In the rapidly evolving world of technology, AI stocks are emerging as some of the most promising investments for the future. The dynamism of this sector cannot be understated, even as market trends ebb and flow.
While the buzz around these companies may have dimmed slightly, a closer look reveals several artificial intelligence stocks poised for significant growth and innovation. Amid the vast technological landscape, three standout names emerge as surprisingly reasonable bets for savvy investors.
These stocks not only reflect the robust potential of AI technology but also showcase financial resilience. They are more than just fleeting tech trends; they’re laying the foundation for the future. Dive deeper to discover which AI stalwarts might just redefine your investment strategies.
Dynatrace (DT)
A global technology firm, Dynatrace (NYSE:DT) provides a software observability platform based on AI and automation. Per its public profile, Dynatrace’s innovations are used to monitor, analyze, and optimize application performance, software development, and security practices, among other functionalities. Since the start of the year, DT gained over 26%, though trading has been choppy.
Financially, Dynatrace ranks among the more compelling ideas for AI stocks due to its broad strengths. For example, its cash-to-debt ratio comes in at 8.91X, higher than almost 65% of its peers. Also, the company’s three-year revenue growth rate clocks in at 24.5%, above 80% of sector rivals.
To be fair, DT appears overpriced relative to common valuation metrics. However, investment data aggregator Gurufocus argues that based on its proprietary calculations of intrinsic value, DT may be significantly undervalued. Analysts seem to agree with Gurufocus, rating DT a strong buy. They anticipate shares hitting $57.06, implying almost 18% growth.
Qualcomm (QCOM)
While primarily known for its connectivity-focused semiconductors, Qualcomm (NASDAQ:QCOM) also ranks among the top artificial intelligence stocks. Basically, you can’t separate digital intelligence from innovations in connectivity. As Qualcomm’s website explains, the rapid pace of generative AI integration places higher demands for AI processing to be distributed between the cloud and devices. Naturally, the tech giant intends to close this gap.
Now, what makes QCOM appealing as one of the AI stocks for contrarians is that Wall Street seems focused on near-term pressures. For example, semiconductor specialists have suffered because of lowered demand for smartphones and PCs. Still, that also means that QCOM now trades at a forward earnings multiple of 12.14x, favorably lower than almost 80% of its peers.
Bullish trading actions in the options market – including bought calls and sold puts – imply that a recovery may soon materialize. If so, QCOM is one of the AI stocks to watch. For good measure, analysts peg shares as a moderate buy with a $135.35 target, implying 21% upside.
Baidu (BIDU)
Heading across the Pacific, China’s multinational internet tech giant Baidu (NASDAQ:BIDU) might not be getting much love. After all, concerns have started to rise about the underlying nation’s economic slowdown. Still, that dark cloud detracts from Baidu’s intriguing developments in digital intelligence. For instance, its researchers are developing a wide spectrum of machine learning algorithms with a focus on deep learning.
To be sure, it’s not that BIDU is performing badly, with shares up over 12% since the January opener. However, it’s arguably underperforming against its potential. Despite some broader headwinds, Baidu remains a consistently profitable enterprise. Also, BIDU trades at a forward earnings multiple of 13.4x. In contrast, the underlying sector median comes in at a loftier 18.52X.
Enticingly, Fintel’s options flow screener – which targets exclusively big block trades – shows a heavily written (sold) volume of the Jan 17 ’25 125.00 Put. At face value, that implies a long-term floor at the $125 strike. Currently, BIDU trades at over $133.
Analysts peg shares as a strong buy with a $186.43 target, implying almost 40% upside. Thus, it’s a top name among artificial intelligence stocks to gamble on.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.