With tech giants like NVIDIA investing big money into their AI departments, the AI sector is expected to grow over 15% this year. Joel Lim, a financial analyst at Trading.Biz, identifies the two best AI stocks to focus on this year.
There is no better time to take advantage of the AI industry’s impressive growth and returns so far this year. With tech giants investing big money into their AI departments, the sector is expected to grow over 15% this year.
Joel Lim, a financial analyst at Trading.Biz, has identified the two best AI stocks to focus on this year. With an expanded partnership and overall dominant performance in EPS and sales last month, these stocks offer some of the most exciting buys for investors this quarter.
The stocks to get your hands on as soon as possible are Nvidia and Service Now Inc. Both companies have a proven history of long-term consistent growth and show no signs of slowing down.
1. Nvidia (NVDA)
Nvidia reports a 126% jump in revenue and a 586% boost in GAAP diluted earnings per share from last year. While some investors have doubted Nvidia’s ability to stay on top of AI and tech, there is no denying its current momentum.
Nvidia is making strides in generative AI to stay ahead of other significant players like Chat GPT. Recently, Nvidia reported about the generative AI startup Bria utilising Nvidia’s latest framework, Nvidia NEMO, from its accelerated software platform.
In addition to software, Nvidia remains a top company for AI chips, releasing the latest and greatest HGX H200 late last year. The AI chip market is set to grow exponentially, reaching almost $70 billion in revenue this year, then expected to double in coming years, hitting $120 billion by 2027.
Financial Analyst Joel Lim says:
“A forward P/E ratio of 34.25 makes Nvidia a pricey but enticing buy for many investors with a proven commitment to AI interference chips that holds great prospects for growth.”
2. Service Now Inc. (NOW)
Service Now Inc. is another rising company in the booming AI and cloud computing industries. Service Now has shown a steady rise in revenue year-over-year, reaching nearly $9 billion last year, showcasing a 23.82% rise from 2022.
EPS is nearing to hit around $1.40/share this year and will even jump to a remarkable high by the end of 2024. This stock is priced high, and Joel Lim predicts it “may incur some turbulence with high revenue estimates for this year.”
The chart below showcases a seasonal trend comparison of these two stocks with NDAQ.
The forecast is based on the latest that is coming in from ServiceNow Inc. and is already creating a wave. First is Service Now’s exciting new partnership with Visa, which they announced in January this year.
Visa will integrate Service Now’s Dispute Management software to create a stand-alone platform where employers can handle all payment audits and disputes. The platform will enhance customers’ and employees’ experiences through generative AI and automated features.
The news doesn’t end here. ServiceNow further announced that it would extend its existing collaboration with Nvidia by incorporating the Now Assist software into ServiceNow’s “Now Platform.” Again, it showcases a commitment to developing cutting-edge generative AI solutions, this time targeting telecommunications and enhancing agent and customer experiences.
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