Historically, these three AI stocks could be big winners in the second half of 2024

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The stock market rally shows no signs of ending anytime soon, and with investors remaining bullish on artificial intelligence and the possibility of the Federal Reserve cutting interest rates later this year, there could still be catalysts to boost stocks in the coming months.

Looking for AI stocks that will perform well in the second half of the year? NVIDIA (NASDAQ: NVDA), Advanced Micro Devices (NASDAQ: AMD)and Tesla (Nasdaq: TSLA)These companies have historically performed well in the second half of the year, so now could be a good time to buy.

NVIDIA

Nvidia is an easy pick for investors these days, as it has been at the forefront of almost everything AI-related. Its powerful GPUs put it in a great position to continue to benefit from rising AI-related spending. And it continues to innovate. Earlier this year, Nvidia announced its new Blackwell chip, its best and most efficient chip yet for training AI models.

The company has generated approximately $40 billion in free cash flow over the past four quarters, giving it ample resources to continue investing in its business and further enhance its products and services, which is why many analysts and investors remain bullish on the company even as its market cap exceeds $3.3 trillion.

Historically, Nvidia has performed well in the second half of the year. Below are its second-half earnings over the past decade.

average

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

33.1%

17.1%

(3.6%)

47%

37.5%

43.3%

(43.7%)

33.9%

127.1%

63.9%

8.1%

Source: YCharts.

In the past, Nvidia has made big moves in the third and fourth quarters, but with the stock's already-high valuation, it's hard to see another phenomenal performance in the second half of 2024. But with plenty of catalysts still remaining, this AI stock is worth buying and holding.

Advanced Micro Devices

Advanced Micro Devices (AMD) is less well-known than Nvidia, but it could be an undervalued AI investment. The company was a bit late to the AI ​​chip scene, but has been a strong contender with new hardware. Microsoft and Meta Platform It plans to take advantage of these cheaper alternatives to Nvidia's chips.

Some companies may want to buy AMD chips just to reduce their reliance on a single supplier. The evidence will come in the results, which have been somewhat disappointing so far. AMD's revenue in the first quarter was just 2% up year-over-year to $5.5 billion. But if demand for its AI chips remains strong, the second half of the year could be a strong year for AMD. Here's how the company's stock has performed in the second half of the past few years:

average

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

30.2%

29.4%

(15.3%)

53.2%

74.3%

51%

23.2%

(17.6%)

120.6%

19.6%

(36.3%)

AMD has averaged more than 30% gains in the second half of the year, just slightly below Nvidia's. Investors looking to diversify away from semiconductor stocks other than Nvidia or who are concerned about the company's lofty valuation may want to buy AMD, which is sure to deliver strong results in the coming quarters.

Tesla

Tesla shares are up just 3% so far this year, but that's because of the recent surge. The company is a major electric vehicle manufacturer, and while automation is a big part of its business, it's also working on robotics and other AI technologies. CEO Elon Musk has big dreams, so to categorize Tesla as just a car stock is to miss the bigger picture.

For now, though, the state of the EV market will likely dominate the stock's performance. At least in the short term, both macroeconomic and company-specific headwinds have been weighing on Tesla. But the company recently reported better-than-expected second-quarter deliveries, helping to reignite the bull market for the stock. That could suggest that its second-quarter financial results, due to be released later this month, will be better than feared. In the first quarter of 2024, the company's revenue fell 9% to $21.3 billion, while its operating profit plummeted 56% to less than $1.2 billion.

But if future earnings improve and Tesla's upcoming robotaxi event in August provides a positive catalyst, investors may have plenty of reasons to be bullish on the stock. Consider Tesla's performance in the second half of the year.

average

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

28.5%

(5.1%)

(45.1%)

55.5%

226.8%

87.2%

(3%)

(13.9%)

0.7%

(10.5%)

(7.4%)

Source: yCharts.

Tesla isn't as stable as AMD or Nvidia, and it's had a tough year, but it also shows that with the right catalyst, Tesla can see big swings in value, and the second half of the year could be favorable for investors.

For AI investors and Musk fans, the drop in stock valuation could be a great opportunity to buy in for a long-term hold.

Should I invest $1,000 in Nvidia right now?

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Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Advanced Micro Devices, Meta Platforms, Microsoft, NVIDIA, and Tesla. The Motley Fool recommends long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

History has it that these 3 AI stocks could be poised for big wins in the second half of 2024. This was originally published by The Motley Fool.



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