Looking for new high-growth stocks to add to your portfolio? You could start with the most obvious choice right now: artificial intelligence (AI) companies.
It no longer seems like an exaggeration to describe AI as a once-in-a-generation investment opportunity. While we don't know exactly what the AI industry will look like five years from now, it's clear that AI is living up to the hype today. The main challenge now is figuring out which companies stand to benefit most.
So, I'm going to talk about three artificial intelligence stocks that are still undervalued in light of their potential, and perhaps all three of these stocks could soar once more investors realize this.
1. Palantir Technologies
You may have heard of ChatGPT from OpenAI. Also, the software giant Microsoft (Nasdaq: MSFT) The company combines its Bing search engine with an AI-powered conversational assistant called Copilot. You may have played around with this tool before. alphabetof (Nasdaq: GOOG) (Nasdaq: GOOGL) Similar chatbots, Gemini (formerly known as Bard) There is no denying that these tools are not only really useful for many users, but also fun to play with.
However, from a monetization perspective, these platforms do not seem to be very commercially attractive. However, ChatGPT and Copilot are not the best use cases for artificial intelligence technology. AI platforms built specifically for businesses have proven to be much more marketable.
input Palantir Technologies (NYSE: PLTR).
As a consumer, you may not have used the service. General MillsCBS Television Network, and Aramark But they are just the latest customers for Palantir, which is using its products to help a growing number of companies make better use of the vast amounts of digital data it has collected over the years. The company's software is also used by the US military, intelligence agencies and energy companies. ExxonMobil,Pharmaceutical company SanofiJust one example: Until now, the data analysis options haven't been powerful enough to make it worth paying for.
But Palantir Technologies Inc. is only living up to a fraction of its potential. Analysts expect the company's sales to grow 21% this year and to hit the same record next year. CEO Alex Karp's only complaint is that the company can't keep up with demand.
The stock is doing well, by the way: up more than 50% in the past year and more than 130% in the past two years.
But given the company's profitability and the fact that it's already a market leader in its niche, there's reason to expect Palantir's stock could skyrocket. Gartner and Forrester Research Both companies have consistently ranked the company as one of the top companies in the AI data analytics space, compared to much larger companies such as Microsoft and Alphabet.
2. Supermicrocomputer
Most people understand NVIDIAof (NASDAQ: NVDA) Its hardware sits at the heart of most artificial intelligence data centers, with analysts at Mizuho Securities suggesting the company controls around 90% of the AI processor market.
These graphics processing units (GPUs) and similarly powerful processors are just one piece of the technological puzzle that is the AI data center. An artificial intelligence server is actually a huge bank of individual computers built around processors and organized into a giant rack (or multiple racks). A company must manufacture these computers and assemble the tower that contains them.
that is Super Microcomputer (NASDAQ:SMCI) Whether customers like Nvidia's technology Intelof, and whether the client wants to use AmazonLike cloud computing services from and cloud computing services from Microsoft, Super Micro Computer can provide.
And the company is doing amazingly well: Last quarter, sales were up an astounding 200% year-over-year, continuing a well-established growth trend that's expected to continue going forward: Analysts are predicting a 60% increase in revenue for the next fiscal year.
And this is just the beginning: Precedence Research predicts the AI infrastructure market will grow at more than 27% annually through 2033 as more organizations realize they need it to stay competitive and rush to build out their AI platforms.
Supermicro Computer shares have plateaued after falling from a peak in March, but they're likely just taking a breather before the next upswing.
3. Alphabet
Last but not least, add Alphabet to the list of AI stocks that could skyrocket in the near future.
Though it's a well-respected technology company, some may find it hard to see Google's parent company as an AI company. Its Gemini/Bard chatbots make smart use of AI technology, but they don't have many practical commercial applications, and the company's core business is advertising. Adding an AI revenue stream to the mix could be a big undertaking.
But Alphabet is up to the challenge, and it's poised to be more worthy of the effort than you might think.
Alphabet isn't building an AI business from scratch aimlessly just to see what happens. The company is using artificial intelligence as a way to further improve its existing advertising business. Last week, for example, the company announced that it will soon make AI-generated ads available to advertisers. The company also said that the ads will soon start appearing within a new AI overview, a separate category of search results for anyone who uses the Google search engine. Of course, more meaningful data about Google users is useful not just to advertisers but also to Alphabet.
But what could really sustain and even accelerate the stock's current gains is renewed optimism from the analyst community. Bank of America Analyst Justin Post recently reiterated his buy recommendation on Alphabet's stock, citing the company's latest advancements in AI advertising technology. Goldman Sachs Analyst Eric Sheridan said something similar.
Both companies acknowledge that advertising is and will continue to be Alphabet's biggest cash cow, but the company's foray into artificial intelligence is complementary to, not in conflict with, that business, and investors may be underestimating the revenue growth it expects from that business.
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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of The Motley Fool's board of directors. James Brumley owns shares of Alphabet. The Motley Fool owns shares of and recommends Alphabet, Amazon, Bank of America, Goldman Sachs Group, Microsoft, NVIDIA, and Palantir Technologies. The Motley Fool recommends Gartner and Intel and recommends the following: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
3 Artificial Intelligence (AI) Stocks Possibly Set to Soar was originally published by The Motley Fool.
