Overall, this year showed a strong turnaround from last year’s losses. of S&P 500 and the NASDAQ are both showing year-to-date gains of 16% and 27%, respectively. That said, as disappointing as the past few weeks have been, the S&P is down ~4% this month, and the NASDAQ is down 6%.
One thing is clear: tech stocks are going to ride out the year’s gains, fueled by strong interest in artificial intelligence technology released last November by ChatGPIT. While AI has transformed the market, gaining the attention of investors hoping for greater adaptability, efficiency and profitability, some analysts on the Street say the AI boom is not a flash in the pan, but a lasting shift.
Wedbush’s Daniel Ives, a 5-star analyst with a 2% Street rating on the stock’s gains, echoes this view. He has long been bullish on technology stocks, and in a recent note assured investors that ‘now is not the time to be afraid.’
Ives acknowledges the pressure on stock markets, describing the current environment as a ‘Rubik’s Cube backdrop’, but goes on to say, “We’re focused on AI-driven technology growth. It all comes down to developments in the technology space and what the real road numbers will ultimately look like in 2024, which remains a key focus for investors in our opinion…. It’s the rocket ship-like trajectory of AI growth that will hit the edge of the tech industry over the next 12-18 months that speaks to our continued bullishness for tech stocks.
Ives’ recent stock recommendations show that he is truly all-in on AI. He has taken a strong bullish stance on AI-driven tech stocks, believing that AI will drive growth forward. Here are two of his closest picks.
Palantir Technologies (PLTR)
By Tolkien The Lord of the Ringsof palantiri They were magical see-stones, which allowed the holder to see events far away in time and space. Palantir Technologies, a software company founded in part by Peter Thiel, is nothing supernatural—but it does offer one. palantiri Never did: This software company’s AI-powered data analysis helps users make sense of their images. The company wants AI to augment human intelligence, not replace it. To that end, the company has developed natural language systems that allow human users to interact with the company’s AI systems to find answers to complex questions — without having to fall back on computer languages or statistical models.
Palantir offers its customers AI-driven platforms optimized for different purposes. Customers can activate and control AI on private networks; Develop real-time connections between data, analytics and operations; and improving and speeding up decision-making operations. The company and its software products have found value in a variety of human endeavors, from auto racing to cryptocurrency to the defense industry to healthcare to the automotive sector.
Palantir was founded in 2003, and in two decades, the company has become a giant of the software world. It has a market value of $30 billion, and last year brought in more than $1.9 billion in total revenue. In its latest financial release, for 2Q23, the company had a top line of $533 million, in line with estimates and up nearly 13% year over year. The company’s bottom line, non-GAAP adjusted EPS of 5 cents a share, was also in line with expectations — and marked the third consecutive profitable quarter. So far this year, Palantir shares are up an impressive 119%.
For Daniel Ives, the key point here is Palantir’s ability to deliver the AI data analytics systems users want and need, and is leveraging that for growth. In a recent memo, he said, “Since the company’s founding, Palantr has focused on building intelligent platforms for data management and security that enable users to answer complex questions without the need for statistical or computational expertise, leveraging artificial intelligence to deliver enhanced analytics.” Between eye pop-up time and 1-4 weeks of sign-off papers with customers we spoke to at the conference, a fully integrated, impressive functionality that speaks to the PLTR AI vision is now playing out. Palantir continues to pioneer and guide customers by incorporating privacy-preserving features to help them deploy products, improve workflows, and deliver operational results at industry-leading rates.
This stance, according to Ives, supports an Outperform (i.e. Buy) rating on PLTR shares, and the $25 price target points to optimism going forward, with a 78% rally in the cards. (To check Ives’ track record, Click here.)
However, Ives’ bullish stance pales in comparison to road caution. Palantir has 15 recent analyst ratings, 3 buys, 6 holds and 6 sells, with a consensus rating of hold. (look out PLTR stock forecast)
C3.ai, Inc. (AI)
The second of Ives’ picks is C3.ai, a software company fully immersed in the new technology, integrating artificial intelligence as a central feature of the C3 AI application platform. The company provides its customers with AI-powered products and tools, including generative AI, machine learning and developer tools. C3.ai serves clients in a variety of industries including manufacturing, oil and gas, utilities, defense and intelligence, financial services, healthcare, retail and telecom; The products are used in everything from predictive maintenance to supply chain optimization, customer engagement to fraud.
A quick look at C3.ai’s stock performance shows just how much of a boost AI can give a company. As noted, the tech-heavy NASDAQ index is up 27% year-to-date — but shares in C3.ai are running well ahead, having gained 138% since the start of this year. That gain also comes after a loss earlier this month.
The loss in early September came on the back of C3.ai’s fiscal 1Q24 earnings report. The company beat both top and bottom line expectations, which are typically positive, but announced that it has stopped forecasting a return to net profitability by the end of the 2024 fiscal year.
But the revenue hits are worth watching. C3.ai reported revenue of $72.4 million, up more than 10% year-over-year and beating forecasts by $760K. – GAAP measures, 8 cents higher than expected. About 85% of C3.ai’s revenue, or $61.4 million, came from subscriptions, a good metric that points to continued revenue success.
That continued potential for success attracted Daniel Ives. Top analysts believe that patient investors should weather the current weakness in AI’s share price, promising future rewards.
“We continue to believe that C3.ai is well-positioned to capture a significant share of the generative AI market through expanding partnerships and market offerings with enterprise AI applications, while continuing to see an elevated pipeline with short sales cycles, albeit a bleak one. Macro Drap with successful consumption based model. “We see the long-term high investment profile as near-term pain for long-term gain and talk about the building pipeline c3 that is emerging in the field,” Ives explained.
To that end, Ives rates AI shares Outperform (i.e. Buy), and the $42 price target indicates a 63% one-year gain.
This is a bullish take on C3.ai; The road, in general, is not quite ready to go too gung-ho on this stock. AI shares have 12 recent analyst ratings, with 2 buys, 6 holds and 4 sells, for a consensus outlook. (look out AI stock prediction)
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Disclaimer: The opinions expressed in this article are those of the featured analysts only. The content is intended for informational purposes only. It is very important to do your own analysis before making any investment.
