of Nasdaq-100 The index includes 100 of the world’s largest publicly traded technology companies. Nasdaq exchange. As a result, it is often used as a barometer of the performance of the technology sector. 2023 has surged 40% so far, marking a strong recovery from last year’s 33% plunge.
But historical data suggests the index could continue to rise for the remainder of 2023. Since 1986, the Nasdaq 100 has fallen only once in a row. That was during the dot-com tech crash of 2000-2002. After three annual declines, the index fell in 1990, 2008 and 2018, but quickly recovered to become positive the following year.
This bodes very well for 2023, but it gets even better. The average return during recovery was 52%. Given that the Nasdaq 100 Index has only risen 40% so far in 2023, it suggests there is potential for further upside.
With artificial intelligence (AI) being a dominant theme in the tech sector this year, stocks in the sector may continue to lead the broader market. Let’s learn about the two AI stocks he wants investors to own if the Nasdaq 100 Index continues to rise.
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1. Opera
opera (Oprah 6.61%) The company’s stock has surged 288% this year, making it one of the best performers in the AI niche, and even the market as a whole. The Norway-based company, which develops his web browser that incorporates AI tools that transform how users interact with the internet, is not only seeing strong growth, but it’s also profitable. .
Opera browser comes with crypto wallet, VPN, messaging service and ad blocker. These features are usually only available in mainstream browsers such as: alphabetGoogle Chrome is available through third-party plugins, making Opera one of the most feature-rich products on the market. But the company’s AI tools are taken to a whole new level with 319 million monthly active users.
Opera built its own generative AI chatbot called Aria. It allows you to create social media posts, engage in discussions with users and answer even the most complex queries. But Opera is also partnering with OpenAI, which means Aria will be joined by ChatGPT, the world’s most advanced and widely used chatbot. These tools can greatly improve user productivity, reducing the need to visit third-party search engines and increasing the time users spend in Opera.
This is important because the company makes money from advertising. In other words, the more time a user spends in his Opera ecosystem, the more revenue he earns. Opera’s revenue for the first quarter of 2023 (ending March 31) was up 21% year-over-year to his $87 million. But profitability soared, with adjusted EBITDA nearly tripling and free cash flow more than doubling.
That’s because the company is spending money, especially on marketing, in a tough economic environment. This is part of a strategy to acquire a higher percentage of monetized users rather than focusing on outright user growth. In the first quarter, Opera’s average revenue per user was near a record high. Over the last four years, the company has experienced a staggering 174% growth for users in developed markets, which underpins the company’s financial success.
Opera’s stock is up 288% this year, but the company is still valued at just $2.1 billion. And based on projected sales of $390 million this year, the company has a projected price-to-sales (P/S) ratio of just 5.3. This is unusually cheap compared to other AI companies such as: Nvidiathe forward P/S ratio is 24.5.
As a result, Opera shares could rise further for the remainder of 2023, especially if the Nasdaq 100 index continues to rise.
2.C3.ai
Opera’s 2023 profits may be surprising, but C3.ai (AI 0.43%) The stock is also up 255%, not far behind. But given that C3.ai has pioneered a whole new field called enterprise AI, there may be a much broader opportunity for C3.ai. The company has developed a portfolio of over 40 off-the-shelf AI applications and has sold them to 287 corporate customers across a dozen different industries, from financial services to manufacturing to energy.
Developing a fundamental AI strategy is impractical for the average company, so outsourcing the technical work to a provider like C3.ai makes sense. For example, banks may find value in the C3.ai smart lending application designed to streamline loan approvals by using AI to quickly analyze large amounts of data. According to the company, smart lending has reduced approval time by 30%, and AI-generated loan approvals are currently 98% accurate.
Oil and gas companies, meanwhile, are using C3.ai’s technology for predictive maintenance and reducing their carbon footprint.fossil fuel giant shell has deployed over 100 applications that monitor thousands of devices, preventing potential failures before they cause environmental catastrophe. Shell uses AI to improve asset performance. At just one of his liquefied natural gas facilities he has reduced carbon dioxide emissions by 355 tons per day. This equates to 28,000 cars being removed from US roads in his one year.
Investors surged C3.ai shares this year on the back of the AI frenzy, even though revenue growth slowed to just 5% in the company’s fiscal year 2023 (ending May 31). The company is in the midst of a significant shift away from subscription-based pricing, which often leads to lengthy negotiation processes. Instead, we are moving to consumption-based pricing so that customers can join C3.ai quickly and easily by only paying for what they use.
It will take time for customers to ramp up usage, but the company believes this new strategy could return up to 20% revenue growth in FY2024. In that regard, based on his $320 million 2024 earnings forecast for C3.ai, the company’s stock is trading at his 14.2x expected P/S multiple.
That’s more expensive than Opera, but C3.ai believes the market it serves could be worth a whopping $791 billion by 2026, so the opportunity just barely scratches the surface. I just got my hands on it. Moreover, C3.ai’s share price is still 75% below its all-time high after experiencing a sharp decline in 2021-2022, so it’s still early in a recovery that could bring even bigger long-term gains going forward. It is in.
A further rise in the Nasdaq 100 Index could boost investor sentiment that both Opera and C3.ai stocks should continue to rise this year.
