Sridhar Ramaswamy has commented on this stating that the company’s ‘obsessive drive to produce product cohesion and ease of use has built Snowflake into the easiest and most cost—effective enterprise data platform. That is what’s leading us to win new logo after new logo, expand within our customer base.’
Our analysts have given the stock a strong buy rating with an average price target of $186.6 in the next 12—month period, up 6% from its current price.
6. $SUPER MICRO COMPUTER INC(SMCI)$
Super Micro Computer provides storage systems, servers and other products for AI technology, data centers, edge computing and 5G. It also helps customers set up and maintain their systems. Its main product offering includes a range of servers, workstations and networking devices.
In Q4 of FY24, Super Micro Computer saw revenue increase 30% year—on—year. Sales reached just over 5 million, compared to 2 million the year before. Net income also increased, reaching $353 million, up from $193 the year before.
Our analysts have given the stock a hold rating with an average price target of $41.17 in the next 12—month period, up 2.39% from its current price.
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