With Q3 of 2023 in full swing, many tech companies have laid off employees due to the poor economy and demand. Q3 is shaping up to be the same as companies like Binance, Niantic, and even Amazon (NASDAQ:AMZN) continue to cut thousands of jobs. However, the recent artificial intelligence and machine learning wave stands strong, and many companies are making large strides in the tech world. This has led to the rise of AI stocks to buy.
One example is Adobe (NASDAQ:ADBE), which uses AI to bolster its creative cloud, unveiling the new Adobe Illustrator and many exciting products. OpenAI also continues to expand its AI sector with new products that can turn sentences into accurate images.
Midjourney and Dall-E are r creating gothic art and virtual art exhibitions, respectively, demonstrating how the world is progressing daily with new technologies and innovations stemming from AI. While there will still be short-term layoffs until America recovers from the looming recession, AI is taking the forefront of innovation, and these three companies in July 2023 are harnessing AI for top-notch long-term growth.
ASML Holding (ASML)
ASML Holding (NASDAQ:ASML) works in lithography, creating machines indispensable to computer chip production. With an uncontested monopoly on the market due to its extreme ultraviolet (EUV) systems, the stock has grown 37.20% YTD.
ASML has shown excellent financials, exceeding both revenue and EPS expectations. In addition, semiconductors are in high demand due to AI, and the global industry is projected to grow at a 12.2% CAGR through 2029, thereby boosting the global lithography equipment market to grow at a projected 9.44% CAGR through 2028.
As the world’s only manufacturer of EUV equipment, it is unchallenged by its two closest industry competitors, Nikon and Canon. This means ASML’s EUV equipment is the only option for manufacturing chips with transistors below 5nm. This technology acts as the company’s main competitive advantage due to the equipment’s high complexity and lack of substitutes. It’s one of those AI stocks to pay attention to.
Yahoo Finance reports 7 analysts, 5 of which have given ASML a “Buy” rating, with a mean 1-year price target of $751.18, from $506.31 to $864.06. This significant upside speaks volumes about the growth potential of ASML Holdings, and it is only a matter of time before the market recognizes this. With all of this and more, ASML stock is an investment-worthy addition to your portfolios as it is an uncontested monopoly in its industry, with the rapid innovation from its product offerings continuing to attract more consumers than ever.
Zscaler Incorporated (ZS)
Zscaler Incorporated (NASDAQ:ZS) is a leading American cloud security company that remains at the forefront of cloud security innovation by leveraging AI and ML in its Security Service Edge (SSE) platform.
Zscaler boasts strong financials, generating $418.8 million in revenue, surpassing Q2 analyst expectations by $7.2 million, and growing at a 52.5% CAGR. ZS stock even shows signs of being undervalued with a Normalized EPS of $0.48, surpassing analyst expectations by $0.05, and having a projected 59.1% forward growth rate. Management has been excelling in handling operational expenditures, yielding a 33.9% Levered FCF Margin TTM that is over four times the sector median. Lastly, a $429.5 million in Cash From Operations TTM coupled with a 77.8% gross profit margin indicates Zscaler’s profitability as one of those AI stocks.
Zscaler unveiled new advanced security solutions at its Zenith Live cybersecurity exposition, which cater to IT and security teams to ensure the safe utilization of generative AI without the risk of compromised intellectual property or data loss. Among these solutions are Zscaler Data Loss Protection (DLP), which safeguards against data leakage and stores prompts in an audit log; AITotal, which assesses AI application risk levels; and AI Visibility and Access control, preventing phishing threats on AI applications. With a broad range of cybersecurity solutions applicable across various sectors, Zscaler is poised to drive up its revenue while providing more solutions for its industry.
With the ZS stock up 29.9% year-to-date and a “buy” rating from 22 analysts with an average predicted 12-month upside of 18.31%, ZS stock is shaping out to be prevailing in its industry. Its strong financials AI security solutions and a SaaS security platform acquisition makes Zscaler a worthwhile addition to investor portfolios.
Symbotic Incorporated (SYM)
Symbotic Incorporated (NASDAQ:SYM) is a leading robotics company that entirely reimagines the warehouse distribution process, utilizing AI-powered software to handle goods at unparalleled speed and accuracy. Amidst competitors implementing similar processes in warehouses, Symbotic stands out for its reputable customer base, which includes large corporations such as Target and Albertsons.
Year-to-date, SYM stock has been up over 266%. Its latest quarter earnings similarly exhibited an impressive performance, beating projections on all fronts: Q2 2023 revenue of $266.85 million beat estimates by $42.04 million, and EPS of -$0.2 beat forecasts by 0.02. Though the negative EPS may evoke concern for investors, EPS has been growing back all year to return to positive digits in the coming quarters. This makes it one of those AI stocks to buy.
Management also reported recent developments that are destined to drive future growth. Firstly, Daniela Rus, an MIT professor bringing a “depth of experience, knowledge and research” to the company, was elected to the Board of Directors last March. During a time in which Symbiotic is experiencing heavy demand for its technology, Rus’ invaluable expertise will further drive innovation and thus appeal to more customers.
On a broader scale, the AI market is rapidly growing and, with a 20.2% CAGR for the next seven years, is forecasted to jump from $52 billion to $226.6 billion by 2030. This momentum and the fact that consumers are demanding faster shipments of goods will prove lucrative for Symbotic in the long term, as more companies will likely partner with it.
Overall, from its impressive YTD growth to its bright expectations for the future, SYM is a strong AI stock that will boost your portfolio for years to come.
On the date of publication, Michael Que 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.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
