Artificial intelligence has exploded in terms of its capability in recent years, with tech giants racing to develop the most advanced AI systems. While not yet profitable, these AI chatbots serve an important purpose – sifting through massive datasets that no human could parse alone. Of course, they lack true understanding, but they excel at discovering intriguing patterns for us to evaluate.
In this spirit of experimentation, I asked Meta Platforms’ (NASDAQ:META) new Llama chatbot to suggest three overlooked tech stocks that could double in 2024. Llama joins Google’s (NASDAQ:GOOG, NASDAQ:GOOGL) Bard and OpenAI’s ChatGPT in my lighthearted contest to see what stock ideas these AIs can generate. I take their suggestions with a huge grain of salt, viewing them only as thought-provoking suggestions. The real analysis is still up to us humans!
With that in mind, I’ll be looking at Llama’s three picks and commentating on them. Let’s start!
Meta Platforms (META)
I’ll start by addressing the virtual elephant in the room – Llama’s first pick being its own maker, Meta Platforms. None of the other AI assistants I’ve tested so far have put their own company at the top of the list, so Llama gets points for shameless self-promotion! However, I have to disagree that META stock will double in 2024.
Don’t get me wrong – I pounded the table on Meta being a strong buy back when shares traded around $90 per share. Since then, the stock has gained nearly 300% off its lows. But at its current levels, I believe Meta’s upside from here is limited. The company would need to flawlessly execute on multiple fronts to justify doubling again in the next 12 months.
Meta faces uncertainty around the metaverse, and cutthroat competition from TikTok. Are these risks priced into the stock? Arguably so. But Meta likely needs a couple of catalysts to ignite the next leg higher. An advertising rebound, big metaverse announcements, or a slowdown in TikTok’s growth could do the trick. Still, I don’t see enough gas left in the tank for a doubling year.
Don’t misinterpret me – I still believe Meta is a good long-term buy at current prices. But in the near-term, markets have likely priced in the good news. This isn’t the screaming bargain it was six months ago. Meta remains a solid stock for patient investors, just not one I expect to be a doubling candidate in 2024.
Shopify (SHOP)
Llama’s next pick, Shopify (NYSE:SHOP), could double this year under the right conditions. Yes, the same Shopify that already trades 77-times forward earnings and 12-times sales. I’ll explain why.
Shopify has cratered a stomach-churning 78% from all-time highs. So even after this year’s snapback rally, shares still sport a 52% discount from 2021 peaks. Merely reclaiming those losses would equate to a double from today’s prices.
And Shopify deserves a premium valuation. Revenue grew 47% over the past three years (better than 92% of peers) despite 2022’s hiccups. Margins are expanding as operating leverage kicks in. And the company is putting up improving bottom-line results, with its Q3 earnings per share smashing estimates by 66%.
Doubling from here will be challenging. But Shopify has levers to pull. Initiatives like international expansion, boosting its fulfillment network capacity, and growing its payments ecosystem can all drive upside surprises. If macro trends stabilize and e-commerce growth re-accelerates, shares could ride momentum back toward previous heights.
I obviously can’t guarantee Shopify stock will double in 2024. But the company’s growth story, its reasonable valuation after the recent market beat-down, and potential upside catalysts make it possible if things break right. Of Llama’s three picks, this is the one I’m most bullish on for outsized returns this year.
Zoom Video (ZM)
Llama’s last selection, Zoom Video (NASDAQ:ZM), is another solid company facing some near-term headwinds. And while I don’t think Zoom will repeat its meteoric pandemic gains in 2024, I agree the company’s current valuation leaves room for upside.
Let’s first level-set. Zoom is unlikely to recapture its former stay-at-home darling status anytime soon. Hybrid work is here to stay, limiting how video conferencing can penetrate the personal usage market. Revenue growth has already normalized to low-single digits, a far cry from triple-digit gains almost four years ago.
That said, Zoom emerged from the pandemic with $6.5 billion in cash and durable enterprise relationships. The company name has become synonymous with video meetings, enjoying wide brand recognition and integration. And priced at 14-times forward earnings, Zoom trades at a reasonable valuation for a steadily-growing company.
In my view, Zoom lands firmly in “show me” territory. This stock could fly higher if new offerings like Zoom Phone gain strong traction or new use cases emerge to recharge growth. But for now, I believe the stock’s valuation already captures realistic possibilities, given the slower demand backdrop.
On the date of publication, Omor Ibne Ehsan 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.
