Best AI Stocks to Buy Amid Nvidia’s Plunge

AI stocks have soared significantly this year, driven by remarkable growth and enthusiasm for this groundbreaking technology. NVIDIA Corporation (NVDA) It reigns as an overwhelming force. The stock price has soared more than 50% since the beginning of the year. solid profits. However, the recent sell-off suggests that gains were primarily driven by sentiment and are vulnerable to market dynamics.

NVDA’s stock price has plunged more than 14% over the past five days, outpacing the Nasdaq Composite’s nearly 5% decline and the Dow Jones Industrial Average’s slight decline over the same period.

Stocks like NVDA Super Microcomputer (SMCI) When you experience tremendous growth, even a minor setback triggers profit-taking, leading to a chain of sales. As investors rush to lock in profits amid fears of the bubble bursting, a single adverse event can snowball into significant losses, highlighting the fragility of market sentiment.

Investor concerns have grown with SMCI plunging as much as 21% over the past five days, reflecting concerns about the upcoming earnings report. Despite the company’s schedule Released on April 30thUnlike the second quarter earnings announcement in January, the company refrained from pre-announcement of earnings.

Typically, companies announce earnings ahead of time if results exceed Wall Street’s consensus estimates. This lack of prior announcement from SMCI raised concerns on Wall Street. Analysts say the upcoming earnings report may not match the strength of previous quarters and fall short of expectations.

Despite its size and cushioning, NVDA is not immune to broader market sentiment. NVIDIA’s chips are essential to SMCI’s server solutions, so investors associate any potential weakness in SMCI’s earnings with NVDA.

Additionally, NVIDIA’s high valuation further exacerbates market sensitivity. On a non-GAAP forward P/E basis, the stock trades at 30.58x, which is 34.1% higher than the industry average of 22.80x. Additionally, the future EV/sales is 16.68 times, which is 520% ​​higher than the industry average of 2.69 times, and the future stock price/sales is 16.81 times, which is higher than the industry average of 2.69 times.

Considering these factors, investors can explore alternative AI stocks that could outperform NVDA in the near future. With NVDA on the decline, these stocks offer a variety of opportunities to capitalize on the growth potential of the burgeoning AI industry.

Microsoft Corporation (MSFT)

Microsoft Corporation (MSFT)The leading technology company delivered stellar performance that exceeded analyst expectations, posting another quarter of double-digit growth in both revenue and bottom line. For the second quarter of fiscal 2024 ended December 31, 2023, the Company’s Total sales surged 17.6% compared to the previous year This amounted to $62.02 billion, exceeding the consensus estimate of $61.13 billion. Operating profit increased 32.5% to $27.03 billion.

Additionally, MSFT’s EPS increased 33.2% year over year to $21.87 billion and $2.93. This compares to analysts’ estimates of $2.77. Strong financial performance highlights the effective execution of MSFT’s sales team and partners, driving significant market share growth.

In addition to its financial success, MSFT expanded its technology capabilities during the quarter. Consolidated support for . OpenAI’s latest modelIncluding the GPT-4 Turbo, GPT-4 with Vision, and Dall-E 3, we demonstrate our commitment to innovation and remain at the forefront of AI technology.

Additionally, MSFT has secured strategic partnerships and investments, strengthening its presence in key markets. the company announced $1.5 billion investment G42, a leading UAE-based AI technology holding company, strengthens collaboration on AI initiatives and technology programs globally.

Additionally, MSFT has deepened its collaboration with Cloud Software Group Inc. through: 8 years of strategic partnership agreement. This collaboration will drive innovation in cloud and AI solutions by leveraging Microsoft Azure as the preferred cloud platform.

Going forward, analysts expect MSFT’s revenue to hit $244.34 billion for the fiscal year ending June 2024, up 15.3% from the same period last year. This year’s EPS is expected to be $11.70, up 19.3% from the previous year. For fiscal 2025, consensus revenue and EPS estimates are for $279.25 billion and $13.33 billion, representing increases of 14.3% and 13.9%, respectively.

AMD (Advanced Micro Device)

AMD (Advanced Micro Device) has been leading innovation in high-performance computing, graphics, and visualization technologies for over half a century. The company’s recent attention has focused on the general availability of: AMD Instinct MI300X AcceleratorIndustry-leading memory bandwidth performance for generative AI.

AMD has also made great strides in expanding its AI software ecosystem. The company has unveiled the latest version of its open source ROCm™ 6 software stack, optimized for generative AI. AI ecosystem leaders such as Databricks, Essential AI, Lamini, and OpenAI leverage AMD Instinct accelerators to deliver differentiated AI solutions.

The company also announced: AMD Ryzen 8040 Series Mobile Processors, some AI models are equipped with integrated neural processing units (NPUs). In 2022, AMD pioneered the introduction of x86 processors with on-chip NPUs with the AMD Ryzen 7040 series mobile processors.

Additionally, the company disclosed the following: AMD Ryzen 8000G Series Desktop Processors At CES 2024, the industry’s first desktop PC processor equipped with a dedicated AI NPU was introduced. At Microsoft Ignite, AMD and MSFT demonstrated how the AMD Instinct MI300X accelerator, AMD EPYC CPU, and AMD Ryzen CPU with AI Engine enable new services and computing capabilities in a variety of domains.

These innovative product launches boosted AMD’s financial performance. In the fourth quarter of fiscal 2023, AMD’s non-GAAP revenue increased 10.2% year-over-year to $6.17 billion. Non-GAAP gross profit increased 9.6% year-over-year to $3.14 billion. Additionally, the company’s non-GAAP net income and EPS increased 12.2% and 11.6% year over year. $1.25 billion and $0.77each.

The Street expects AMD’s revenue to reach $25.72 billion for the fiscal year ending December 2024, up 13.4% year-over-year, and EPS to reach $3.60, up 35.7% year-over-year. These optimistic analyst forecasts highlight AMD’s position as a leader driving innovation in the AI ​​computing landscape.

Service Now (NOW)

Service Now (NOW) Excellent for cloud-based platforms that transform digital enterprise operations. AI-based solutions enable businesses to efficiently streamline their services and gain significant market presence. with 8,100+ clientsNOW’s influence is enormous, including 85% of the Fortune 500 companies.

NOW delivered outstanding results in the fourth quarter of fiscal 2023, delivering remarkable results. 27% increase in subscription revenue Closed 70 deals worth over $1 million. Additionally, platform workflows have skyrocketed by a whopping 40%, proving the platform’s effectiveness in increasing operational efficiency and reducing costs.

The company’s fourth quarter revenue increased 25.6% year-over-year to $2.44 billion, and non-GAAP operating income increased 31.8% year-over-year to $717 million. Additionally, non-GAAP net income and earnings per share were $643 million and $3.11, up 38.6% and 36.4%, respectively, compared to the same period last year.

NOW is also building strategic partnerships to deliver customized solutions by integrating advanced analytics and AI capabilities. Strategic collaboration with DXC and Amazon Web Services Demonstrates commitment to innovation while ensuring industry-specific AI-based applications.

By expanding alliances EY organization Visa (V)NOW is: Revolutionizing AI Compliance, provides governance and payment services. that much Acquisition of UltimateSuite Increase operational efficiency by further enhancing automation and AI capabilities.

With continued generative AI advancements, NOW expects 25% revenue growth in 2024, providing stability and long-term growth potential. Analysts expect the company’s revenue to hit $10.89 billion for the fiscal year ending December 2024, up 21.4% year-over-year, and EPS are expected to total $13.09, up a significant 21.5% year-over-year. .

UiPass Co., Ltd. (Gil)

UiPass Co., Ltd. (Gil) It operates in the rapidly growing Robotic Process Automation (RPA) market and provides software solutions suited to automating administrative tasks and optimizing workflow processes. With a strong customer base More than 2,000 customersEach investing at least $100,000 annually, PATH has a widespread presence and appeal across a variety of sectors.

Remarkably, PATH has seen its customer base grow 26% year-over-year among customers spending at least $1 million annually, demonstrating widespread adoption among small and medium-sized businesses and large enterprises. This trend is consistent with the growing demand for AI-based solutions in recent years.

In the fourth quarter ended January 31, 2024, PATH achieved notable financial performance, with total revenue surging 31.3% year-over-year. Reached $405.25 million. This significant growth was reflected in non-GAAP operating income, which reached $110.52 million, a 59.6% increase over the prior year period.

Additionally, PATH’s non-GAAP net income and non-GAAP net income per share increased 55.4% and 53.3% year-over-year, respectively, to $128.51 million and $0.23.

Recent in PATH Obtain approved status Within the Federal Risk and Authorization Management Program (FedRAMP®), this also marks a pivotal milestone as we are poised to expand public sector adoption of UiPath Automation Cloud™ within federal government agencies. This certification reflects PATH’s commitment to improving operational efficiency through AI-based automation, particularly within the public sector.

additionally, Expanded partnership between PATH and Google Cloud It heralds promising prospects for customers looking to embark on their automation journey. Now that PATH is available in Google Cloud Marketplace, customers can seamlessly access PATH’s business automation platform to leverage Google Cloud’s powerful infrastructure to effectively deploy and scale their automation initiatives.

As Wall Street expects revenue to increase 19% year-over-year to $1.56 billion and EPS to increase 7% to $0.58 for the fiscal year ending January 2025, PATH is poised to advance further by leveraging innovative solutions and strategic partnerships. became. We are solidifying our position as a leader in the RPA field.

conclusion

The development trajectory of the artificial intelligence (AI) sector is remarkable. The global AI market is expected to reach USD 515.31 billion in 2023 and grow rapidly from 2023 onwards. $621.19 billion in 2024 It will reach $2.74 trillion by 2032, boasting a CAGR of 20.4%. This growth is driven by increasing AI applications, partnerships, smaller providers, evolving business structures, and demand for customized services.

However, recent market volatility has raised caution among investors and led to a decline in NVDA stock price. This vulnerability highlights the vulnerability of profits to emotion, indicating a potential turning point for stocks. Meanwhile, alternative AI stocks like MSFT, AMD, NOW, and PATH are poised for potential growth.

MSFT has demonstrated strong financial performance and technological innovation, while AMD has established itself as a leader in its field through advancements in AI hardware and software. NOW’s cloud-based solutions and strategic partnerships provide stability and long-term growth potential, while PATH’s RPA market success and strategic partnerships highlight PATH’s promising future.

As investors reassess their portfolios amid NVDA’s decline, these alternative AI stocks offer a variety of opportunities to capitalize on the industry’s continued growth.