Artificial intelligence (AI) has entrenched itself as a hot topic in the year 2024, permeating every corner of the market. Missing out on the AI revolution is akin to leaving a feast untouched. Companies and investors are funneling substantial investments into AI, poised to dominate the market in the forthcoming years. While luminaries like Nvidia (NASDAQ:NVDA) shine bright but come at a hefty price, other contenders are ready to ascend to new heights. According to fresh insights from Bloomberg, Generative AI is forecasted to burgeon into a $1.3 trillion market by 2032. With the economy on a growth trajectory, it’s prime time to hop aboard the AI bandwagon. Below are three undervalued AI stocks silently surging in the shadows.
The Rise of Advanced Micro Devices (AMD)
Source: JHVEPhoto / Shutterstock.com
Pitted against Nvidia, Advanced Micro Devices (NASDAQ:AMD) has kicked off 2024 with commendable applause. AMD’s stocks have surged by a notable 147% over the past year and 46% in the current year. With a burgeoning appetite for its chips, tech giants are lining up to secure AMD’s offerings. Positioned as one of the most promising AI stocks, AMD has positioned itself as a prime investment choice.
Currently priced at $202, the stock is inching closer to its 52-week peak of $227, hinting at a continued upward trajectory. As AMD recently introduced the MI300 graphics processing units tailored for intensified AI workloads, a successful uptake may pave the way for more promising figures in the upcoming years. Management forecasts revenues of $3.5 billion from its chip segment this year.
Fundamentally strong, AMD has rebounded impressively, witnessing a 6% year-over-year revenue uptick in the fourth quarter. Posting an EPS of $0.41 and revenue of $6.2 billion, AMD stands tall in the expansive global data center sector, brimming with potential to thrive amidst fierce competition.
The surge in chip demand implies that Nvidia alone cannot satiate the supply, leaving customers in search of viable alternatives. This scenario presents a monumental growth opportunity for AMD, poised to scale dizzying heights in the ensuing months.
Mizuho Securities has bestowed a buy recommendation upon the stock with a target price of $235. For those finding Nvidia a tad too exorbitant, casting an eye on AMD before it blazes into the stratosphere is strongly advised.
Pioneering Progress: Palantir Technologies (PLTR)
Source: Mamun sheikh K / Shutterstock.com
Once cloaked in secrecy while serving the government, Palantir (NYSE:PLTR) has emerged as a formidable player over the past decade, attaining profitability along the way. Posting its inaugural quarter of positive net income in the fourth quarter, Palantir witnessed a substantial upswing in metrics. With 103 new deals sealed in the quarter and a surge in commercial clientele, the growth trajectory is unmistakable.
A major propeller for the company is its Artificial Intelligence Platform (AIP), driving data analysis and promulgating apt business decisions and workflows. Client-transforming boot camps have bolstered lead conversion into tangible deals.
Marking a 32% year-over-year ascent in commercial business and an 11% rise in government revenue, with customer numbers soaring by 35% year over year, Palantir raked in total revenue of $608 million. Projections for the current quarter point towards earnings ranging between $612 and $616 billion.
The revelatory fourth-quarter results underscore the success of AIP with clients, hinting at substantial revenue streams in the offing. Strong profitability in forthcoming quarters wouldn’t be surprising. Trading at $24 presently, Palantir stocks appear significantly undervalued, with the potential to double investors’ stake.
Earning my repeated recommendation, Palantir has proven its mettle and stands as a robust buy. The company has been on a steady growth upward trend, amassing a 48% surge year to date. Already a stalwart in the government domain, Palantir is now making formidable strides within the commercial sphere.
Fresh off the AIPCon event last week, Wedbush analysts marked their bullish stance by elevating the stock’s price target from $30 to $35, accompanied by an Outperform rating.
The Unsung Amazon (AMZN)
Source: Jonathan Weiss / Shutterstock.com
Heralded as a global e-commerce juggernaut, Amazon (NASDAQ:AMZN) is a prominent figure in the AI domain, often overlooked by investors enchanted by its e-commerce prowess. Boasting a diversified portfolio spanning various industries, Amazon Web Services (AWS) emerges as a potent revenue driver. In the fourth quarter, AWS recorded a brisk 13% year-over-year revenue surge.
Garnishing a sizable market share, AWS has yielded billions in revenue from this segment alone. In Q4, AWS revenue touched $24.2 billion and $91 billion for the fiscal year, affirming its resilience and reliability.
Harnessing AI for several years now, Amazon has buttressed its cloud platform, fortifying its strength in the domain. Priced at $175 today, Amazon stocks exude an undervalued aura, with ample room for expansion. Posting a 16% year-to-date upswing and an impressive 89% annual surge, Amazon shares trade lower compared to AMD stocks. With an appealing valuation and long-term viability, Amazon presents an enticing investment prospect.
Whether perceived as an e-commerce giant or an AI stalwart, Amazon warrants inclusion in your investment portfolio. Enamored by Wall Street, AMZN stocks revel in a plethora of Buy ratings, poised to scale greater heights in the approaching months.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Vandita Jadeja, a CPA and a freelance financial copywriter with a penchant for stocks, espouses a philosophy of long-term investment gains. Her adeptness with words and numbers engenders clear stock analyses.