Top-performing artificial intelligence (AI) stocks experienced significant growth in 2023, showcasing the market’s recognition of the vast potential of this cutting-edge technology. However, as stock prices surged, concerns about potential corrections naturally emerged.
In 2024, many AI stocks have sustained their strong performance, with notable standouts in the industry. Nevertheless, some AI stocks have not fully participated in the market excitement and appear to be more reasonably priced, considering the sector’s overall exuberance.
Investors often turn to Wall Street analysts for guidance on whether to invest in specific stocks or avoid them. These analysts, specializing in stock analysis, offer valuable insights into investment decisions. For those interested in gaining exposure to top-rated AI stocks, considering the favorites of Wall Street analysts could prove advantageous.
Supermicro (SMCI)
Supermicro (NASDAQ: SMCI) emerges as a thriving AI stock highly regarded by numerous analysts. This software and service provider boasts an average price target of \(361.33, suggesting a potential upside of nearly 7%. The median price target is \)400, with the high target reaching $500.
With data center servers designed to meet the demanding requirements of artificial intelligence, Supermicro has established a strong presence in the market. A strategic partnership with Nvidia (NASDAQ: NVDA) further bolsters the company’s prospects, potentially driving increased revenue and earnings growth.
Having outperformed Nvidia and most competitors in the past year, Supermicro’s stock has soared by over 300% during this period and an impressive 2,164% over the last five years. Currently trading at a P/E ratio of 31, the company commenced fiscal 2024 on a positive note with a 14.4% year-over-year revenue growth in the first quarter. Despite ongoing GPU supply constraints, Supermicro remains on a growth trajectory, poised for exponential growth once these challenges are mitigated.
Axcelis Technologies (ACLS)
Axcelis Technologies (NASDAQ: ACLS) represents an undervalued semiconductor stock specializing in ion implantation technology. Rather than manufacturing chips, the company aids chipmakers in producing more efficient chips.
The demand for its Purion systems has been robust, with the order backlog surpassing the company’s revenue for the entire year of 2022. This substantial backlog, coupled with strong revenue and earnings growth, underscores the positive outlook for the company.
In the third quarter, Axcelis experienced a 27.6% year-over-year revenue increase, accompanied by a 63.7% year-over-year surge in net income. Despite a recent decline in its stock price without significant news catalysts, shares now trade at an attractive P/E ratio of 16.
Five analysts have set an average price target of \(183 for Axcelis Technologies, implying a potential 60% upside from the current price. The highest target stands at \)215, while even the lowest target of $134 suggests a possible rally of 17.5% from the current level.
Nvidia (NVDA)
Nvidia continues to attract a growing fan base while winning over most, if not all, of its previously skeptical investors. With a remarkable 209% gain over the past year and a staggering 1,295% increase over the last five years, the company has undeniably captured significant attention.
While concerns about valuation lingered among investors, Nvidia has dispelled these doubts with outstanding revenue and earnings growth. The company recorded a 206% year-over-year revenue growth and a remarkable 1,259% year-over-year surge in net income, figures rarely seen in the market.
Nvidia’s consistent achievement of such growth rates over multiple quarters, despite not being a microcap company, is truly noteworthy. Surpassing a market cap of $1 trillion in 2023, Nvidia’s potential to exceed giants like Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT) in the coming years is within reach.
Despite the hype surrounding AI, Nvidia’s financial robustness is reflected in its 28-forward P/E ratio and 0.55 PEG ratio. The stock’s appeal is further supported by analysts, with an average price target of $662 suggesting a 21% upside from the current price. Out of 35 analysts, 32 rate NVDA as a “Buy,” while four rate it as a “Hold.”
As of the publication date, Marc Guberti held long positions in SMCI, ACLS, and NVDA. The opinions expressed in this article are solely those of the writer and are subject to the InvestorPlace.com Publishing Guidelines.
Marc Guberti, a finance freelance writer at InvestorPlace.com and host of the Breakthrough Success Podcast, has contributed to various publications, including U.S. News & World Report, Benzinga, and Joy Wallet._
