Discerning investors are increasingly looking to mid-cap stocks to supercharge their portfolios and build wealth. The artificial intelligence boom is only just beginning, and AI-powered software will continue to capture investors’ attention.
Amid the gold rush, there are several candidates that stand out as hidden gems, ready to capitalize on the AI revolution. With the total addressable market for enterprise software set to reach unprecedented heights, these mid-cap stocks should benefit. These 3 exciting companies demonstrate the foresight and innovation necessary to produce outsized returns.
Now, let’s discover the 3 best mid-cap stocks to buy for the coming AI revolution!
Qualys (QLYS)
Qualys (NASDAQ:QLYS) is a market leader in cloud security and compliance, and they’re making a compelling buy case in 2024. The company boasts over 10,000 customers and their TruRisk platform is valued in the cybersecurity sector.
Their cloud-based platform offers a comprehensive suite of solutions, streamlining tasks like vulnerability threats, web application scanning and more. Qualys’ VDMR stands out, powering teams to measure, communicate and eliminate risk across their IT infrastructure.
Their customers can now leverage the power of AI through their acquisition of Blue Hexagon’s AI and machine learning platform. They’re able to identify relationships and patterns, with highly integrated data that are undetectable from traditional signature-based solutions.
In FY23, Qualys’ revenue increased 13% YOY to $554.5 million. Net income swelled to $151.6 million, or $4.03 per share. Gross margins remained robust, up to 81% compared to 79% in 2022.
Qualys is guiding double digit revenue growth in Q1 FY24, and with GAAP EPS in the $0.84 – $0.92 range. With cybersecurity threats on the rise, Qualys remains a top stock to benefit from the AI revolution.
Science Applications International (SAIC)
Science Applications International (NYSE:SAIC) is an aerospace and defense contractor that has been crafting a unique AI strategy, and strong industry fundamentals position them for continued growth.
Science Applications International is an enterprise software company that primarily provides services for the aerospace and defense industry. They have a unique portfolio of cybersecurity solutions, cloud solutions and digital transformation services.
SAIC possesses deep knowledge of immersive technologies, program management, and climate solutions. While serving clients like the U.S. Department of Defense, their acquisition of Koverse further strengthens their AI and analytics capabilities.
In Q3 2023, SAIC’s revenue was flat but their bottom line saw continuous improvements. Net income and EPS rose 16% and 21%, respectively. More recently, SAIC landed an $80 million U.S. navy contract for heavyweight torpedo test sets.
With a healthy backlog of $23.1 billion, SAIC is one of the best mid-cap stocks to buy for 2024.
Allegro MicroSystems (ALGM)
Allegro MicroSystems (NASDAQ:ALGM) is a global leader in sensor and power integrated circuits (ICs) headquartered in New Hampshire, United States. Allegro’s technology is integral, serving as the building blocks for modern applications in electronics, EVs, and data centers.
The company has shipped over 11 billion integrated circuits, holding the number one spot for magnetic sensor ICs. Their product portfolio includes advanced diodes, MOSFET, and gate drivers.
They are widely serving a diverse customer base from automotive, industrial and commercial customers. Their products will be crucial to meeting the AI revolution, given the rapid expansion of data centers over the next decade.
In their latest quarterly results, ALGM revenue increased 16% YOY to $276 million. Growth in E-Mobility accelerated 60% YOY, despite a broader slowdown in the global EV market.
The company continues to push the boundaries with cutting-edge technologies like Tunnel Magnetoresistance. This was supercharged with their acquisition of Crocus Technology, making ALGM one of the best mid-cap stocks to keep on your radar.
On the date of publication, Terel Miles 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.
