Three artificial intelligence stocks to buy for growth could rise significantly further with recent positive reports about their respective outlooks.
The three artificial intelligence stocks to buy for growth feature well-known technology companies that already have surged but still look to have room to rise. One of the stocks is best known for its social media offerings but reportedly is pursuing plans to launch a new search engine capability that could expand its customer base significantly.
Menlo Park, California-based Meta Platforms Inc. (NASDAQ: META) reportedly is developing a search engine that scans the web to provide conversational answers about current events and news in its Meta AI chatbot, according to an Oct. 29 research report from BofA Global Research. Further reports hint that Meta recently partnered with Reuters to enhance the chatbot’s ability to answer informational questions about current events and news. By developing its own search engine, Meta could reduce reliance on Google Search and Microsoft Bing, which currently provide information for Meta AI, BofA wrote.
Three Artificial Intelligence Stocks to Buy for Growth: Meta Platforms
Neither Meta or Google share prices reacted much to the search engine reports — possibly due to earnings announcements this week), but still outperforming the S&P 500, BofA commented. The report is consistent with Meta’s long-term goal to reduce dependence on competitor platforms and technology. An announcement by Meta on new AI and search capabilities could occur on the company’s 3Q earnings call scheduled to take place on Oct. 30 at 5 p.m. ET.
If users increasingly engage with Meta AI for information, a portion of internet traffic could shift away from search engine leader Google Search, with its current search share of 90%, BofA reported. The investment firm continued that Google could and should highlight new AI overview capabilities and any related search query traction to improve increasingly cautious sentiment about its search share risk.
Can Meta Develop a Search Engine Successfully?
With increasing large language model (LLM) capabilities to answer search queries, Meta’s growing AI assets such as in-house infrastructure and Llama LLM, along with new information licensing deals, position Meta well to develop internal AI assistant and query response capabilities, the BofA analysts wrote. Compared to new Gen-AI companies such as Open AI and Anthropic, Meta potentially has a larger user and content base to train its own LLM, and more capital to sign licensing agreements, they continued.
“However, we think Meta will be at a data and web scraping disadvantage vs Google given a still limited number of Meta AI users,” BofA wrote.
In August, Meta had reported that Meta Al has more than 185 million WebARs (WAUs). Assuming three queries per user each week, BofA estimates Meta Al could generate about 30 billion queries a year vs. Google estimated at two trillion. Plus, the investment firm predicts Meta should be able develop informational retrieval capabilities similar to other LLM based assistants. BofA rates Meta as a buy recommendation.
Ben Franklin scion Mark Skousen, who heads TNT Trader, Fast Money Alert and Forecasts & Strategies, talks to Paul Dykewicz.
Mark Skousen, PhD, recommended Meta successfully in his TNT Trader advisory service last April. In slightly more than six months, the position has soared 20.09%.
Meta is among the technology companies that are investing billions of dollars to apply artificial intelligence to their respective business models, Skousen wrote to his TNT Trader subscribers in its latest update on Oct. 29. He expressed hope that the company will announce a stock split, which is always seen as giving investors a psychological boost that tends to turn into higher stock prices, he added.
TNT Trader also has a related call option recommendation that is up around 30% thus far. However, Skousen is holding off on recommending sale of the options with the advice that patience could pay off if an the company’s earnings report is positive enough to cause the price of those options to climb.
Chart courtesy of www.stockcharts.com
Three Artificial Intelligence Stocks to Buy for Growth: NVIDIA
NVIDIA Corporation (NASDAQ: NVDA), of Santa Clara, California, is another recommended AI stock that continues on an uptrend for Skousen’s TNT Trader subscribers. The stock is up 22% and looks likely to keep ascending, according to TNT Trader.
“We have made an average of about 35% on the options, and the final quarter is up around 80% right now,” Skousen wrote to his subscribers. “Let’s wait another week and see if some positive earnings from the other Magnificent Seven stocks boost Nvidia even higher.”
The options-only trading service, Breakout Options Alert, led by Wall Street veteran Bryan Perry, also has recommended call options in NVDA. Similar to Skousen, Perry is advising his Breakout Options Alert subscribers to hold onto the options to let them rise further.
Bryan Perry, head of Cash Machine, Breakout Options Alert and Quick Income Trader, recommends NVIDIA options.
NVIDIA is a buy recommendation of Citigroup, which estimates the company has roughly a 67% share of the four-large U.S. hyperscalers to aggregate AI accelerator installed base of around 6.3 million through 2021-2024 estimates.
“We believe NVIDIA relies on three advantages,” Citigroup wrote in a recent research note. Those advantages are:
1) enough performance lead at the chip level,
2) stronger scaling capabilities, and
3) large-installed base across all major cloud providers to allow enterprises that often adopt a multi-cloud strategy to have the interoperability they need across cloud infrastructures.
Chart courtesy of www.stockcharts.com
Three Artificial Intelligence Stocks to Buy for Growth: Microsoft
Redmond, Washington-based technology giant Microsoft (NASDAQ: MSFT) is another way to profit from AI. The company’s shares have lagged over the last quarter as investors struggle to rationalize enormous ramps in capital expenditures amid “underwhelming” growth in earnings per share and Microsoft Azure, a cloud platform that offers a variety of services to help users build, run and manage applications.
Citigroup views Microsoft as “buy” and wrote in a recent research note that the company’s share price dip could help the stock provide investors with a slight surprise to the upside, in light of modest expectations by some analysts on Wall Street. The investment bank wrote that it expects the company to show increased second-half Azure/AI demand signals and reassuring commentary on capital expenditures/returns.
“We are buyers of the pullback in shares as we expect investor sentiment to turn more positive,” Citigroup wrote. Despite the optimism, Citigroup trimmed its price target in Microsoft to $497.
Chart courtesy of www.stockcharts.com
Three Artificial Intelligence Stocks to Buy for Growth: Summary
The three artificial intelligence stocks to buy for growth feature a trio of the top technology names available. Amid Russia’s continuing attack of neighboring Ukraine and a volatile conflict in the Middle East that is exacerbated by Hamas continuing to hold hostages from its terrorist attack in Israel on October 7, 2023, these three technology stocks offer ways to profit despite the fallout.
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is the editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. Follow Paul on Twitter @PaulDykewicz.
