3 Machine Learning Stocks That Could Be Millionaire-Makers: May Edition


  • AI and machine learning are revolutionizing nearly every industry imaginable.
  • Palantir (PLTR): Palantir’s data analytics platforms use machine learning to help companies maximize efficiency.
  • Baidu (BIDU): This Chinese tech giant utilizes machine learning for many of its products and services.
  • Micron Technology (MU): Micron creates purpose-built memory infrastructure to power AI and machine-learning technology.
Machine Learning Stocks to Buy - 3 Machine Learning Stocks That Could Be Millionaire-Makers: May Edition

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The next phase of technology has been established: machine learning and AI will revolutionize the world for the better. Although it might seem like these stocks are trading in a bubble, investors need to keep a discerning and keen long-term vision for these disruptive, emerging technologies. Some way or another, AI will grow to become a secular movement that nearly every industry, not every company in the world, will incorporate to increase productivity and efficiency. 

Of course, anxiousness about the AI bubble is not unwarranted. Preparing a well-diversified portfolio of the right stocks is crucial to avoid such major drawdowns. Just because a company mentions AI doesn’t mean it instantly becomes a good investment. We’ve already seen this with pullbacks in industries like EVs and fintech. So, if you want to gain machine learning exposure in your portfolio, consider these three machine learning stocks to buy and thank us in the coming five or ten years.

Palantir (PLTR)

Palantir logo on the smartphone and the company share price on the day of opening the trade October 1, 2020. Palantir valued at $15.8bn in stock market debut. PLTR stock
Source: Ascannio / Shutterstock.com

Palantir (NYSE:PLTR) went from a meme stock to a legitimate business, earning hundreds of millions each year in profits. The stock is trading right at the average analyst price target of $21.45 and has a street-high price target of $35.00. This high-end target represents a more than 60% upside from the current price. 

This stock has been polarizing on Wall Street since its direct listing debut in September 2020. While the first few years were a roller coaster ride for investors, the stock is earning legitimate backing through its machine-learning integrated production deployment infrastructure. Additionally, the hype doesn’t get any more legit than Stanley Druckenmiller, who disclosed that he bought nearly 770,000 shares in the recent quarter! For those who don’t know him, Druckenmiller has long supported the ML revolution, with NVIDIA (NASDAQ:NVDA) being his most recent win during its massive rally over the past year. 

The problem with Palantir has always been its valuation. Currently, shares trade at 21x sales and 65x forward earnings. Nonetheless, growth prospects are looking strong now, with revenue growing at a five-year compound annual growth rate (CAGR) of 12% and a three-year CAGR of 21%. As multiples begin to compress, investors should consider Palantir to be a legitimate money-making contender in the ML space.

Baidu (BIDU)

An image of a laptop on a table with the screen showing the red and blue logo for Chinese Internet company "Baidu", with the background being blurred.

Baidu (NASDAQ:BIDU) is a Chinese technology company that recently amassed over 200 million users on its new Ernie AI chatbot. This year, the stock is down by about 4.0% as Chinese stocks have lagged the broader rally in US equities. Nonetheless, Wall Street has maintained an average analyst price target of $153.36, about 40% higher than the current price. 

Baidu recently made headlines after reporting it was interested in partnering with Tesla (NASDAQ:TSLA) to use its robotaxis in China. As China looks to get its hands on some for immediate rollout, investors should keep their eyes peeled for the unveiling of the CyberCabs in America this August. Not only will this potentially be one of the strongest new channels for revenue growth for both these companies, but Baidu’s race to get first movers advantage could solidify it as a leader in the Chinese automobile space.

As with many Chinese ADR stocks, the multiples for BIDU are low. For example, its P/E ratio of 9.79x is sitting 25% lower than its sector’s median! On top of such a discounted valuation, Baidu has maintained a strong 10-year revenue CAGR of 14%. Baidu looks like a bargain for investors who can tolerate the risk that comes with Chinese stocks. 

Micron Technologies (MU)

Micron Technologies (NASDAQ:MU) is an American chip maker with a major surge in demand due to AI and machine learning technology. Analysts are bullish on MU, with 28 of 31 recommendations coming in May as a Buy or Strong Buy rating. The average analyst price target is $145.52, nearly 15% higher than the current price. 

This chip maker has already hit new all-time highs this month and is seeing revitalized product demand. This growth potential has largely been attributed to Micron being one of three companies in the world that make DRAM memory chips. These chips allow for storing massive amounts of data, which will help accelerate the training of AI and machine learning technologies. These DRAM chips account for 71% of Micron’s revenue as of Q2 2024, which bodes well for the stock’s upward momentum. 

Usually, when a stock trades at all-time highs, its valuations also stretch. That’s not exactly true for Micron, as shares are trading at just 7.5x sales and 17x forward earnings. As revenue growth accelerates, Micron sticks out as one of the more under-the-radar ways to gain exposure to AI and potentially join the million-dollar club.

On the date of publication, Ian Hartana and Vayun Chugh 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.

Chandler Capital is the work of Ian Hartana and Vayun Chugh. Ian Hartana and Vayun Chugh are both self-taught investors whose work has been featured in Seeking Alpha. Their research primarily revolves around GARP stocks with a long-term investment perspective encompassing diverse sectors such as technology, energy, and healthcare.

Article printed from InvestorPlace Media, https://investorplace.com/2024/05/3-machine-learning-stocks-that-could-be-millionaire-makers-may-edition/.

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