The AI sector has attracted significant attention from investors, with companies rushing to integrate these technologies into their operations to boost performance and revenue. The buzzword of 2023, AI, continues to dominate discussions in 2024.
Leading AI firms have been seeing substantial profit growth, although the market’s volatility poses risks. Nevertheless, some AI stocks show promise for long-term returns.
CrowdStrike (CRWD)
CrowdStrike (NASDAQ: CRWD) stands out as a cybersecurity company that is thriving amidst industry challenges. With a robust recurring revenue model that saw a 34% YoY growth in the fourth quarter of fiscal 2024, the company’s annual recurring revenue now sits at $3.44 billion.
As cyber threats evolve using AI tactics, organizations increasingly rely on security solutions to safeguard their data. CrowdStrike’s latest innovation, Charlotte AI, streamlines security operations, enabling quicker threat detection. Customers using this AI tool have reported significant time savings, with the solution being a key driver of CrowdStrike’s success. The stock has surged by 397% over the past five years.
Amazon (AMZN)
Amazon (NASDAQ: AMZN) has been at the forefront of incorporating AI across its products and services. Leveraging AI algorithms, Amazon offers personalized product recommendations on its e-commerce platform. Moreover, Amazon Web Services harnesses AI to enhance user experience, empowering customers to develop advanced AI applications for lead generation and efficiency improvements.
The demand for AI necessitates robust computing infrastructure, driving growth in cloud computing services. Amazon’s financial performance remains strong, with record sales of $170.0 billion in Q4 2023 and expanding profit margins. Various sectors within Amazon experienced double-digit revenue growth, with North American and international sales up by 13% and 17% YoY, respectively. Amazon Web Services revenue also grew by 13% compared to the previous year.
Synopsys (SNPS)
Synopsys (NASDAQ: SNPS), a chip manufacturer, is well-positioned to benefit from the AI wave. With a history of strong financial results predating the AI surge, Synopsys has seen impressive stock growth of 395% over the past five years, with a 13% year-to-date increase.
The company’s exceptional profit margin expansion and a 63 P/E ratio indicate potential for higher earnings. In the first quarter of fiscal year 2024, Synopsys achieved a 27% net profit margin, driven by a 65% YoY increase in net income and a 21% YoY growth in revenue. The acquisition of Ansys (NASDAQ: ANSS) further enhances Synopsys’ market position, offering substantial growth opportunities. Investors can capitalize on the AI trend propelling Synopsys’ stock price upwards.
As of the publication date, Marc Guberti disclosed long positions in AMZN and SNPS. The views expressed in this article are those of the author and comply with the InvestorPlace.com Publishing Guidelines.
Marc Guberti, a finance writer at InvestorPlace.com and host of the Breakthrough Success Podcast, has contributed to various reputable publications, including U.S. News & World Report, Benzinga, and Joy Wallet.
