It’s 2024, and it is impossible to talk about tech stocks without mentioning artificial intelligence (AI). Everyone has been talking about AI on earnings calls and we are hearing about an AI Act too.
The market for AI is going to be huge and the companies that are already on the ride have made massive gains. Besides Nvidia (NASDAQ:NVDA), other tech companies stand ready to expand their business and achieve tremendous growth this year. Tech stocks are going to be hot property. So, for those ready to own a part of the most coveted assets of 2024, these three tech stocks are counted as buys.
Amazon (AMZN)
A major growth driver for Amazon (NASDAQ:AMZN) is its cloud segment, Amazon Web Services (AWS). With a market share of 31%, AWS is growing at a rapid pace. The tech giant has become much more than an e-commerce company. It is growing in profitability and cash flow. Free cash flow grew from $11.6 billion in 2022 to $36.8 billion in 2023.
It could become one of the top AI stocks by the end of this year. Trading at $174 right now, the stock is up 16% year to date (YTD) and close to a 52-week high of $180. It has grown over 97% in the past five years.
Another segment working in its favor is advertising. With several people flocking to Amazon every day, marketers continually look for ways to advertise on the platform. We could see this segment become an integral part of the business by 2025.
Super Micro Computer (SMCI)
The one company that had a better year than Nvidia is Super Micro Computer (NASDAQ:SMCI). Up 250% YTD, the stock is trading at $1,000 and moving ahead to the 52-week high of $1,229.
True, the stock is expensive, but it is riding on the highs of AI and could continue the rally. With the AI server market expanding, AI systems are only going to get better with each passive year.
Recently, Super Micro Computers has joined the S&P 500, and in the past few quarters, it saw maximum revenue generated from the AI server systems. The second quarter results boast sales of $3.66 billion and a net income of $296 million. SMCI spent $15 million in capital expenditure, and the cash at the end of the year stood at $726 million. For Q3, the company aims for net sales of $3.7 billion.
SMCI is already collaborating with Nvidia for projects, and is a supplier to the latter. So, it will continue to gain as Nvidia grows. Its modular server rack-scale system is being used to mount the AI graphics cards for Nvidia. With an increase in demand for Nvidia’s chips, we will see a rise in Supermicro’s server solutions.
Therefore, expect impressive growth in the top and bottom lines for Supermicro Computer this year. And, a Bank of America (NYSE:BAC) analyst has a stock price target of $1,280, believing SMCI is well-positioned in the AI server market.
Palantir Technologies (PLTR)
Finally, Palantir Technologies (NYSE:PLTR) has remained a highly secretive company for a long time. But with its AI prowess, it has gained massive popularity.
The stock is up 44% YTD. Trading at $24 today, the stock is extremely close to a two-year high. The data analytics company has built an AI platform which has helped it bag over 100 new clients in the recent quarter.
In Q4, PLTR saw 70% year over year (YOY) revenue growth in the commercial segment while the government revenue was up 11% YOY. Its customer count grew 35% YOY in the quarter. The numbers are impressive and so is its solid balance sheet with no debt.
It is gaining high interest and new customers through the AIP bootcamps. The latter allows companies to build live with Palantir Technologies engineers and track platform performance. This helps the clients understand the difference that Palantir Technologies can bring to their data. The company has a backlog of boot camps due to the soaring demand.
With over two decades of experience and an impressive presence in the commercial and government sectors, PLTR stock looks undervalued. It could double your money by the end of this year. Wedbush Analyst has a price target of $35 for the stock and calls it a “Messi of AI thesis.”
On the date of publication, Vandita Jadeja did not hold (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.
