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The Rise of AI Stocks 2024 – 2027: Best of Us Investor’s Insight and Recommendations

The Rise of AI Stocks 2024 – 2027: Best of Us Investor’s Insight and Recommendations
July 8, 2024

Artificial intelligence has been part of our lives for quite some time, but it gained significant attention with the release of ChatGPT and numerous similar applications in late 2022. These apps can write reports, analyze data, and improve various tasks, leading to a surge in AI-related stocks in 2023—a trend that continues in 2024 and is expected to offer unprecedented investment opportunities for the foreseeable future.

At Best of Us Investors, we have identified ten of the best AI stocks. Each stock stands out for different reasons: some are strong leaders in the data revolution with impressive earnings growth over the past two decades, while others are more speculative but hold promise due to their innovative contributions to society. These selections are influenced by my extensive research and understanding of the digital revolution, the shift from brick-and-mortar to e-commerce, and the empowerment of consumers through social media. The change driven by these factors will persist.

  1. Super Micro-Computer, Inc. (SMCI) – YTD +198%

Description: Super Micro Computer, Inc. provides high-performance server technology and innovation, specializing in solutions for data centers, cloud computing, and enterprise IT.

Past Performance: SMCI has shown strong revenue growth, driven by increasing demand for high-performance computing and data center solutions.

Justification: The growth is justified by the expanding need for data processing and storage solutions, as well as SMCI’s reputation for innovation and quality.

Future Outlook: The company is expected to continue its growth trajectory as the demand for data center and cloud solutions remains robust, supported by advancements in AI and big data. Best of Us Investors projects an average annual rate of return over the next 2 ½ years of 53%.

  1. Amazon.com, Inc. (AMZN) – YTD +30%

Description: Amazon is a global leader in e-commerce, cloud computing (AWS), digital streaming, and artificial intelligence.

Past Performance: Amazon reported revenues of $590.74 billion with a net income of $37.68 billion in the past year, driven by strong performance in AWS, e-commerce, and digital services.

Justification: The consistent growth is supported by Amazon’s diversified business model and continuous innovation in technology and services.

Future Outlook: Over the next 2.5 years, Amazon is expected to benefit from the expansion of its AWS cloud services, increased e-commerce penetration, and advancements in AI-driven products and services. Best of Us Investors projects an average annual rate of return over the next 2 ½ years of 59%.

  1. Axcelis Technologies, Inc. (ACLS) – YTD +12%

Description: Axcelis Technologies provides ion implantation and other processing equipment used in the fabrication of semiconductor chips.

Past Performance: The company has experienced significant growth due to the rising demand for semiconductor manufacturing equipment.

Justification: The semiconductor industry is seeing unprecedented demand, driven by advancements in AI, 5G, and IoT technologies. Ion implantation will be integral to the evolution of semiconductors as they deal with challenges posed by accelerated computing.

Future Outlook: ACLS is poised for continued growth as the demand for semiconductor devices and manufacturing equipment remains strong. Best of Us Investors projects an average annual rate of return over the next 2 ½ years of 60%.

  1. Palantir Technologies Inc. (PLTR) – YTD +53%

Description: Palantir specializes in big data analytics and provides software solutions for integrating, managing, and analyzing data.

Past Performance: Palantir has seen steady revenue growth due to increased adoption of its data analytics platforms by government and commercial sectors.

Justification: The company’s growth is justified by the increasing importance of data-driven decision-making and the need for sophisticated analytics solutions.

Future Outlook: Palantir is expected to continue growing as more organizations seek advanced data analytics capabilities, especially in AI and machine learning applications. Best of Us Investors projects an average annual rate of return over the next 2 ½ years of 65%.

  1. Symbotic Inc. (SYM) – YTD -31%

Description: Symbotic designs and manufactures robotic automation and AI-driven systems for warehouse and supply chain operations.

Past Performance: The company has shown strong performance, driven by the increasing adoption of automation in warehousing.

Justification: The growth is supported by the ongoing trend towards automation to improve efficiency and reduce costs in supply chain operations. They have a backlog of orders for conversion of Walmart and Target distribution centers that points to continued growth and profitability.

Future Outlook: Symbotic is likely to see continued growth as the demand for automated warehousing solutions increases. Best of Us Investors projects an average annual rate of return over the next 2 ½ years of 77%.

  1. Applied Digital Corporation (APLD) – YTD +1%

Description: Applied Digital provides digital infrastructure solutions, including data centers and cloud services.

Past Performance: The company has experienced growth due to the rising demand for data storage and cloud computing services. There is and will continue to be a shortage of data centers in the US and APLD is in a position to benefit.

Justification: The increasing need for digital infrastructure to support cloud computing and data-intensive applications justifies their growth.

Future Outlook: Applied Digital is expected to expand as the demand for digital infrastructure continues to grow, particularly with the rise of AI and big data. Best of Us Investors projects an average annual rate of return over the next 2 ½ years of 83%.

  1. Ultra Clean Holdings, Inc. (UCTT) – YTD +51%

Description: Ultra Clean Holdings provides critical subsystems, ultra-high purity cleaning, and analytics services primarily for the semiconductor industry.

Past Performance: UCTT has benefited from the semiconductor boom, with significant growth in revenues and profits.

Justification: The continued expansion of the semiconductor industry supports the demand for UCTT’s services.

Future Outlook: The company is expected to maintain its growth as semiconductor manufacturing scales up to meet global demand. Best of Us Investors projects an average annual rate of return over the next 2 ½ years of 87%.

  1. Navitas Semiconductor Corporation (NVTS) – YTD -44%

Description: Navitas focuses on developing next-generation power semiconductors using gallium nitride (GaN) technology.

Past Performance: The company has shown promising growth due to the increasing adoption of GaN technology in power electronics. As data centers continue to seek solutions to the heat problems caused by accelerated computing, NVTS’s solution will become an alternative to current wafer composition.

Justification: GaN technology offers superior efficiency and performance compared to traditional silicon semiconductors, driving its adoption.

Future Outlook: Navitas is positioned for strong growth as GaN technology becomes more widely adopted in various applications. Best of Us Investors projects an average annual rate of return over the next 2 ½ years of 93%.

  1. Micron Technology, Inc. (MU) – YTD +56%

Description: Micron is a leading producer of memory and storage solutions, including DRAM, NAND, and NOR flash memory.

Past Performance: Micron has seen fluctuating performance due to the cyclical nature of the memory market, but long-term growth remains strong.

Justification: The growth is justified by the increasing demand for memory and storage solutions in data centers, mobile devices, and AI applications.

Future Outlook: Micron is expected to benefit from the growing data economy, with increasing needs for high-performance memory and storage. Best of Us Investors projects an average annual rate of return over the next 2 ½ years of 114%.

  1. Aehr Test Systems (AEHR) – YTD -58%

Description: Aehr Test Systems provides semiconductor test and burn-in equipment.

Past Performance: The company has experienced growth due to the rising demand for semiconductor testing solutions but is depressed over the past year due to the downturn in the semiconductor sector, more specifically the EV market.

Justification: As semiconductor manufacturing becomes more complex, the need for advanced testing solutions supports Aehr’s growth.

Future Outlook: Aehr Test Systems is poised for continued growth as the semiconductor industry expands and requires more sophisticated testing solutions. Best of Us Investors projects an average annual rate of return over the next 2 ½ years of 193%.

These insights should help provide a comprehensive understanding of each company’s current performance and future potential in the rapidly evolving AI and technology sectors.

Methodology

Our list is curated based on a methodology designed to identify AI stocks with solid growth and future potential. All stocks trade on U.S. exchanges and meet the following criteria:

  • AI-Related: Companies are involved in AI either as enablers (creating AI products or technologies), engagers (using AI products), or enhancers (building and improving on AI technology).
  • High Ranking Metric: Each stock excels in at least one area, acknowledging that not all share the same features due to the short history to draw from in the AI field.
  • High Growth and/or High Return: Stocks were selected based on expected EPS growth over the next 2.5 years and were the best-performing based on these metrics, which I have developed and incorporated into my cheat sheet. Several of these stocks are currently depressed because of higher interest rates, inflation causing a downturn in the overall semiconductor industry, and the EV industry.

What Are AI Stocks?

AI is a rapidly growing industry within the broader### The Rise of AI Stocks 2024 – 2027: Best Of Us Investor’s Insight and Recommendations

Artificial intelligence has been part of our lives for quite some time, but it gained significant attention with the release of ChatGPT and numerous similar applications in late 2022. These apps can write reports, analyze data, and improve various tasks, leading to a surge in AI-related stocks in 2023—a trend that continues in 2024 and is expected to offer unprecedented investment opportunities for the foreseeable future.

How To Invest in AI Stocks

Investing in AI stocks is similar to investing in any other industry. Due diligence is crucial to understand the industry and its associated companies. The AI sector is creating its own ecosystem to propitiate its development. Investors should:

  1. Conduct Research: Gain a thorough understanding of the AI industry and the companies within it and gaining entry.
  2. Identify Potential Stocks: Determine which stocks have the greatest long-term potential for growth of EPS based on personal research.
  3. Purchase Stocks: Buy AI stocks through a stockbroker.

It’s always recommended to consult a financial advisor before making significant investment decisions.

Where To Buy AI Stocks

Most AI stocks are publicly traded on major stock exchanges, such as Nasdaq. If the AI stock of interest is listed on a major exchange, it can be purchased directly through a broker. If it is traded over the counter (OTC), thorough due diligence is essential, as OTC stocks can be volatile and illiquid. There are many new AI stocks that are not yet listed on the exchanges, they are pre-IPO and can only be invested in by accredited investors when share become available.

How To Pick AI Stocks

Choosing AI stocks depends on personal preferences and portfolio needs. A recommended methodology for screening AI stocks is to look for those that are AI-related, have high ranking metrics, and show high growth or return potential. Thes metrics can be found on sites like Seeking Alpha or Yahoo Finance.  However, each investor must assess their own needs and preferences to determine the right stocks for their portfolio.

Should I Invest in AI Stocks?

The decision to invest in AI stocks is personal and should be based on individual portfolio considerations and beliefs about the industry’s future. While AI shows tremendous promise, it carries inherent risks like any investment. Become familiar with your personal Risk Tolerance.

Is It To Late To Buy AI Stocks?

AI has a bright future, but the evolution of technology and business cycles is unpredictable. Every investment carries risk, and it’s crucial to conduct thorough research and keep abreast with any changes in the industry. It is always to consult a financial advisor before making major investment decisions.

By sharing these insights, I aim to guide you through the evolving landscape of AI stocks. Remember, these recommendations are based on my years of research and understanding of the market. Continue to stay informed and make decisions that align with your investment goals.

Kerry

 

 

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