As the third quarter of 2023 is in full swing, many tech companies have laid off employees, citing the weak economy and demand. A similar situation is emerging in the third quarter as companies continue to lay off thousands of jobs. However, the recent wave of artificial intelligence and machine learning is strong, and many companies are making great strides in the tech world. This led to AI stocks being bought.
As an example, Adobe has leveraged AI to power its creative cloud, announcing the new Adobe Illustrator and many other exciting products. OpenAI also continues to expand its AI field with new products that can convert text into accurate images. Midjourney and Dall-E have created Gothic art and virtual art exhibits respectively, showing how the world is advancing day by day with new technologies and innovations derived from AI. AI is at the forefront of innovation, and as of July 2023, these three companies are aiming for first-class long-term growth with AI, although there will still be short-term job cuts until the U.S. recovers from the looming recession.
ASML Holding (ASML) operates in the lithography sector and manufactures machinery essential to the production of computer chips. The company dominates the market with its extreme ultraviolet (EUV) systems, with its share price growing 37.20% year-to-date. ASML has demonstrated excellent financial results, exceeding both earnings and EPS expectations. Moreover, AI is boosting the demand for semiconductors and the global industry is expected to grow at a CAGR of 12.2% through 2029, which in turn drives the global lithography equipment market to grow at a CAGR of 9.44% through 2028.
The company is the world’s only EUV equipment maker, well ahead of the industry’s two closest competitors, Nikon and Canon. This means ASML’s EUV equipment is the only option for making chips with sub-5nm transistors. This technology is the company’s main competitive advantage as the equipment is very complex and there are no alternatives.
Zscaler Incorporated (ZS) is a leading US cloud security company that continues to be at the forefront of cloud security innovation by leveraging AI and ML in its Security Service Edge (SSE) platform. Zscaler boasts strong financials, generating revenue of $418.8 million, exceeding analyst expectations in the second quarter by $7.2 million, growing at a CAGR of 52.5%. ZS stock is even showing signs of being undervalued at $0.48 normalized EPS, $0.05 more than analysts expected, and projected future growth of 59.1%.
Zscaler unveiled new advanced security solutions at the Zenith Live cybersecurity trade show. This addresses the desire of IT and security teams to ensure the safe use of generative AI without the risk of intellectual property compromise or data loss. With a wide range of cybersecurity solutions that can be applied to different verticals, her Zscaler is poised to grow revenue while offering more solutions to the industry.
Symbotic Incorporated (SYM) is a leading robotics company completely redefining warehouse distribution processes, leveraging AI-powered software to handle goods with unmatched speed and accuracy. While competitors have implemented similar processes in their warehouses, Symbolic stands out with a reputable customer base that includes large companies such as Target and Albertsons. Year-to-date, SYM shares are up more than 266%.
Management also reported on recent developments that will drive future growth. First, Daniela Rath, a professor at the Massachusetts Institute of Technology who brought “deep experience, knowledge and research” to the company, was elected to the board last March. On a broader scale, the AI market is growing rapidly and is projected to grow at a CAGR of 20.2% over the next seven years, jumping from $52 billion to $226.6 billion by 2030.
Overall, from impressive year-to-date growth to optimistic expectations for the future, SYM is a strong AI stock that will strengthen its portfolio for years to come.
