Welcome to our post about the AI stocks! By the end of this article, our readers will be able to know the best AI stocks investors should buy now and hold for entire 2024.
Latest edition of the US inflation report made investors uneasy regarding the US Fed’s possible path forward about the rate cuts. Experts believe that consistent shadow of inflation is expected to stay for some time now and global investors need to adapt to this new environment.
With so much uncertainty, what should investors do? What are fund managers and experts recommending?
Stifel in its latest report titled “Embracing Change” has specifically mentioned that higher rates are “here to stay.” That being said, the company anticipates subdued but positive returns for the equities in this year. On the positive side, Stifel mentioned that inflation has shown some signs of deceleration and the risks seem to have “balanced.”
Amidst this uncertain economic environment, which sector should investors target?
Well, we believe that AI revolution is a once-in-a-century phenomenon which should shape and impact overall society at every single level. PwC, in its recent report, mentioned that 2023 Emerging Technology Survey unveiled that within just 1 year of the launch of ChatGPT, ~54% of companies which were surveyed had implemented generative AI in their businesses.
With this in mind, let now have a look at Best AI stocks investors should buy now and hold for entire 2024.
1. Salesforce, Inc.
The company provides enterprise cloud computing solutions. It offers customer relationship management (CRM) technology, which focuses on bringing companies and customers together.
It has announced results for the 3Q ended fiscal 2024. The company’s 3Q revenue came in at $8.72 billion, exhibiting a rise of 11% year-over-year and up by 10% in constant currency. Its 3Q GAAP operating margin came at 17.2% and non-GAAP operating margin was 31.2%.
It has returned $1.9 billion to its stockholders in 3Q through share repurchases and the company is now being categorised as 3rd largest enterprise software company in terms of revenue, number one AI CRM and #1 enterprise apps company.
Cash generated from operations for 3Q came at $1.53 billion, exhibiting a rise of 389% year-over-year. FCF was $1.37 billion, which showcases a rise of 1088% year-over-year. The restructuring negatively impacted 3Q operating cash flow growth by ~ (3,600) bps. The remaining performance obligation closed 3Q at $48.3 billion, exhibiting a rise of 21% year-over-year. Current remaining performance obligation closed at $23.9 billion, a rise of 14% Y/Y.
The company updated its FY24 revenue guidance and has raised its GAAP and non-GAAP diluted EPS guidance, GAAP and non-GAAP operating margin guidance along with operating cash flow growth guidance.
For 4Q24, it expects revenues in the range of $9.18 billion – $9.23 billion and FY24 revenues of between $34.75 billion – $34.8 billion. For FY24, it expects non-GAAP operating margin of 30.5% and GAAP diluted EPS of between $3.99 – $4.00. The company expects operating cash flow growth (Y/Y) of 30% – 33% in FY24.
With strong results, what are analysts expecting about this stock?
Analysts at Bank of America increased their price target on the company’s shares from $280.00 to $300.00, giving it a “Buy” rating in the report dated November 30th. BMO Capital Markets upped its target price from $252.00 to $277.00. The investment firm gave an “outperform” rating in a reported dated November 30th.
2. NVIDIA Corp
The company is a top designer of discrete graphics processing units which focuses on enhancing experience on computing platforms.
It has announced results for the 3Q ended fiscal 2024, with its revenue reaching $18.12 billion, up by 34% from 2Q and up by 206% from the previous year. Its GAAP earnings per diluted share for the quarter came in at $3.71, up by over ~12x from the previous year and up by 50% from previous quarter.
Strong growth of the company exhibits broad industry platform transition from the general-purpose to accelerated computing and generative AI. Large language model startups and consumer internet companies have been categorised as first movers. Now, the next waves have started to build.
For 4Q, the company anticipates revenue of ~$20.00 billion, plus or minus 2% and GAAP and non-GAAP gross margins are expected of ~74.5% and ~75.5%, respectively, plus or minus 50 basis points. The company’s GAAP and non-GAAP operating expenses are anticipated to be ~$3.17 billion and $2.20 billion, respectively.
Oppenheimer gave an “outperform” rating on the company’s stock, giving a $650.00 price objective in a research report dated November 22nd. Analysts at Rosenblatt Securities initiated the coverage on the company’s stock, and reissued a “Buy” rating on its shares in a research report dated November 22nd.
3. ServiceNow, Inc.
The company provides software solutions to structure and automate a range of business processes through a SaaS delivery model. It mainly focuses on IT function for enterprise customers.
It has released its 3Q23 financial results, with subscription revenues coming at $2,216 million in 3Q23, exhibiting 27% year-over-year growth and 24.5% growth in constant currency. Total revenues were $2,288 million in 3Q23, showcasing 25% year-over-year growth and 22.5% increase in constant currency.
Current remaining performance obligations came in at $7.43 billion as at 3Q23, exhibiting 27% year-over-year growth and 24% rise in constant currency.
3Q points to another quarter of strong execution as it has significantly surpassed high-end of its guidance metrics. It has significantly expanded partner ecosystem capabilities and partnerships.
Conclusion
While above are some of the best AI stocks investors should buy now and hold for entire 2024, there are other companies which are expected to benefit as a result of the advent of generative AI.
Global experts believe that 2024 is expected to be a year in which AI is expected to become even more entrenched in the business operations. Therefore, the companies operating in this industry are expected to enhanced margins and improved revenues.
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