Since the first mainstream media coverage on the growth of Artificial Intelligence (AI), investors have paid close attention to this rapidly growing new industry.
Investors are closely monitoring AI-related stocks, hoping to capitalize on this potent megatrend. The implementation and utilization of AI across diverse sectors, including healthcare, finance, manufacturing, and transportation, have unveiled new revenue streams previously unexplored.
Industry experts are now predicting remarkable growth for the AI sector, with a projected compound annual growth rate of 38.1% between 2022 and 2030. During this period, the market is anticipated to reach a staggering value of US $1.8 trillion.
For investors seeking to harness the potential of this megatrend in the coming months, and possibly years, the key lies in identifying companies with distinctive AI technology or applications that confer a clear advantage in their respective fields.
As with any rapidly expanding industry, not all AI stocks will fulfill the early promises. Therefore, it is critical to examine each potential investment carefully, making well-informed decisions that align with your financial circumstances and acceptable risk threshold.
To that end, here are five AI stocks that currently appear primed for significant upside potential in the foreseeable future and warrant a closer look:
Top AI Stock #1 – C3.ai, Inc. (NYSE: AI)
C3.ai Inc. (NYSE: AI) provides SaaS (software as a service) applications to develop, deploy and run enterprise-scale AI applications. Offerings include purpose-driven software suites for supply chain optimization and energy efficiency, and industry-specific solutions for financial services and oil and gas.
The company’s C3 AI application platform enables customers to design, develop, and deploy enterprise AI applications; C3 AI Ex Machina to for analysis-ready data; C3 AI CRM, an industry specific customer relationship management solution; and C3 AI Data Vision that visualizes, understands, and leverages the relationships between data entities.
C3.ai recently reported revenues of $78.4 million, up 17.6% year-over-year, topping analyst expectations by 3%. The company also reported that customer engagement grew 80% year-over-year.
Independent analysts have established a consensus price target of $29.91 for C3.ai, Inc., which resents a forecasted upside of 26.8% from its current price of $23.58 as of this writing.
Top AI Stock #2 – Palo Alto Networks, Inc. (Nasdaq: PANW)
Palo Alto Networks Inc. (Nasdaq: PANW) is a leading cybersecurity company that provides advanced security solutions to businesses, governments and organizations worldwide.
Founded in 2005, Palo Alto Networks has become a market leader in next-generation firewall technology and cloud-based security solutions. In fact, the company is one of the largest of its kind and it did $7.5 billion worth of business last year.
The company’s mission is to protect its customers from cyber threats by providing innovative security solutions that are easy to use and deploy. Palo Alto Networks offers various products and services to protect networks, endpoints and cloud-based applications from advanced cyber-attacks.
Analysts expect the current fiscal year’s revenue to roll in nearly 16% better than last year’s, extending a long-standing pace that’s also expected to extend into the next several years. Per-share earnings have been growing at a similar clip, and are also expected to carry on.
The consensus price target established by analysts for the company’s shares is $314.82, representing a forecasted upside of 12.3% from its price of $280.41 as of this writing.
Top AI Stock #3 – UiPath Inc. (NYSE: PATH)
UiPath Inc. (NYSE: PATH) is a leading software company specializing in robotic process automation (RPA) technology.
Headquartered in New York City, but founded in Bucharest, Romania, UiPath offers a comprehensive platform that automates repetitive tasks and enables businesses to operate more efficiently.
The company was founded in 2005 by Romanian entrepreneurs Daniel Dines and Marius Tirca and has since grown to become a significant player in the RPA industry. UiPath has received numerous awards and accolades, including being named a leader in the Gartner Magic Quadrant for RPA Software in 2020.
The company has recently introduced new products into the market designed to help automation and organizational development. Its strategic partnerships with software industry leaders also allow UiPath Inc. to enhance its long-term position in the market.
Independent analysts have established a consensus price target of $27.41 for UiPath, Inc., which resents a forecasted upside of 27.9% from its current price of $21.43 as of this writing.
Top AI Stock #4 – ServiceNow, Inc. (NYSE: NOW)
ServiceNow, Inc. (NYSE: NOW) provides end to-end intelligent workflow automation platform solutions for digital businesses in the North America, Europe, the Middle East and Africa, Asia Pacific, and internationally.
The company aims to enable organizations to digitize and automate their business processes, increasing efficiency and productivity.
ServiceNow’s core product is its platform-as-a-service (PaaS) offering, allowing businesses to create custom applications and workflows tailored to their needs. The platform encompasses various modules, including IT Service Management, Human Resources, Customer Service Management, and Security Operations. By leveraging ServiceNow’s platform, organizations can automate routine tasks, streamline communication and collaboration and enhance employee and customer experience.
In the fourth quarter of 2023, ServiceNow had a record number of new clients sign agreements with net new annual contract values in excess of $1 million.
These new contracts include agreements with multinational financial services companies and demonstrate ServiceNow’s capacity to draw high-quality customers from a variety of sectors.
In addition, the company reported a 33% year-over-year growth rate as well as a notable rise in agreements exceeding $1 million in net new annual contract value in Q4 2023. This shows that the business successfully lands bigger contracts and grows its income base.
Another outstanding aspect of the company’s business is its best-in-class renewal rate in the fourth quarter of 99%, which speaks to the high degree of value the company is delivering for its clients.
Top AI Stock #5 – Super Micro Computer, Inc. (Nasdaq: SMCI)
Super Micro Computer, Inc. (Nasdaq: SMCI) is a global leader in high-performance, high-efficiency server technology, and innovation. The company was founded in 1993 and is headquartered in San Jose, California.
Super Micro has become a trusted partner in the technology industry, focusing on delivering advanced computing solutions to a diverse range of customers, including data centers, cloud computing providers, and enterprises. The company’s products include server systems, storage solutions, networking devices, and software.
Despite operating behind the scenes in the world of AI, the company has seen earnings growth 5 times faster than its industry’s average over the past 12 months.
The company works closely with powerhouse clients including Nvidia, Intel and other chip leaders and is able to immediately integrate their latest chip innovations into its own platforms.
Super Micro Computer has received a consensus rating of Moderate Buy from independent analysts based on 9 buy ratings, 3 hold ratings and 1 sell rating.