3 AI Stocks to Buy on the Dip May 2024

Stocks to buy

Artificial intelligence has been in the limelight over the past one year, leading to investors to search for AI stocks to buy. Today, AI is not just a technological tool but a foundational element that is transforming how businesses interact with information, make decisions and interact with customers.

The global AI market is projected to grow to $2.5 trillion by 2032. The market is expected to grow at a compounded annual growth rate (CAGR) of 19%. This growth is primarily expected to be driven by AI’s ability to significantly enhance efficiency and decision-making processes across critical sectors like healthcare, finance and cybersecurity.

The generative AI market alone is expected to reach $1.3 trillion by 2032. This growth is expected to be driven initially by investments in infrastructure for training large language models.

Despite the AI market’s rapid expansion and the sector’s pronounced rally in recent years, certain stocks still present significant value. Given this backdrop, here are the three AI stocks poised for potential growth, making them attractive buys in May 2024.

Palo Alto (PANW)

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Palo Alto (NASDAQ:PANW) is a frontrunner in the cybersecurity sector, renowned for its robust suite of security solutions. The company incorporates AI across various segments of its cybersecurity platform, from network security to advanced threat prevention.

In recent quarters, Palo Alto Networks has shown impressive financial growth, marked by a consistent increase in revenue and improved profitability. During fiscal Q2 2024, the company recorded earnings per share (EPS) of $1.46, beating expectations by 16 cents.

Moreover, the revenues of $1.98 billion saw a significant 19.33% increase year-over-year (YoY). For the full year 2024, Palo Alto Networks anticipates billings between $10.10 billion and $10.20 billion, with revenue projections between $7.95 billion and $8.00 billion. The company’s strong financial results have boosted the market’s optimism in PANW’s growth prospects. PANW’s stock has increased by 65% over the past year. Wall Street analysts are optimistic on the company and have an average target price of $335 on the stock.

ServiceNow (NOW)

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Businesses continue to accelerate their journey towards digital transformation. ServiceNow (NYSE:NOW) stands out as a pivotal force in shaping how enterprises manage their workflows across various departments.

ServiceNow leverages AI to automate routine and complex workflows across various departments, such as IT, customer service, human resources and security operations. This automation helps speed up response times, reduce manual errors and free up employee bandwidth for more strategic tasks.

The company’s financial health is robust, marked by a consistent track record of growth. ServiceNow reported strong first-quarter results for 2024, outperforming expectations in both earnings per share and revenue. The company announced an EPS of $3.41, beating estimates by 28 cents. Moreover, the revenues of $2.60 billion, were up 24.19% YoY and exceeded forecasts by $14.17 million.

CEO Bill McDermott expressed optimism about the transformative impact of AI on business operations. During the earnings call, he noted that AI is driving productivity and operational efficiency across various industries.

Palantir Technologies (PLTR)

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Palantir Technologies (NYSE:PLTR) has carved a niche for itself in the competitive landscape of data analytics and artificial intelligence. The company’s innovative approach to AI integrates complex algorithms and data analytics to provide actionable insights and operational solutions, making it a critical asset in data-driven decision-making processes.

The introduction of its Artificial Intelligence Platform (AIP) boot camps has been a transformative strategy for Palantir. These boot camps serve as intensive training sessions that equip businesses with the necessary tools to integrate AI into their daily operations effectively. Last year, Palantir boosted boot camps for over 500 organizations.

Despite its recent stock price correction, Palantir’s fundamentals remain strong. Palantir’s recent financial results reflect robust growth, with a reported 21% increase in revenue in the first quarter of 2024 compared to the previous year. This growth is driven by a 40% increase in its U.S. commercial segment. This underscores the potent impact of its targeted strategies in this area.

On the date of publication, Mohammed Saqib did not hold (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

Mohammed Saqib is a research analyst with experience in equity research and financial modeling. He has extensively covered stocks listed in the tech sector using fundamental analysis as the cornerstone of his approach. Currently pursuing a master’s degree in finance, Saqib is dedicated to obtaining the CFA charter to augment his expertise in the field further.

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