Are you looking for new high-growth stocks to add to your portfolio? You could start with the most obvious option right now: artificial intelligence (AI) players.
Describing AI as a once-in-a-generation investment opportunity no longer seems like an exaggeration. Even without knowing exactly what the AI industry will look like in five years, it’s pretty clear at this point that it will live up to the hype. The main challenge now is simply figuring out which companies are best positioned to benefit from this.
Which brings me to three artificial intelligence stocks that haven’t yet been fully valued in light of their potential. Any of these three tickers could undoubtedly explode higher once more investors connect the dots.
1. Palantir Technologies
You’ve probably heard of OpenAI’s ChatGPT, and perhaps you’ve noticed that software giant as well Microsoft (NASDAQ: MSFT) has merged its Bing search engine with an AI-powered conversational assistant called Copilot. Maybe you’ve even tinkered with this tool, or with it Alphabet‘S (NASDAQ: GOOG) (NASDAQ: GOOGL) similar chatbot, Gemini (formerly called Bard). There’s no denying that these tools are fun to play with, as well as being legitimately useful to many who use them.
However, from a monetization perspective, these platforms don’t seem to have much commercial appeal. However, ChatGPT and Copilot do not represent the best use cases for artificial intelligence technology. AI platforms built specifically for business are proving much more marketable.
Enter Palantir Technologies (NYSE:PLTR).
As a consumer you have not used the service. Companies like General Millsthe CBS television network, and Aramark however, are some of the latest customers to join a growing number of companies using Palantir’s offering to help them do something constructive with the mountains of digitized data they’ve been collecting for years. The company’s software is also used by the US military, intelligence services and energy companies ExxonMobiland drug manufacturer Sanofi, to name a few. Until now, there simply wasn’t a data analytics option powerful enough to pay for.
However, Palantir Technologies has only scratched the surface of its potential. Analysts expect sales to grow to 21% this year and repeat this performance next year. CEO Alex Karp’s only complaint is that the company can’t keep up with demand.
By the way, shares are doing well. They are up more than 50% in the past year and more than 130% in recent years.
However, there is reason to expect Palantir’s shares could move higher, given the company’s profitability and the fact that it is already a market leader in its niche. Technology market research outfits Gartner And Forrester research both consistently consider it one of the top names in AI data analytics, compared to much larger players like Microsoft and Alphabet.
2. Super microcomputer
Almost everyone understands it Nvidia‘S (NASDAQ: NVDA) Hardware is at the heart of most artificial intelligence data centers. Analysts at Mizuho Securities suggest it controls about 90% of the AI processor market.
These graphics processing units (GPUs) and similarly powerful processors are just one piece of the technological puzzle: an AI data center. Artificial intelligence servers are essentially huge banks of individual computers that must be built around a processor and then linked together on a giant rack (or racks). A company must manufacture these computers and then assemble the towers they become part of.
That is what Super microcomputer (NASDAQ: SMCI) do. Whether a customer prefers Nvidia technology or… Intel‘s, and whether that customer wants to use it Amazon‘s cloud computing service or Microsoft’s, Super Micro Computer can provide.
And it delivers like crazy. Last quarter’s revenue increased by a whopping 200% year over year, continuing an established growth trend that is expected to continue well into the future. Analysts expect revenue growth of 60% in the next fiscal year.
That’s just the beginning. Precedence Research predicts that the AI infrastructure market will grow by more than 27% annually through 2033, as more organizations rush to build the AI platforms they increasingly realize they will need if they want to stay competitive.
Super Micro Computer’s stock price has fallen sideways after peaking in March. However, it’s probably just a breather before his next leg higher.
3. Alphabet
Finally, add Alphabet to your list of AI stocks that could go parabolic in the near future.
It’s a respected tech name, but some may find it difficult to see the Google parent company as an AI play. While the Gemini/Bard chatbot is a clever use of AI technology, there aren’t many practical commercial applications for it. Moreover, advertising is the core activity of the company. Adding an AI profit center to the mix can be quite an undertaking.
However, Alphabet is taking on the task and is better positioned to make it worthwhile than you might think.
Look, Alphabet isn’t aimlessly building an AI company from the ground up just to see what happens. It uses artificial intelligence as a means to make its existing advertising operations even better. Last week, the company announced that advertisers will soon be able to use AI-generated ads, for example. The company also says that ads will soon appear in the new AI listings, which will provide a separate category of search results for anyone using the Google search engine. Naturally, more meaningful data about Google’s users helps both advertisers and Alphabet.
What could really support and even accelerate the stock’s current run, however, is the renewed optimism from the analyst community. bank of America Analyst Justin Post recently reiterated his buy rating on Alphabet stock, citing the latest developments in AI advertising technology. Goldman Sachs analyst Eric Sheridan said the same.
Both recognize that advertising is and will remain Alphabet’s major breadwinner for the foreseeable future. However, its foray into artificial intelligence is complementary to this industry without conflicting with it. Investors may underestimate the level of revenue growth that awaits here.
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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. James Brumley has positions at Alphabet. The Motley Fool holds positions in and recommends Alphabet, Amazon, Bank of America, Goldman Sachs Group, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool recommends Gartner and Intel and recommends the following options: long January 2025 $45 calls to Intel, long January 2026 $395 calls to Microsoft, short January 2026 $405 calls to Microsoft, and short May 2024 $47 calls to Intel. The Motley Fool has a disclosure policy.
3 Artificial Intelligence (AI) Stocks That Could Go Parabolic was originally published by The Motley Fool
