Whether right or wrong, Nvidia has become the face of artificial intelligence (AI) on Wall Street. It is not a case; Nvidia’s growth has exploded since the start of last year, and its stock gains have made it a household name among investors.
However, it’s worth noting that AI goes far beyond a company. You can buy and hold a stock like Nvidia, but don’t discount the potential upside of some smaller companies that have the ingredients to become big winners down the road.
Here are three AI stocks you can add to your long-term portfolio:
1. Palantir Technologies
Data is clearly the foundation of how AI works, so it would make sense that companies that make the best use of their data could have a competitive advantage. This is the quick and dirty pitch for him Palantir Technologies (NYSE: PLTR).
The company builds custom software applications on its platforms—Foundry, Gotham and AIP—that help organizations analyze their data in real time. Palantir works closely with the US government, its allies and the private sector, where expansion is happening rapidly.
Its AIP, or Artificial Intelligence Platform, opened up a new level of growth and could be the long-term catalyst that makes Palantir one of the biggest businesses in the world for decades to come. AIP helps develop and deploy AI applications for government and businesses.
The value of AIP is evident throughout Palantir. Commercial customer growth accelerated to 69% year-over-year in the first quarter, driven primarily by interest in AIP.
Palantir is growing and profitable, with a balance sheet of $3.9 billion in cash and zero debt. Analysts believe the company’s earnings will grow at an annual rate of 27% over the next three to five years.
The company still only has 262 commercial customers in the U.S. That number could grow over time if it continues to demonstrate the value of its AI technology to businesses.
2. Snowflake
An organization’s data isn’t just there, ready to go. Companies need to store it securely, which creates a massive opportunity for Snow flakes (NYSE: SNOW).
The company is a cloud-based data storage and analytics platform that can make it easy for customers to store their data and access it whenever they want. Just think of the different data formats and sources; referencing data quickly becomes a matter of finding the needle in the haystack. That’s where Snowflake helps.
Snowflake has a usage-based billing model that enables customers to scale its products according to their needs. And since data grows exponentially, companies must increase their use of Snowflake as their data expands. As proof, the business has a consistent net income retention rate of 128%.
Along with that organic revenue expansion is the opportunity to add new customers. Snowflake has approximately 9,822 customers today, and with 1.7 million C corporations in the US alone, it has an incredible long-term track record. Overall, it looks likely to enjoy many years of double-digit growth.
3. CrowdStrike Holdings
Cyber security has steadily moved to the top of many businesses’ priorities. Protecting data and digital assets is no longer optional because the potential costs of failure are so high — the average breach causes millions of dollars in damages.
So companies are looking to next-generation security providers like CrowdStrike Holdings (NASDAQ: CRWD ). The company operates a cloud-based platform that secures endpoints, cloud workloads, identities and data. The platform adapts to threats in real time, making it far more effective than outdated technologies such as antivirus protections.
The proof of how good CrowdStrike is lies in its stellar financial metrics. Annual revenue multiplied more than sevenfold over the past five years to $3 billion.
The company is also very profitable. CrowdStrike is converting 32% of its revenue into free cash flow, bolstering a solid balance sheet that has $3.5 billion in cash against $742 million in debt. Analysts believe it will grow revenue by 22% annually for the next three to five years.
The company has become famous for expanding through new product modules. Its addressable market is worth $100 billion today and could expand to $225 billion by the end of the decade. This is a tremendous opportunity for a business that does just over $3 billion in sales today.
Investors should consider buying the stock slowly because strong fundamentals have earned the stock a lofty valuation of 79 times earnings, which is expensive — even for a company of CrowdStrike’s caliber.
Should you invest $1,000 in Palantir Technologies right now?
Before you buy stock in Palantir Technologies, consider this:
of Motley Fool Stock Advisor the team of analysts just identified what they believe they are Top 10 Stocks for investors to buy now… and Palantir Technologies was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia I made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $713,416!*
Stock advisor provides investors with an easy-to-follow plan for success, including instructions for building a portfolio, regular updates from analysts, and two new stock picks each month. of Stock advisor the service has more than quadrupled return of the S&P 500 since 2002*.
See 10 shares »
*The stock advisor returns on June 3, 2024
Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike, Nvidia, Palantir Technologies and Snowflake. The Motley Fool has a disclosure policy.
Diversify beyond Nvidia: 3 artificial intelligence (AI) stocks to add to your portfolio was originally published by The Motley Fool
#Diversify #Nvidia #artificial #intelligence #stocks #add #portfolio
Image Source : finance.yahoo.com