Analysts closely monitor AI stocks as demand for the latest software and technology grows worldwide. Many AI stocks have seen exponential growth in recent years. And while some are in the spotlight of the general public, analysts have shared some very exciting ratings for lesser-known AI stocks.
These three AI stocks have received strong upside ratings and are believed to show excellent potential for the coming years. AI is exceptionally resilient to economic conditions and in constant demand. So, keeping up with the latest analyst recommendations can prove highly beneficial to stay ahead of the game.
Let’s detail reasons behind analysts’ beliefs in these three stocks that are on their way up. And, let’s discover how their contributions to the AI market make them excellent buys.
Baidu (BIDU)
Baidu (NASDAQ:BIDU) is a dominant Chinese stock in the market. Despite economic headwinds, analysts have not hesitated to place high expectations for this AI company’s future growth. Analysts feel optimistic after Baidu reported an earnings beat in the most recent quarter.
Baidu beat EPS estimates by 26% and saw a 10% increase in income in the first quarter of this year. While Baidu is predominantly known for being China’s most widely used search engine, the company is also seeing great success in its contributions to the AI market.
The company’s cloud computing software and automated ride-sharing platform showed promising results last quarter. The company continues to show healthy cash flow growth, which will continue to fund secure investments in innovation to develop its AI segments.
The stock trades at a relatively cheap price-to-earnings ratio of 15.31, Making it an excellent bargain for a solid addition to your portfolio. While analysts’ price targets for Baidu have fluctuated after its most recent earnings report, many still hold the stock at a buy rating and recommend investors get their hands on it.
Taiwan Semiconductor Manufacturing (TSM)
Behind all of the biggest companies in AI that design hardware are manufacturers like Taiwan Semiconductor Manufacturing (NYSE:TSM). It manufactures the semiconductor chips used in the most popular AI hardware on the market. Those companies include Nvidia and AMD. TSM can dominate the market with large, unmatched manufacturing capacity.
Also, the company has the most advanced semiconductor technology with its 3nm chips. While 3M chips make up the smallest percentage of the company’s revenue, they are among the only manufacturers with the technology available.
Further, analysts have high expectations for TSM after an exciting earnings beat in the first quarter of 2024. Net income and revenue were up year-over-year (YOY). And the outlook indicates similar growth rates for the second quarter rates. Management reported a strong demand for AI-related products.
Therefore, TSM is expected to maintain a steady growth rate over the coming years and is valued reasonably, considering its potential.
SentinelOne (S)
SentinelOne (NYSE:S) is a cybersecurity stock that analysts have been monitoring for some time. Cybersecurity is a popular field for investors today as software and products never go out of demand alongside ever-increasing digitalization. After SentinelOne crushed earnings estimates for the end of its fiscal year, analysts hold the stock in high esteem.
SentinelOne reported a 47% increase in revenue YOY, and the guidance for fiscal 2025 shows that management expects accelerated revenue growth. AI is a massive part of SentinelOne’s cybersecurity platform, Singularity. The platform utilizes machine learning to identify threats and optimize security responses continuously.
Also, the company relies on a subscription-based service and has seen increased customers over the last quarter. However, the higher spending per customer is equally as promising for SentinelOne. Customers with an annualized recurring revenue of over $100,000 grew by over 30% in the last quarter of fiscal 2024.
The company shows excellent growth in loyalty and spending amongst customers. Although its path has not been as consistent as some investors may hope, analysts still have high expectations for this AI cybersecurity stock.
On the date of publication, Joel Lim did not have (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.
