Artificial intelligence (AI) is more than just a trendy term. This groundbreaking technology, as per Goldman Sachs, has the potential to revolutionize businesses and drive global economic expansion. Let’s delve into some of the top AI companies worth considering for investment in April, poised for substantial growth in the coming years.
The transformative power of AI across diverse sectors is clear. Initially, it streamlines operations by automating routine tasks such as data entry and customer service, freeing up valuable time for individuals. A prime example is Klarna, whose AI bot effectively performs the duties of 700 customer service agents.
Moreover, AI serves as a catalyst for innovation in various industries. Presently, it aids in drug discovery, advances autonomous driving, and combats financial fraud. The continuous evolution of artificial intelligence promises even more groundbreaking advancements in the future.
Here are the recommended AI investments for April:
Arista Networks (ANET)
Arista Networks (NASDAQ: ANET) stands out as a premier AI investment due to its critical role in providing essential backend networking and wireless solutions for AI implementation. Both hardware and software networking solutions are indispensable for AI data centers.
With the rise of Generative AI, there has been a substantial expansion in data centers. Nvidia’s CEO, Jensen Huang, projects a staggering $1 trillion expenditure over the next four years. Networking equipment manufacturers, akin to chipmakers, are poised to reap significant benefits.
Arista Networks emerges as a top AI stock pick for April because AI heavily relies on Ethernet infrastructure. High-speed Ethernet is imperative for efficient data flows to GPU clusters handling AI workloads given their data-intensive nature. Industry giants like Microsoft (NASDAQ: MSFT) leverage Arista’s 400 and 800 gigabit Ethernet solutions in their AI backend GPU clusters.
The company has set an ambitious $750 million revenue target for AI networking by 2025, showcasing its strong market position. Additionally, Arista is gaining ground against competitors like Cisco Systems (NASDAQ: CSCO) in the data switching domain.
As a frontrunner in communication technology, Arista Networks is well-positioned for the AI era. Its collaboration with the Ultra Ethernet Consortium to enhance AI task completion speed further underscores its commitment to innovation. ANET is a compelling investment option due to its significant exposure to cloud networking and AI.
Dell Technologies (DELL)
While renowned for its hardware offerings, Dell Technologies (NYSE: DELL) presents a promising opportunity in the realm of AI investments. The market has taken notice of its potential, evident in the 49% year-to-date surge in DELL shares.
Dell is witnessing robust demand for its GPU-based server solutions, with AI client orders contributing 25% to client revenue in the last fiscal year 2024. The company reported \(800 million in AI-related sales during Q4 FY2024, with a notable 40% quarterly increase in AI-optimized server orders. Dell’s AI backlog amounts to approximately \)2.9 billion over five quarters.
Analysts are optimistic about Dell’s AI revenue trajectory, with Evercore ISI forecasting a minimum of \(5 billion in the upcoming fiscal year. Citi’s Asiya Merchant anticipates even more substantial growth, projecting AI revenues reaching \)10 billion by FY2026, potentially expanding to \(12-\)15 billion.
The increasing adoption of AI-capable PCs, expected to represent 60% of PCs shipped by 2027 according to Canalys, bodes well for Dell Technologies. The projected 19% AI-ready PC shipments in 2024 will further broaden the addressable market for the PC industry, benefiting Dell.
Oracle (ORCL)
Oracle (NYSE: ORCL) emerges as a top AI stock pick for April, trading at 22 times forward earnings. The latest Q3 FY2024 results underscore Oracle’s position as a key beneficiary of AI advancements.
As a frontrunner in AI-related system training and modeling, Oracle is enhancing its industry-specific applications to harness cognitive AI capabilities. For instance, in healthcare, Oracle has revamped the Ambulatory Clinic System to integrate a voice-enabled Clinical Digital Assistant. This innovative tool engages in voice conversations with physicians, generates prescriptions, and accesses patient health records promptly.
Oracle Cloud Infrastructure (OCI) is gaining traction driven by AI demand, positioning Oracle ahead of competitors with its advanced capabilities. In addition to embedding AI in Fusion and Industry Cloud applications and intelligent databases, OCI empowers users to develop and refine AI models using proprietary data.
Oracle’s strategic hardware agreements, fueled by the AI surge, sustain its momentum. A notable deal in Q3 FY2024 involved a significant cloud hardware collaboration with Nvidia.
The accelerated growth of OCI, particularly in the context of AI, is evident in its 49% year-over-year revenue growth in Q3 FY2024, outpacing the overall cloud revenue growth of 24%. Despite some supply constraints, OCI’s consumption revenue growth rate could have been even higher at 63%. These developments affirm Oracle’s poised position as a significant player in the AI landscape.
As of the publication date, Charles Munyi did not hold any positions (directly or indirectly) in the securities mentioned in this article. The views expressed are solely those of the author in accordance with the InvestorPlace.com Publishing Guidelines.
Charles Munyi boasts extensive writing experience spanning personal banking, insurance, systems, wealth management, and stock trading. With contributions to various financial platforms such as Benzinga, The Balance, and Investopedia, he brings a wealth of expertise to the financial domain.
