When looking at the tech market and AI in particular, some huge names stand out, and for a good reason. I’m talking, of course, about companies like Nvidia (NVDA), Microsoft (MSFT), Tesla (TSLA), Alphabet (GOOGL), and Meta Platforms (META), just to name a few.
Those big names that have led the tech rally in 2023 so far are great stocks to have in your portfolio and offer attractive potential returns. However, there are a few we may have overlooked.
The stocks I’ll cover today show a history of increasingly strong earnings reports that beat analysts’ forecasts and year-over-year growth in crucial areas such as revenue and EPS (earnings per share).
If we look past what’s most popular, we’ll discover other AI stocks that can bring us enormous profits. Such stocks present opportunities we do NOT want to pass by us…
Arista Networks Inc (ANET)
Arista Networks (ANET) is a compelling AI stock choice, offering advanced cloud networking solutions to internet companies, cloud service providers, and enterprise data centers. With its high-performance data center switches optimized for AI workloads, ANET caters to the industry’s evolving demands. ANET’s recent guidance, backed by notable clients like Microsoft (MSFT) and Meta Platforms (META), reflects increasing demand for its 7800 series switches tailored for AI tasks. Analysts project that ANET will hold a potential $35 billion market share by 2025, underscoring Arista’s growth prospects in the AI sector and cementing its status as a promising investment.
Surrounded by bullish sentiment, ANET is up year-to-date by 44.34%, has a positive 20/200 day SMA (simple moving average), a positive ROE (return on equity), and positive TTM (trailing twelve-month) momentum and asset growth. For its Q2 2023 earnings report, ANET exceeded analysts’ EPS and revenue projections by 9.83% and 5.90%, respectively. At the same time, it showed year-over-year revenue growth (+38.70%), net income (+64.46%), EPS (+64.89%), and net profit margin (+18.61%). For the current quarter, ANET is projected to report $1.4 billion in sales at $1.47 per share, with a 3-5 year EPS growth rate of 23.8%. With a 10-day average volume of 4.74 million shares, ANET has a median price target of $200, with a high of $225 and a low of $154; this represents a potential 28.5% jump in pricing.
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Relx PLC (RELX)
Relx PLC (RELX) presents an enticing opportunity for investors seeking exposure to the AI sector. As a global provider of information and analytics to professional and business clients, RELX has strategically integrated AI and ML (machine learning) into its legal, risk, and science divisions. Notably, the recent acquisition of Aistemos, a company specializing in AI-driven patent classification, affirms RELX’s commitment to innovation. The case can be made that RELX’s growth surge in the first half of 2023 indicates a genuine upward trend. RELX plans to soon launch its transformative “Lexis+” product, enhanced by generative AI capabilities. Combining its established success with pioneering AI initiatives positions RELX as an attractive AI player.
RELX CEO Erik Engstrom said at its last earnings call, “RELX delivered strong revenue and profit growth in the first half of 2023. The improving long-term growth trajectory continues to be driven by the ongoing
shift in the business mix towards higher growth analytics and decision tools that deliver enhanced value to our customers across market segments. By embracing artificial intelligence technologies for well over a decade, we have been able to develop and deploy these analytics and decision tools across the company, and we believe that our ability to leverage AI as it evolves will continue to be an important driver of our business going forward.”
RELX is up year-to-date by 17.75%, has a 0.91 beta score, a positive SMA, positive momentum growth, and a projected 3-5 year EPS growth rate of 5.8%. During its last earnings report, RELX also displayed year-over-year revenue growth (+13.35%), net income (+14.85%), EPS (+15%), and net profit margin (+1.36%). RELX has an annual dividend yield of 2.15%, with a quarterly payout of 18 cents ($0.72/year) per share and a 58.40% payout ratio. With a modest 10-day average volume of approximately 636 thousand shares, RELX has an average price target of $37.90, with a high of $38.80 and a low of $37; this indicates as much as a 20% potential price upside.
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Baidu Inc (BIDU)
Indeed, the biggest of the names on this list is China-based Baidu Inc. (BIDU), which is a standout due to its leadership in China’s internet search sector, diversified businesses, including AI and cloud, and a significant stake in iQIYI Inc. BIDU’s recent launch of “Ernie Bot,” a large language model AI product, and its $145 million AI-focused venture fund emphasize its commitment to innovation. Analysts highlight BIDU’s ongoing integration of AI features, like chat interactions and AI-generated search results, within its search engine, solidifying its position as the biggest AI name not located in the United States.
BIDU is up by 20.57% year-to-date, has a positive SMA and momentum growth, a PEG (price/earnings to growth) ratio of 1.22x, and a 0.71 beta score. For its last earnings report, it surpassed analysts’ estimates on revenue and EPS by 25.86% and 3.82%, respectively; BIDU also reported year-over-year revenue growth (+9.62%), net income (+758.19%), EPS (+652.78%), and net profit margin (+701.29%). With a 10-day average volume of 1.84 million shares, BIDU has an average price target of $178.60, with a high of $228.83 and a low of $108.47, representing a potential 66% jump from its current trading price.
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