The technology sector continued to plunge on Monday following a surprising hawkish tilt by the Bank of Japan, which caused the Japanese stock market to crater by a double-digit percentage. Still, investors seeking AI-enabled growth at a double-digit percentage discount may finally have an opportunity to do some buying.
Undoubtedly, it feels quite difficult to hold onto cloud computing stocks this time around, let alone buy them, especially with geopolitical tensions mounting, recession risks coming to light, and Warren Buffett’s recent souring in various stocks in the Berkshire Hathaway (NYSE:BRK.B) portfolio.
In any case, if you were eager to buy when stocks were at their peak before the Paris Olympics began back in late July, you shouldn’t let the recent wave of volatility stop you from going after the cloud names that are continuing to lead the digital transformation. Ultimately, the Japan-induced volatility and Berkshire stock sales, I believe, are nothing to ring the alarm bell over!
Salesforce (CRM)
Salesforce (NYSE:CRM) stock crumbled more than 7% in the past week, falling alongside almost everything else in tech. As the broad basket of tech stocks gets marked down and punished, I feel an increasing number of investors are ignoring the recently announced AI initiative with fellow cloud firm Workday (NASDAQ:WDAY).
The Salesforce-Workday partnership for work on a new AI employee service agent is a tremendously bullish development that could help level up both companies’ AI platforms. It certainly stands out as a win-win proposition that could help both firms pull ahead in the AI race as they unlock more value in the enterprise.
Still, investors don’t seem to care much for AI these days, not with stocks rolling over because of the hefty price of admission it takes to stay in the race. As absurd as it sounds, it seems like AI news is a source of bearishness these days!
For Salesforce, the “big AI payoff” may not be too far off, at least compared to other firms that have recently joined the AI bandwagon. Though choppy trading is likely ahead for CRM shares, it’s hard not to view the enterprise cloud computing stock as a great deal right here.
Oracle (ORCL)
Oracle (NASDAQ:ORCL) is an AI winner that’s been nosediving in recent sessions, down 4% on Monday and more than 11% from July’s all-time highs. The company hasn’t really done anything wrong to deserve its recent correction. The company’s cloud services growth continued to be a strong point for the firm in its (latest) second quarter.
It’s arguable that ORCL stock was a bit frothy when it peaked just a few months away. Either way, the latest dip seems to be more of a golden buying opportunity for investors seeking value and AI in a single stock.
At writing, shares of ORCL trade at 21.2 times forward price-to-earnings (P/E), which seems too low if you’re in the belief the AI data center boom is still in its early days. Even if data center spending stalls in the face of a recession, Oracle still doesn’t look as expensive or as “at risk” as many other AI cloud plays out there today.
Snowflake (SNOW)
Finally, we have much-hated data cloud company Snowflake (NYSE:SNOW), which crumbed another 6% on Monday, adding to its already sizeable losses from peak levels. The data warehousing firm has now shed more than 71% of its value from its 2021 peak, thanks in part to its link to past cyber breaches (Snowflake denied it was at fault) and less-than-impressive recent quarters that suggested the best growth days are over.
At $112 and change per share (close to a new low for SNOW stock), shares seem like a pretty great value if you’re looking for a misunderstood mid- or late-stage AI beneficiary. Sure, Snowflake’s enterprise AI platform may not be the only one on the market for companies seeking the best tools to build their AI models from the ground up. That said, Snowflake’s offering is certainly one of the most convenient, given many firms use Snowflake to manage and store their data.
In any case, I find many are overlooking the firm, given its potential should it be on the right side of the AI infrastructure boom.
On the date of publication, Joey Frenette held a long position in Berkshire Hathaway (Class B) and Snowflake. 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.
