Investors are always on the look out for the stocks which can generate long-term capital appreciation. There are investors who prefer to give weightage to the industry and then they screen stocks which can generate wealth. Screening the industry first helps an investor to know what is going on in the market and which are the trending industries. It goes without saying that right now the focus is on artificial intelligence industry. Therefore, at this point in time, it is very important to buy top artificial intelligence stocks which should help the investors to generate profits over the long-term. Artificial intelligence exhibits combination of a range of technologies such as machine learning, deep learning, natural language processing, computer vision, speech recognition, etc. AI is expected to be found in virtually everything, spanning from individual products and applications to widespread systems and networks.
Role and importance of artificial intelligence in 5G spans from optimizing resource allocation to data security and protecting network and enterprise assets. That being said, the concept of utilising AI in networking appears to be new area which should ultimately require more unified approach to fully realize great potential. Since the companies operating in artificial intelligence industry are expected to perform well, top artificial intelligence stocks (leaders in the industry) of some of the top companies should outpace the returns of the market. Experts believe that global context-aware processing market should touch $7.15 billion by 2025. AI in IoT Devices should surpass $105 billion in North America by 2025, and should compound at ~28% between 2023-2025. Global fund managers project that Asia Pac and North America AI markets should touch $59 billion and $55.4 billion, respectively by 2025.
With this in mind, let us have a look at top artificial intelligence stocks to buy.
1. Advanced Micro Devices, Inc.
The company has supported innovation in high-performance computing, graphics and visualization technologies. These are the building blocks for gaming, immersive platforms and data center.
The company has released its results for 2Q23, with its revenue coming at $5.4 billion, gross margin at 46%, operating loss at $20 million and net income at $27 million. Its diluted EPS was $0.02. Results of the company were supported by the ramp up of 4th Gen EPYC and Ryzen 7000 processors. Its AI engagements grew by more than 7x in 2Q23 because multiple customers initiated or expanded programs helping future deployments of Instinct accelerators at scale.
For 3Q, the company expects Data Center and Client segment revenues to each increase by double-digit percentage as compared to 2Q. This should stem from increased demand for EPYC and Ryzen processors, partially offset by Gaming and Embedded segment declines. In 2H, the company expects expansion of gross margin and a modest rise in operating expenses.
2. Micron Technology, Inc.
Initially, Micron Technology, Inc. focused on designing and manufacturing DRAM for PCs. Later on, the company expanded into NAND flash memory market.
Revenue of the company in 3Q23 came in at $3.75 billion in comparison to $3.69 billion for the prior quarter and $8.64 billion for the same period of the previous year. GAAP net loss of the company was $1.90 billion, or $1.73 per diluted share. Operating cash flow of the company came in at $24 million in comparison to $343 million for the prior quarter and $3.84 billion for the same period of the previous year.
The company delivered fiscal 3Q revenue, gross margin, and EPS all above midpoint of the guidance range which it provided. The company believes that memory industry has passed its trough in revenue, and it projects that margins should improve as industry supply-demand balance gets gradually restored.
In the long term, the company’s technology leadership, product portfolio, and operational excellence should continue to strengthen its competitive positioning throughout diverse growth markets, including AI and memory-centric computing. Investments in capital expenditures (Net) came in at $1.38 billion for 3Q23, that resulted in adjusted free cash flows of negative $1.36 billion. It closed 3Q23 with cash, marketable investments, and restricted cash of $11.40 billion.
For 4Q23, on GAAP basis, the company expects revenue of ~$3.90 billion (± $200 million) and gross margin of -12.5% (± 2.5%). Operating expenses are expected to be ~$946 million (± $15 million) on GAAP basis in 4Q23.
3. Salesforce, Inc.
Salesforce Inc offers enterprise cloud computing solutions. It provides customer relationship management (CRM) technology which brings companies and customers together.
In 2Q24, the company’s revenue came in at $8.60 billion, exhibiting a rise of 11% year-over-year, and up 11% in constant currency. GAAP operating margin of the company came in at 17.2% and non-GAAP operating margin was 31.6%. The company raised its FY24 revenue guidance to $34.7 billion – $34.8 billion, exhibiting a rise of ~11% year-over-year. It has raised FY24 GAAP operating margin guidance to ~13.3% and non-GAAP operating margin guidance to ~30.0%.
The company continues to execute against its profitable growth framework, delivering 17.2% GAAP operating margin and 31.6% operating margin (non-GAAP). Subscription and support revenues came at $8.01 billion, exhibiting a rise of 12% year-over-year. Professional services and other revenues were $0.60 billion, a rise of 3% year-over-year.
Cash generated from operations for 2Q came in at $0.81 billion, exhibiting a rise of 142% year-over-year. FCF was $0.63 billion, up 379% Y/Y. The company continues to accelerate its transformation and continue to deliver strong shareholder value.
To sum up
While there are several artificial intelligence stocks to buy in which investors can expect, the above are some of the screened top AI stocks which investors can consider going long on. The company’s business model, growth opportunities, financial risk profile, financial health, etc. should be analysed before making any investment decisions. Wall street analysts believe that the above stocks check all the boxes of basic criteria for top artificial intelligence stocks. In 2022, release of ChatGPT 3.0 brought new awakening to several possibilities related to generative artificial intelligence. Therefore, this growth trend is expected to continue for foreseeable future.
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