Semiconductor giant Broadcom Co. (NASDAQ: AVGO) stock has rocketed 35% in the past month, fueled by the artificial intelligence (AI) mania. Broadcom is a significant benefactor from its customers' robust deployment of generative AI. While Broadcom doesn’t make AI chips like Nvid
Several
technology stocks have rebounded from last year’s slump and rallied significantly so far in 2023, thanks to the buzz around
artificial intelligence (AI) and improved investor sentiment about the times ahead. Using
TipRanks’ Stock Comparison Tool, we placed Meta Platforms (
NASDAQ:META
), CrowdStrike (
NASDAQ:CRWD
), and Nvidia (
NASDAQ:NVDA
) against each other to pick the tech stock that could deliver the most attractive upside from current levels.
Meta Platforms (NASDAQ:META)
Shares of
social media giant Meta Platforms have
jumped about 134% since the start of this year. The company’s cost reduction efforts in 2023 (which it calls the “year of efficiency”) and its
return to revenue growth in the first quarter after three quarters of decline revived investors’ confidence in the stock.
In particular, investors appreciated
Meta’s Q1 revenue growth, despite the impact of continued macro pressures on the digital advertising market and the lingering effect of Apple’s (
NASDAQ:AAPL
) iOS privacy policy changes on the company’s ad-targeting capabilities.
Meta is leveraging AI to make ads on its platform more appealing to businesses by making it easier for them to find the right audience. For instance, it is using AI to power automation for advertisers through products like Advantage+ shopping. During the
Q1 earnings call, management revealed that daily revenue from Advantage+ shopping campaigns has risen seven times over the last six months. Further, AI has helped boost Reels monetization efficiency by over 30% on Instagram and more than 40% on Facebook quarter-over-quarter.
Is Meta a Good Stock to Buy?
Last week,
Piper Sandler analyst Thomas Champion increased his price target for
Meta Platforms stock to $310 from $270 and reaffirmed a Buy rating. Champion highlighted that the company has just begun to regain its market share after about two years of declines.
The analyst believes that Meta’s AI investments, growth in new products like Reels, the crackdown on TikTok, and investments in adtech could drive the stock higher in the second half of this year and into 2024.
With 37 Buys and five Holds, Meta earns Wall Street’s Strong Buy consensus rating. The average price target of $290.87 implies 3.5% upside.
CrowdStrike (NASDAQ:CRWD)
Cybersecurity company CrowdStrike recently reported
better-than-anticipated fiscal first-quarter (ended April 30) results, with
revenue rising 42% year-over-year to about $693 million.
Adjusted EPS jumped 84% to $0.57, driven by higher gross margin and cost discipline.
Despite upbeat Q1 FY24 results and improved full-year outlook, investors were disappointed with the continued slowdown in the company’s top-line growth rate. CrowdStrike expects Q2 FY24 revenue growth in the range of 34% to 36%, reflecting further deceleration amid a tough macro backdrop.
Nevertheless, the company is confident about the road ahead based on the growing adoption of its offerings. At the end of Q1 FY24, CrowdStrike’s module adoption rates were 62%, 40%, and 23% for five or more, six or more, and seven or more modules, respectively, as of Q1 end.
CrowdStrike sees more demand for its products driven by the increasing adoption of generative AI. The company has collaborated with Amazon’s (
NASDAQ:AMZN
) Amazon Web Services (AWS) to develop powerful new generative AI applications that help customers accelerate their cloud, security, and AI ambitions.
Is CrowdStrike a Buy, Sell, or Hold?
Mizuho analyst Gregg Moskowitz increased the
price target for CrowdStrike stock to $180 from $175 and reiterated a Buy rating following his firm’s annual cybersecurity summit. Moskowitz noted that despite the ongoing macroeconomic pressures, the company stated that demand remains resilient and its pipeline growth is reflecting good momentum. Further, management is confident about emerging as a generative AI winner.
Wall Street’s Strong Buy consensus rating on CRWD is based on 30 Buys and two Holds. The average price target of $176.77 implies 14% upside.
Shares have risen over 47% since the start of 2023.
Nvidia (NASDAQ:NVDA)
Chip giant Nvidia’s
market-beating fiscal first-quarter results and a stellar Q2 FY24 revenue guidance of $11 billion (plus or minus 2%), which was over 50% higher than the Street’s expectations, triggered a solid rally in the stock.
Shares have rallied more than 192% year-to-date.
The company’s guidance is backed by an
impressive demand for its chips in generative AI applications. The demand for Nvidia’s graphics processing units (GPUs) in cloud computing and generative AI applications like OpenAI’s ChatGPT is fueling strong growth in its data center segment, with revenue rising 14% to $4.28 billion in Q1 FY24.
While the company’s automotive business contributed only $296 million to Nvidia’s Q1 FY24 top line, its impressive growth trajectory (114% in Q1) cannot be ignored. The company’s automotive design win pipeline over the next six years has climbed to $14 billion from $11 billion a year ago.
What is the Target Price for NVDA?
Last week,
Morgan Stanley analyst Joseph Moore raised his price target for Nvidia to $500 from $450, while also increasing the price targets for other semiconductor stocks, including Advanced Micro Devices (
NASDAQ:AMD
).
Moore chose Nvidia as his “top pick” over AMD, as he sees significant upside in the stock over the near team based on his expectation that it could be the “only company” likely to beat and raise this year due to its robust AI exposure. The analyst raised AMD’s price target by $41 to $138, but thinks that “Unlike Nvidia, the company is unlikely to post near term upside.”
Moore expects Nvidia’s data center business to drive much of its growth over the next five years due to demand for the segment’s products, with the spike in interest in generative AI creating a solid environment for AI and machine learning hardware solutions.
Nvidia stock, which recently joined the trillion-dollar market-cap club, boasts Wall Street’s Strong Buy consensus rating based on 32 Buys and four Holds. The average price target of $451.48 implies about 6% upside.
Conclusion
Nvidia and Meta shares have skyrocketed year-to-date and have outperformed CrowdStrike stock. While Wall Street is very bullish about the prospects of all the three tech stocks discussed here, currently, analysts see higher upside in CrowdStrike than the other two stocks.
As per TipRanks’ Smart Score System, CrowdStrike earns a score of “Perfect 10,” implying the stock is capable of outperforming the broader market over the long term.
Disclosure
In this video, I will discuss Taiwan Semiconductor Manufacturing (NYSE: TSM) and five other semiconductor companies that can benefit from numerous tailwinds impacting the chip industry. Check out the short video to learn more, consider subscribing, and click the special offer lin
A war is happening in the tech world, and Amazon (NASDAQ: AMZN) is not sitting idly by. The company commands 30% of the data-center market shares and faces increased competition from names like Microsoft (NASDAQ: MSFT), which continue to whittle away at the market.
The rise of A
The artificial intelligence (AI) wars are heating up. Software companies are battling it out for consumers' attention, but hardware giants are also jostling for position in what could become a multitrillion-dollar revolution for global data centers.
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Artificial intelligence (AI) is generating a lot of hype, but early signs are beginning to emerge that this is no mere stock market bubble but a sea change that will produce tangible economic results. Goldman Sachs (
NYSE:GS
) believes that AI could increase productivity by 1.5% per year for the next decade and boost the S&P 500’s (
SPX
) profits by 30% over the same time frame.
Earlier, the renowned investment bank predicted that generative AI (more on this shortly) could help to lift global GDP by 7%, or $7 trillion, over the next decade. A great way to invest in this emerging megatrend is through ETFs. Here are two under-the-radar AI ETFs that take interesting approaches to the space. Both are fairly new and are relatively small in terms of assets under management, and both could be hidden gems for investor portfolios.
1.
Roundhill Generative AI & Technology ETF (NYSEARCA:CHAT)
CHAT is the world’s-first ETF focused specifically on generative AI, the technology that Goldman Sachs hailed as having the capability to increase GDP. Roundhill explains that generative AI is AI that can create new and unique content, such as images or text, by “learning patterns and structures from existing data.”
Generative AI differs from generalized, traditional AI “in its ability to create new, unique content, rather than just analyzing or processing existing information.” Examples of generative AI you may have seen or experienced would be asking ChatGPT to write a poem or story for you or creating an image seemingly out of thin air with Dall-E. Adobe (
NASDAQ:ADBE
) is now incorporating AI into its core Photoshop and Illustrator products with Firefly, its creative generative AI engine that allows users to describe the images they want to generate using text.
As such, it’s no surprise that Adobe makes up a 5.2% weighting in the CHAT ETF. Overall, CHAT has 35 holdings, and its top 10 positions account for 56.1% of the fund. Below, you can take a look at
CHAT’s top 10 holdings using TipRanks’ Holdings Tool.
Nvidia (
NASDAQ:NVDA
) is CHAT’s top holding, which makes sense as Nvidia’s semiconductors are powering today’s generative AI applications. Beyond these names and other mega-cap tech names like Microsoft (
NASDAQ:MSFT
) and Alphabet (
NASDAQ:GOOGL
), CHAT casts a wide net in looking for generative AI names.
It owns quite a few Chinese companies that are making advances in AI, from stocks that are well-known to Western investors like Baidu (
NASDAQ:BIDU
) and Tencent (
OTC:TCEHY
), to more under-the-radar names like iFlytek Co. and SenseTime Group. These types of stocks are stocks can be difficult for retail investors to access, so it’s nice to have the option to be able to gain exposure to them through CHAT.
We
first covered CHAT last month when it launched and had under $2 million in assets under management (AUM). Now, just a few weeks later, CHAT has grown to over $66 million in AUM. While this is still relatively small in the world of ETFs, it shows that CHAT is garnering momentum. The only downsides to point out about CHAT is that it is a new, small ETF without a proven track record, and it has a relatively high expense ratio of 0.75%.
Nonetheless, CHAT looks like an interesting option for investors thanks to its unique, undiluted focus on generative AI and its portfolio that goes off the beaten path to find these generative AI companies.
Also, it has an ETF Smart Score of 8 out of 10. The
Smart Score is TipRanks’ proprietary quantitative stock scoring system. It gives stocks a score from 1 to 10 based on eight market key factors. The score is data-driven and does not involve any human intervention.
Is CHAT Stock a Buy, According to Analysts?
Analysts view CHAT as a Moderate Buy. Over 75% of the ratings on CHAT are Buys, 21.8% are Holds, and just 2.8% are Sells. It should be noted that the
average CHAT stock price target of $31.55 represents only 4.9% upside potential, reflecting the fact that the price of CHAT has run up over 15% since its launch just a month ago.
2.
WisdomTree Artificial Intelligence & Innovation Fund (BATS:WTAI)
Like CHAT, the WisdomTree Artificial Intelligence & Innovation Fund is a relative newcomer to the world of ETFs, launching in December 2021. It's larger than CHAT, with nearly $100 million in AUM, and it has a comparatively lower expense ratio of 0.45%.
While WTAI isn’t exclusively focused on generative AI like CHAT, it takes a comprehensive approach toward investing across the space as a whole, including AI software, semiconductors, hardware (which includes things like drones, autonomous vehicles, and industrial automation), and innovation, which WisdomTree describes as any application of AI technology disrupting existing industries.
WTAI is more diversified than CHAT, with 79 holdings, and its top 10 holdings make up just 20.9% of the fund. Below, you can get an overview of
WTAI’s top 10 holdings.
Like CHAT, WTAI’s top position is Nvidia, although with a smaller 2.55% weighting. Nvidia competitor Advanced Micro Devices (
NASDAQ:AMD
) is the fund’s second-largest holding, and the semiconductor space is well-represented throughout the top 10 with these names plus Taiwan Semiconductor (
NYSE:TSM
), Synopsys (
NASDAQ:SNPS
) and Cadence Design Systems (
NASDAQ:CDNS
).
Like CHAT, WTAI isn’t afraid to go off the beaten path and go international in its search for AI leaders, with top 10 positions in Taiwan’s Alchip Technologies and Switzerland’s STMicroelectronics NV (
NYSE:STM
). WTAI also has positions in the mega-cap tech names that are pushing advances in AI, like Microsoft, Alphabet, and Meta Platforms (
NASDAQ:META
).
WTAI has a Neutral ETF Smart Score of 7, one point lower than CHAT.
Is WTAI Stock a Buy, According to Analysts?
WTAI is viewed as a Moderate Buy by analysts, and nearly 70% of analyst ratings on the ETF are Buys. The
average WTAI stock price target of $21.09 is just 7.7% above the ETF’s current price, reflecting the fact that the ETF has gained nearly 40% year-to-date.
Investor Takeaway
AI and generative AI will have a long-term impact for years to come, and this is the type of secular trend that I personally want to invest in. I like CHAT because of its unique, laser-like focus on generative AI, as well as the fact that it leaves no stone unturned in its hunt for AI stocks. I like WTAI for its comprehensive, all-encompassing approach to AI innovation. Therefore, both ETFs look like intriguing options for investors who want to add exposure to their portfolios.
Disclosure
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