As global economic tensions and fears of a recession rise, the stock market experienced a turbulent week. However, savvy investors view this as a chance to acquire high-quality stocks at more attractive prices. With the tech sector and artificial intelligence (AI) generating significant interest, companies continue to invest heavily in AI. This suggests the industry will likely keep growing in the coming years. Notably, AI stocks such as Nvidia (NASDAQ:NVDA) have performed impressively in the first half of 2024.
In a historical context, Nvidia has been a significant beneficiary of the AI boom, consistently reporting solid financial gains in recent quarters. However, analysts are now urging investors to consider other AI stocks with potential for substantial growth. Previously, the focus on Nvidia overshadowed other promising companies in the AI sector. Now, as the competition intensifies, a broader view of the market highlights additional opportunities. This shift in focus suggests a more diversified approach to investing in AI stocks.
Palantir Technologies (PLTR)
Palantir Technologies, established nearly two decades ago, has transitioned from serving primarily government clients to diversifying its business across various sectors. The company has invested in AI, developing an Artificial Intelligence Platform (AIP) and offering it through boot camps. These efforts have successfully converted leads into clients.
For the second quarter, Palantir reported a 27% year-over-year increase in revenue, reaching $678 million, and a 41% rise in customer numbers. The company closed 27 deals worth more than $10 million each, with commercial clients increasing by 83%. This impressive performance, coupled with government contracts, positions Palantir for continued growth. The company’s EPS grew 500% year-over-year to $0.06, highlighting strong financial health and potential for future expansion.
Oracle (ORCL)
Oracle, a well-established player across multiple industries, has experienced a 23% year-to-date increase in stock value, now trading at $128. The company’s strategic partnerships with Nvidia and Palantir have expanded its market presence. With plans to build 100 data centers, Oracle is positioned to meet growing cloud service demands as businesses transition to cloud computing.
Recently, Oracle partnered with OpenAI to utilize its cloud infrastructure for running AI applications. This collaboration has brought Oracle into the spotlight, potentially attracting more partnerships for AI-related tasks. In its fourth-quarter results, Oracle reported a 3% increase in revenue to $14.3 billion and a 42% year-over-year jump in cloud infrastructure revenue. The company’s performance obligations stood at $98 billion, indicating strong future revenue potential.
ServiceNow (NOW)
ServiceNow, a cloud computing platform company, helps organizations manage complex workflows, facilitating the use of AI applications. The company’s stock has risen 15% year-to-date, now trading at $792. Despite its high price, it remains a strong candidate for future growth, potentially even a stock split.
ServiceNow reported impressive second-quarter results with an EPS of $3.13 and revenue of $2.63 billion, beating market expectations. The company’s subscription revenue increased by 23% year-over-year. Additionally, ServiceNow’s high subscription renewal rate of 98% indicates strong customer satisfaction. The company’s expansion into the Middle East, including the upcoming launch of ServiceNow UAE cloud, further solidifies its growth prospects.
The AI market presents numerous opportunities for growth beyond Nvidia, with companies like Palantir, Oracle, and ServiceNow showing strong potential. Investors seeking to capitalize on the AI boom should consider diversifying their portfolios to include these promising stocks. The growing demand for AI and cloud services, coupled with strategic partnerships and expansions, positions these companies for significant future gains. Adopting a broader investment perspective in the dynamic AI sector could yield substantial returns over time.
