Artificial intelligence (AI) leader, Nvidia (NASDAQ:NVDA) had a rough week with the stock declining 8.5% after a strong 2024 start. Concerns loom as the AI stocks‘ surges have been losing some steam due to Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) disappointing results.
As Big Tech faces scrutiny, Nvidia awaits earnings reports from major companies like Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN) and Meta (NASDAQ:META). Moreover, Nvidia’s results for the quarter ending June 30 are due August 28, with analysts noting the upcoming week could be crucial for market direction.
Artificial intelligence has remained volatile, with high valuations raising skepticism similar to the pre-dot-com crash era. Though currently less inflated, AI stocks fluctuate daily, offering a risky but potentially rewarding playground for investors. While many AI firms stand to benefit from rapid growth, three are considered safer long-term bets.
Nvidia (NVDA)
Nvidia has led the AI revolution but suffered a 10% drop post-stock split. Despite this, it’s a prime buy-the-dip opportunity. With its market cap soaring over 200% in the past year and briefly entering the $3 trillion club, Nvidia remains a leader in AI, demonstrating impressive growth.
After Nvidia unveiled new tools to boost humanoid robotics and AI development at SIGGRAPH 2024, its stock could benefit. CEO Jensen Huang highlighted that these advancements will support global developers in building the next generation of robots.
Since Nvidia’s share retreat began on July 10, 2024, four analysts reaffirmed buy ratings and raised their price targets. Benchmark’s Cody Acree lifted his target to $170, citing increased confidence in Nvidia’s AI chip leadership.
TD Cowen’s Matthew Ramsay raised his target to $165, anticipating strong quarterly results. Ananda Baruah of Loop Capital set NVDA’s target of $175, while Piper Sandler raised it to $140. This highlights confidence in Nvidia’s strong business trends.
Super Micro Computer (SMCI)
Super Micro Computer (NASDAQ:SMCI) is expanding with new facilities to meet the rising demand for AI and liquid-cooled solutions. This growth, coupled with strong financials, supports a buy rating. The expansion could double its AI SuperCluster capacity and enhance its leadership in the AI and data center markets.
Super Micro’s new facilities enhance its market position by meeting the growing demand for AI and liquid-cooled solutions. These facilities improve delivery times, cut operational costs, and support faster, more efficient data processing. With liquid-cooled data centers expected to rise significantly, Super Micro is well-positioned to capture a large share of the AI market.
Strong results and positive guidance could drive stock gains post-earnings. Super Micro’s upcoming results on August 6, without preliminary numbers, might lead to a relief rally if they exceed expectations among AI stocks.
Meta Platforms (META)
Facebook and Instagram parent Meta Platforms (NASDAQ:META) will be releasing its second-quarter earnings report on July 31. Although the stock declined 15% after a weak first-quarter guidance, shares have increased 33% year-to-date. Investors are watching for strong ad revenue and progress on the Llama 3.1 AI model, amid concerns over its AI spending.
Meta’s shares are trading at 24 times future earnings, aligning with the S&P 500 average and historically low for Meta. Despite this dip, Meta recently advanced its AI with the open-source Llama 3.1 model, its most sophisticated version yet. Although some analysts criticize the free availability of Meta’s AI, the company believes it will yield long-term benefits. META stock has risen 33% this year despite the recent drop.
Meta launched its new AI Studio in the U.S., allowing users to create custom AI bots. Users can design characters using templates or from scratch and interact with them via Instagram DMs. The AI bots, powered by Meta’s Llama LLM, offer personalized advice and entertainment. Additionally, creators can develop AI bots as extensions of themselves.
On the date of publication, Chris MacDonald 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.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.
