What do you get when you combine hit stock prices with an economic and technological niche that will become increasingly important? You get stocks with a low cost of entry – plus high potential and approval from Wall Street analysts.
The niche we are talking about is AI, artificial intelligence, once a pipe dream of science fiction but today computer technology is constantly growing more important. AI powers the rapidly expanding Internet of Things, is the technology behind game changers like 3D printing, and has already changed the world of online marketing. When applied to autonomous vehicles, it even promises to change the way we travel forever. No matter where you go, you can’t escape AI.
The reduced prices are a product of the current bear market and ever-present supply chain snarls. We’ve been facing a semiconductor chip shortage since last year, and it’s affecting everything from heavy industry to healthcare to high-end computing. But the supply issues are starting to resolve, and demand for AI-related technology remains high.
So let’s dive in, and look at some artificial intelligence stocks that are primed for growth in the coming months and years – and whose prices are now a low entry point. We will take the latest data from the TipRanks platform, add in the analyst commentary on these stocks, and get a complete picture.
Nvidia Corporation (NVDA)
First up is Nvidia, one of the leading names in the chip industry. Nvidia has long been known for its high market share – better than 80% – in the graphics processing unit (GPU) segment, an important coup for this company, because high-end GPUs are in high demand. The chips, originally designed to allow sharper, more realistic graphics for computer games, have found applications in plenty of other sectors, where their high computing power has enabled AI and machine learning technology in data processing, medical imaging , smart town and city. technological, and autonomous machines.
Nvidia has customers in all of those areas, and the autonomous engines—especially vehicles—were a hot spot in the company’s recent fiscal 2Q23 earnings report. In the quarter, which ended on July 31, Nvidia’s revenue and earnings fell sharply from Q1, but drilling down shows that the company’s news also had some positive aspects.
At the top line, revenue fell sequentially from $8.3 billion to $6.7 billion. At the same time, Q2 results were still up 3% y/y. Earnings, however, have not been so successful. Diluted non-GAAP EPS fell q/q from $1.36 to $0.51, a 51% y/y decrease. And that is only part of the bad news.
Nvidia’s revenue was well below the $8.1 billion expected, which has been attributed to a contraction in the PC gaming segment. And the company pulled back on its Q3 guidance, spooking investors — and prompting a sharp drop in the stock’s post-earnings release.
On the positive side, Nvidia saw big gains in its Data Center and Automotive segments, both areas where the company’s high-end chips have strong potential, AI capable of expanding its market share – they offer strong computing capabilities , with the support of a company that has a. reputation for delivering high quality in these areas in particular. Data Center revenue increased to $3.81 billion in fiscal Q2, for a d/y gain of 61%. The company’s automotive business is smaller, generating Q2 revenue of $220 million – but that was up 45% y/y and 59% q/q, indicating not just gains, but accelerating gains.
5-star Truist analyst William Stein acknowledges Nvidia’s slippage in gaming revenue, describing it as ‘bitter medicine’, but praises the stock for its AI leadership. He writes, “Bears will focus on the possibility of a vulnerability spreading to a datacenter. We recognize this possibility, but we continue to see NVDA as best positioned to capture share in the datacenter long-term, as its GPU leadership is sticky, and its newer products (DPU & CPU) are aligned with architectures Emerging disaggregation computing…. In CQ2, Automotive revenue grew ~45% y/y to $220m and set an all-time high. Management noted strength driven by self-driving and cockpit AI solutions, partially offset by declining legacy cockpit revenue. It looks like the long-awaited growth in NVDA’s automotive business is finally coming to fruition. Datacenter revenue was also strong, driven by demand in vertical markets and North American hyperscale customers.”
In addition to a positive outlook, Stein gives NVDA shares a Buy rating; Its $198 price target suggests a one-year upside potential of 50%. (To view Stein’s track record, Click here.)
Turning now to the rest of the Street, where the stock has 31 reviews on file, and 23 Buys weighed against 9 Holds for a Moderate Buy consensus rating. Shares of Nvidia are selling at $131.98 and their average price target of $206.71 indicates a potential 57% improvement in the next 12 months. (See Nvidia stock forecast at TipRanks.)
Marpai, Inc. (MRAI)
From semiconductor chips we move to the healthcare sector, where technology firm Marpai has seen an opportunity to introduce AI tech into the third party administrator (TAP) segment of the field. This is a $22 billion market, and Marpai uses AI to design system features that will increase the quality of care while reducing the cost of claims and reducing stop-loss premiums. Marpai’s approach to TAP is based on the use of proprietary predictive algorithms to streamline processes.
This health management technology company is relatively new to the public markets, having held its IPO at the end of October last year. The offering, which opened on the 27th and closed on the 29th of the month, sold over 7.1 million shares at $4 each, and raised $28.75 million in gross proceeds, surpassing the $25 million originally planned. However, since the IPO, the stock has fallen 78%.
Marpai has issued 4 quarterly financial reports since going public, and has consistently shown a top line between $4.8 million and $6.2 million. The most recent report, for 2Q22, showed revenue of $5.6 million, in the middle of that range – and slightly above expectations. On earnings, the company reported a net loss of $6.66 million, or 34 cents per diluted share. On a per share basis, this was a significant improvement on the 54-cent diluted EPS loss recorded a year earlier.
Giving an in-depth look at Marpai, Maxim Group analyst Allen Klee describes the company’s product innovation and potential: “MRAI is well positioned to drive innovation in the third-party administrator (TPA) space. Employers who self-insure the health care of their employees can use Marpai to process claims and administer benefits. The company’s technology uses artificial intelligence (AI) to predict and mitigate potential high-cost health events, as well as automatically evaluate claims, reducing costs. The technology can also reduce waste in the system by directing members to the most cost-effective providers ahead of time. Through these efficiencies and cutting overhead from traditional healthcare plans, Marpai believes employers can reduce healthcare costs by over 25%.”
Believing Marpai can deliver for investors, Klee rates the shares a Buy, and his 12-month price target of $2.50 implies a strong gain of 162%. (To view Klee’s track record, Click here.)
Some stocks fly under Wall Street’s radar and Marpai seems to be one such name; Klee’s is the only analyst review posted in the last 3 months. (See Marpai stock forecast at TipRanks.)
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Disclaimer: The views expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.