The large investments corporations are making in artificial intelligence (AI) will bring latest products and experiences to consumers which may change the world. Investors who put their money in the companies best positioned to profit from this technology could see outstanding results.
Listed listed here are two AI stocks which may find a way to take off inside the second half of the 12 months and beyond.
1. Apple
What higher company to differ the world with AI than Apple (NASDAQ: AAPL) — a brand built on Steve Jobs’ vision to design devices that did just that? Since unveiling latest AI features coming to its devices this fall, the stock has surged to latest highs over the past month. Wall Street is high on Apple’s growth prospects, and for good reason.
Morgan Stanley is one firm that’s touting Apple’s growth potential inside the AI era. The firm sees Apple Intelligence as a “clear catalyst for a multiyear product upgrade cycle.”
Out of the three.1 billion smartphones in use globally, more shall be AI smartphones over the next decade. IDC expects smartphones with generative AI capabilities will grow 78% annually through 2028 compared with 2.3% for the broader smartphone market. The adoption of AI smartphones is a possibility for Apple to convert more smartphone buyers to its lucrative lineup of products, and this probability kicks off with the launch of iOS 18 and the brand latest iPhones later this 12 months.
No smartphone maker is best at taking advantage of latest technology. Apple’s net profit totaled $100 billion over the past 12 months. Strong sales of pricier devices with more advanced processors which could find a way to running Apple Intelligence could drive its profits even higher. “We proceed to feel very bullish about our opportunity in generative AI,” CEO Tim Cook said on the company’s last earnings call.
Analysts forecast Apple’s earnings to grow 15% in fiscal 2024 (which ends in September), before increasing 10% next 12 months. If Apple Intelligence drives the extent of demand that analysts expect, these estimates could prove conservative and fuel Apple stock higher toward the highest of the 12 months.
2. Advanced Micro Devices
After rocketing 128% higher in 2023, shares of Advanced Micro Devices (NASDAQ: AMD) are effectively flat up to now in 2024. But this top chip supplier has a few catalysts on the horizon which may send the stock to latest highs.
AMD’s latest MI300 AI chip is doing thoroughly in the data center market. The company’s data center revenue grew 80% 12 months over 12 months in the first quarter. Nevertheless, the remaining of the business has seen mixed results, which explains the stock’s subpar performance this 12 months. Nevertheless, improving growth in a couple of of the corporate’s other markets could open the floodgates for accelerating revenue growth heading into 2025.
Citigroup sees a path for the stock to maneuver higher over the next 12 months. The firm sees AMD benefiting from continued growth inside the AI chip market, together with improving chip demand for PCs. On that note, AMD is working with Microsoft to optimize its Ryzen processors for brand latest AI experiences coming to PCs.
“We see AI as crucial inflection point in PC for the explanation that web with the facility to deliver unprecedented productivity and value gains,” CEO Lisa Su said on the first-quarter earnings call.
Analysts currently expect earnings to increase by 31% this 12 months before jumping 59% in 2025. As the highest of the 12 months approaches and investors turn their attention to next 12 months’s growth estimates, AMD stock could move sharply higher.
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Citigroup is an promoting partner of The Ascent, a Motley Idiot company. John Ballard has positions in Advanced Micro Devices. The Motley Idiot has positions in and recommends Advanced Micro Devices, Apple, and Microsoft. The Motley Idiot recommends the subsequent options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure policy.
2 AI Stocks That Could Dominate the Remainder of 2024 was originally published by The Motley Idiot