These 2 AI stocks are set for strong growth, analysts say

These 2 AI stocks are set for strong growth, analysts say

What do you get when you combine low stock prices with a financial and technology position that is poised to win as it becomes more and more essential? You get stocks with a low cost of entry – plus high upside prospects and approval from Wall Street analysts.

The position we are talking about is artificial intelligence, artificial intelligence, once a dream of science fiction, but today a computing technology that is becoming increasingly important. Artificial intelligence is powering the rapidly growing Internet of Things, is the technology behind game-changers like 3D printing, and has already transformed the world of online marketing. In its application to autonomous vehicles, it even promises to change the way we travel forever. Wherever you go, you can’t escape AI.

The low prices are an artifact of the current bear market and a stretched supply chain. We’ve been experiencing a semiconductor chip shortage since last year, and it’s affected everything from heavy industry to healthcare to high-end computing. But supply issues are beginning to resolve, and demand for AI-related technology remains high.

So let’s dive in and look at some AI stocks that are poised for growth in the coming months and years – and whose prices now represent a low entry point. We will get 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 biggest names in the chip industry. Nvidia has long been known for its high market share – better than 80% – in the graphics processing unit (GPU) sector, a major coup for this company as high-end GPUs are in high demand. The chips, which were originally designed to enable sharper, more realistic graphics for computer games, have found applications in many other areas, where their high computing power has enabled AI and machine learning technology in data processing, medical imaging, smart home and the city of technology and autonomous machines.

Nvidia has customers in all of these areas, and autonomous machines—especially vehicles—proved to be a bright spot in the company’s recent 2Q23 earnings report. In the quarter ended July 31, Nvidia’s revenue and profit fell sharply from Q1, but the analysis shows that the company’s news had some positive aspects.

On the top line, revenue fell sequentially from $8.3 billion to $6.7 billion. At the same time, second quarter results were still up 3% year-on-year. Profits, however, did not fare so well. Non-GAAP diluted EPS fell q/q from $1.36 to $0.51, down 51% YoY. And this is only part of the bad news.

Nvidia’s revenue was well below expectations of $8.1 billion, a miss that has been attributed to contractions in the PC gaming sector. And the company withdrew its guidance for the third quarter, spooking investors — and causing a sharp drop in stock trading after earnings.

On the bright side, Nvidia made big gains in the Data Center and Automotive sectors, both areas where the company’s high-end AI-capable chips have strong potential to expand market share – they offer strong compute capacity, which backed by a company with a reputation for delivering quality especially in these areas. Data Center revenue rose to $3.81 billion in fiscal Q2, a 61% year-over-year gain. The company’s auto business is smaller, generating $220 million in revenue for the second quarter — but it grew 45% year-over-year and 59% year-over-year, showing not only profits, but accelerating profits.

Truist 5-star analyst William Stein acknowledges Nvidia’s slide in gaming revenue, describing it as “bitter medicine,” but recommends the stock for AI leadership. He writes, “Bears will focus on the potential for weakness to spread to the datacenter. We recognize this possibility, but continue to see NVDA as best positioned to capture data center share over the long term because GPU leadership is solid and its newer products (DPU & CPU) align with emerging PC architectures. In Q2, automotive revenue of $220M grew ~45% YoY and hit an all-time high. Management saw strength driven by self-driving and artificial intelligence solutions in the cockpit, partially offset by a decline in legacy cockpit revenue. NVDA’s long-awaited automotive development finally seems to be coming to fruition. Datacenter revenue was also strong, driven by demand in vertical markets and hyperscale North American customers.”

Along with an upbeat outlook, Stein gives NVDA stock a Buy rating. The $198 price target implies a one-year upside potential of 50%. (To follow Stein’s history, Click here.)

Moving now to the rest of the street, where the stock has 31 reviews on file, with 23 Buys weighted against 9 Holds for a moderate consensus Buy rating. Shares of Nvidia are selling for $131.98 and the average price target of $206.71 suggests a potential upside of 57% in the next 12 months. (See Nvidia stock forecast at TipRanks.)

Marpai, Inc. (MRAI)

From semiconductor chips we’ll move to the healthcare sector, where tech company Marpai saw an opportunity to bring AI technology to the third-party administration (TAP) sector. It’s a $22 billion market, and Marpai is using artificial intelligence to design system features that will improve the quality of care, while reducing claims costs and reducing premiums for lost claims. 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 only 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 more than 7.1 million shares at $4 each and raised $28.75 million in gross proceeds, surpassing the $25 million initially planned. Since the IPO, however, the stock is down 78%.

Marpai has released 4 quarterly financial reports since going public, and has consistently reported a top line between $4.8 million and $6.2 million. The most recent report, for 2Q12, showed revenue of $5.6 million, in the middle of that range – and slightly above expectations. On the earnings side, the company reported a net loss of $6.66 million, or 34 cents per share. On a per share basis, this was a significant improvement over the 54 cents diluted EPS loss recorded a year ago.

Giving an in-depth look at Marpai, Maxim Group analyst Allen Klee describes both the company’s product innovation and capabilities: “MRAI is well positioned to drive innovation in the third-party administrator (TPA) space. Employers who self-insure their employees’ health care can use Marpai to process claims and manage benefits. The company’s technology uses artificial intelligence (AI) to predict and mitigate potential high-cost health events, as well as automatically adjudicate claims, reducing costs. Technology can also reduce waste in the system by directing members to the most efficient providers in a timely manner. Through these results and by cutting excess costs from traditional health care plans, Marpai believes employers can reduce health care costs by more than 25%.

Believing Marpai can deliver for investors, Klee rates the stock a Buy and his 12-month price target of $2.50 implies a strong 162% gain. (To follow Klee’s history, Click here.)

Some stocks fly under the radar of Wall Street, and Marpai seems to be one such name. Klee’s is the only analyst review published in the last 3 months. (See Marpai stock prediction on TipRanks.)

To find good ideas for trading stocks at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all of TipRanks’ stock information.

Disclaimer: The views expressed in this article are solely those of the selected 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.

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