As spring reaches its peak, it’s perhaps a perfect time to add sexy stocks to your investment portfolio. Not only do these stocks promise growth, but they also offer a splash of excitement.
However, the stock market is far from sexy at this point. After a thrilling first half of the year, it is now firmly in correction territory. Many of the sexy AI stocks have retreated in the past couple of weeks, with investors starting to look past the hype. To be fair, though, many experts anticipated such a drop, noting that years of growth had already been factored into AI stock prices. Nevertheless, it wouldn’t be a bad idea to add these three sexy stocks to buy, positioned for a robust upside once the dust settles.
Tesla (TSLA)
EV pioneer Tesla (NASDAQ:TSLA) has been far from sexy of late. In its first quarter (Q1), it posted its largest revenue drop since 2012, while profits dropped 55% from the prior-year period. Despite these worrying numbers, it appears TSLA stock has bottomed out and is positioned for strong gains with multiple catalysts in motion.
One of the biggest growth drivers for Tesla will be the launch of a more economically priced EV. CEO Elon Musk committed to releasing a cheaper EV model by early 2025 during Tesla’s Q1 earnings call. Tesla has taken a hammering from its competition, especially BYD (OTCMKTS:BYDDY), which has effectively leveraged more affordable EVs to its advantage. Moreover, Musk also talked about effective cost management and the proposed reduction of Tesla’s workforce by 10%.
Moreover, Tesla got the green signal for its highly anticipated Full Self-Driving (FSD) in China. According to Wedbush analyst Dan Ives, the company’s valuation is closely linked to FSD and autonomous technologies. Following the approval in China, a critical piece of the FSD puzzle for the company is now complete.
Palantir Technologies (PLTR)
There have been a fair few beneficiaries of the AI trend, but perhaps none more so than Palantir Technologies (NASDAQ:PLTR). Big data giant Palantir saw its stock go parabolic over the last year, gaining almost 200%, dwarfing the S&P 500’s 22% gain.
The company has been in the AI and machine learning game for a long time, catering to the intelligence and defense sectors. Its Gotham platform, designed for public sector entities, has been its primary growth driver over the years. However, its Foundry platform, which serves commercial entities, has recently outpaced growth in its public sector platform. For instance, in the fourth quarter (Q4), its commercial segment was up 32%, delivering $284 million in sales, beating its government segment, which was up just 5%, bringing $324 million. Moreover, its newest Artificial Intelligence Platform (AIP) witnessed a 70% jump in commercial sales year-over-year (YOY) in Q4, contributing to Palantir’s first year of profitability.
Palantir expects to be profitable again this year, but analysts are concerned about its lofty price. However, given its solid positioning in the AI realm, it’s tough to set a price target for the stock.
Shopify (SHOP)
Shopify (NYSE:SHOP) is a juggernaut in the e-commerce sector, providing an unmatched suite of services for online retailers. Its robust platform has equipped business owners around the world with a comprehensive set of tools robust tools for launching, growing and managing retail operations. Consequently, we’ve seen the company evolve from humble beginnings into a household name. A testament to that notion is that its revenues have grown from $105 million in 2014 to a whopping $7.06 billion last year. Its consistent top-line expansion, including a 26% increase last year, underscores the quality of its business.
Furthermore, AI could play a major role in taking Shopify’s business to the next level. It’s leveraging AI to not only enhance user experiences but drive operational efficiencies across its powerful platform. Its patented AI tools, such as Shopify Magic and Shopify Sidekick, facilitate content creation, optimize email marketing and streamline communications and marketing strategies. Moreover, AI-driven dynamic pricing, inventory management and fraud detection will likely significantly increase operational efficiency and security.
Additionally, SHOP stock shot up more than 58% over the last year but has been ticking in the red year-to-date (YTD). Despite last year’s ascent, Tipranks’ analysts estimate an 8% upside from current price levels.
On the date of publication, Muslim Farooque 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.
