Let's take a closer look at the top three rising stars in the machine learning stock world that you can add to your portfolio in July to reap big rewards.
In the early 2020s, machine learning was a small industry with limited applications outside of the marketing department, but the rise of AI over the past two years and the arrival of faster, more efficient chips has opened the door to innovation.
Most of the big technology conglomerates are investing billions of dollars in research projects to stay ahead of their competitors.
However, investors are no longer interested in promising projects. The focus has shifted to projects that will impact the company's sales. So far, some clear winners have emerged, and the following three stocks show great progress in machine learning:ML) department.
Adding them to your portfolio as part of a long-term investment strategy could lead to big gains in the future. Below is a detailed review to help you understand why you should invest in these three stocks in the emerging machine learning sector in July 2024.
Snowflake
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Snowflake (New York Stock Exchange: snow) is a company that develops solutions for the cloud computing industry, including advanced data analytics and training of machine learning algorithms. Since its 2021 IPO, this machine learning stock has been on an upward trend, peaking at $392.15 in late 2021.
The company's stock price has since fallen to $135 per share due to the bearish market that followed its IPO and the market correction caused by the company's overvaluation at the time of its IPO. Despite this decline, the market remains optimistic about the company's future performance.
Snowflake reported revenue of $789.6 million in its first quarter fiscal year 2025, up 34% year over year. Additionally, it reported FCF of $313.5 million. Snowflake has maintained positive free cash flow (FCFC) over several quarters.
In its first-quarter earnings report, Snowflake forecast that its revenue for fiscal 2025 will grow 24% to $3.3 billion.
On July 12, SNOW's stock price fell. AT&T (New York Stock Exchange:TSnowflake revealed that a hack led to the theft of nearly all of its customers' call and text message records. The data was obtained using login credentials stolen from a Snowflake employee. Snowflake first disclosed the data breach about seven weeks ago. However, this is likely a temporary setback.
Analysts are optimistic about SNOW's future. The company's average expected price is $198.51, up 43.66% from the recent price of $135.75. The most optimistic analyst expects SNOW to reach $240, up 73.69%.
AeroVironment (AVAV)
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AeroVironment (Nasdaq:AVAV) is a leader in designing AI-enabled UAVs and advanced weapon systems for the military, as well as supplying first responders and space missions.
The company announced its participation in the high-profile Mars Helicopter Mission, which marked the first flight of a drone on Mars in June 2020. The company is also working with NATO customers on the supply of drones for use in the Ukraine conflict.
AeroVironment announced its fourth quarter and full-year results for fiscal year 2024 on June 26.Year-on-year change) quarterly revenue increase, while full-year revenue increased 33% year over year to $716.7 million.
In its fourth quarter and fiscal year 24 financial results, AeroVironment expects revenue to grow approximately 12% to $790 million to $820 million in fiscal year 25. The company expects net income to increase to $83 million from $59.67 million in fiscal year 24.
Analysts remain optimistic about the future of this Machine Learning stock, with an average target price of $191.83, which represents an upside of 9.40%, while the most optimistic analyst expects the stock price to rise 39.73% from the current price of $173.25 to $245 per share.
Arista Networks (ANET)
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Arista Networks (New York Stock Exchange:Annette) is the go-to service provider of cloud networking services for large data centers, cloud service providers, and high-performance cloud networking. Their high-throughput solutions are essential for delivering the processing power required for large-scale machine learning workloads.
In a recent report, Argus analyst Jim Kelleher noted that the rise of AI is a boon for the cloud-based data networking services provider, and as a result, he has given the stock a buy rating.
Arista highlighted several achievements during its fiscal first quarter 2024 presentation, including market share gains in high-speed data center switching. Cisco (Nasdaq:Central Intelligence Agency) decreased.
The company reported that revenue for the first quarter of 2024 reached $1.571 billion, up 16.3% year over year. Non-GAAP gross margin increased to 64.2% from 60.3% in the first quarter of 2023. Arista Networks expects revenue of $1.62 billion to $1.65 billion for the upcoming second quarter. It also expects non-GAAP gross margin to be about 64%.
During an investor call with analysts, Arista CEO Jayshree V. Ullal said he expects the company's AI revenue to grow to $750 million in 2025, most of which will come from Ethernet switches, an area the company has been doing extensive research in and launched a new product in June.
Analysts rate the stock as a Hold. Analysts predict an average price target of $333.25 over the next 12 months, which would imply a 7.33% decline compared to the recent price of $361.90. The most optimistic analyst predicts a price of $425.00, an increase of 18.19%. Despite the expected price correction, forecasts for the decade remain optimistic due to the growing use cases of machine learning by large enterprises.
As of the date of publication, Joel Lim 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 author and are subject to InvestorPlace.com's publication guidelines.
On the date of publication, the editor in charge did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
