Are you in search of AI stocks that have the potential for long-term growth? Artificial intelligence has emerged as a dominant theme in 2023, capturing widespread attention and significantly influencing the performance of the IT industry.
The advent of AI has ushered in new opportunities for various sectors to thrive and expand, spanning from healthcare to banking and real estate, among others. The versatility of AI applications knows no bounds. As we step into 2024, the pivotal question arises: will the frontrunners of 2023 maintain their positions, or will a new cohort of AI stocks ascend to the forefront? Investors are urged to contemplate investing in the leading AI stocks of 2024 for sustained growth.
Altair Engineering (ALTR)
Topping our selection is a prominent figure in Artificial Intelligence and computational science. Altair Engineering (NASDAQ: ALTR) has been a trailblazer in AI and computational science, revolutionizing cloud solutions and high-performance computing (HPC). Its expertise in data analytics, simulation software, and optimization products caters to a diverse clientele.
ALTR’s recent release of HPCWorks 2024 has enriched user experience and functionality by integrating AI to streamline workflow distribution and optimize cloud scaling. Moreover, the company offers client engineering services to provide sustained support to customers leveraging its ongoing expertise.
A closer examination of its financials reveals a robust 14.8% year-over-year growth in software product revenue and a 12.3% total revenue growth year-over-year. Non-GAAP metrics exhibit a notable 126.3% surge in adjusted EBITDA and a remarkable 197.0% increase in net income year-over-year.
Analysts have bestowed ALTR with a “Strong Buy” recommendation and a high target price projection of $95.00. While this figure may appear modest relative to current price levels, it’s imperative to acknowledge ALTR’s position as a leader in AI and computational science. As technology permeates every facet of society, so does the trajectory of its growth. This growth narrative positions ALTR as a compelling buy-rated AI stock for long-term growth.
Super Micro Computer (SMCI)
Source: shutterstock.com/Victor Runov
Next on the roster is Super Micro Computer (NASDAQ: SMCI), a provider of application-optimized server and storage systems for enterprise data centers engaged in high-demand tasks such as cloud computing, artificial intelligence, and edge computing. Distinct from companies like Nvidia, which specialize in GPU sales, SMCI delivers comprehensive IT solutions by bundling various components into server racks for a broad consumer base. Consequently, as AI adoption scales up, so does SMCI’s potential.
The company has announced forthcoming support for the new NVIDIA HGX H200, featuring the H200 Tensor Core GPU and cutting-edge rack solutions tailored for AI, edge computing, and cloud service providers.
Despite falling short in certain aspects, recent financial performance and announcements position SMCI as a compelling investment opportunity for AI enthusiasts. Robust net sales of \(2.12 billion reflect a 14.5% year-over-year growth. Although net income dipped year-over-year to \)157 million due to escalated operating expenses, particularly in research and development, and reduced operating income, SMCI maintains a positive outlook for FY’24, bolstering investor confidence. Year-to-date, the stock has surged over 52%, indicating substantial growth potential in 2024.
Baidu Inc (BIDU)
Rounding off our selection of AI stocks is another frontrunner in the AI arena poised for long-term growth. Baidu Inc (NASDAQ: BIDU) is renowned for its Chinese language Internet search engine, a globally popular platform.
The company operates through two segments: Baidu Core, offering search-based, feed-based, and online marketing services with AI initiatives, and iQIYI, providing online entertainment content produced in-house or in collaboration with other content creators. BIDU has made substantial investments in AI, exemplified by its latest ERNIE 4.0 accessible through ERNIE Bot and Cloud API, underscoring its commitment to spearheading AI advancements.
Baidu’s recent financials indicate a 6% year-over-year revenue growth, with the Baidu Core segment reporting a 5% increase in total revenue and a 6% uptick in non-online marketing revenue. Additionally, the company’s Apollo Go ride-hailing service witnessed a significant 73% surge in reported rides, totaling 4.1 million rides for the public. The Baidu app also experienced a 5% rise in monthly active users year-over-year.
Although BIDU’s one-year performance, akin to many Chinese stocks, has been lackluster, with a ~22% decline, its robust metrics and steadfast dedication to advancing AI position Baidu as a prime contender for investors seeking to capitalize on the AI boom.
