Artificial intelligence (AI) is expected to significantly impact the global economy and business in the coming years. While some debate sustainability of the current AI-driven growth, investors and traders alike consider AI stocks to buy. With AI technology undoubtedly here to stay, this disruption will reshape the way we work, conduct business and invest.
Multiple stocks have seen dramatic gains in recent years due to AI adoption. However, they may be vulnerable to changes in investor sentiment now. Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Nvidia (NASDAQ:NVDA) are getting the lion’s share of headlines and investor interest as they battle it out for the leading edge. Yet, as with the dot-com boom, millionaire-making stocks haven’t grown yet despite witnessing substantial returns.
Generative AI is expected to add $2.6-4.4 trillion globally in the coming years, allowing ample room for stock growth. As AI applications and technologies become more pervasive, the overall economic benefits are projected to be sizable.
While large companies make headlines, smaller players with consistent earnings and projected continued AI-enabled expansion may be worth examining. Let’s explore three stocks to buy for long-term AI-driven returns.
DoubleVerify Holdings (DV)
One of the stocks to buy that has the potential to return millions is DoubleVerify Holdings (NYSE:DV). The technology firm provides data analytics and user authentication services for online companies. Its primary focus is helping advertisers reach audiences and achieve effective, quality returns on sales. The company uses AI to increase fraud detection capabilities. It also offers AI as a service to enhance the effectiveness of digital advertising and optimize strategies for individual businesses.
What makes DoubleVerify attractive as a growth stock is that it has consistently increased EPS over the last four years. The company is projected to continue doing so this year, delivering a 17% sales growth in 2024. Expanding into new markets like Meta (NASDAQ:META), YouTube and TikTok will probably weigh on its current earnings but is expected to enhance future growth.
This may explain why analysts are so positive about DV stock. The average price target is currently at $29.12 per share. This represents a potential upside of over 45%, which typically spans for a 1-year period.
Zoom (ZM)
Zoom (NASDAQ:ZM) is an internet communications platform company. It is most known for its shared-screen meetings, which were prevalent during the pandemic. As the end of lockdowns brought a major decline in demand, Zoom now integrates AI into its software. ZM provides a one-stop business solutions platform for arranging communications as companies navigate hybrid work environments.
The company is trading near pre-pandemic levels after its stock grew approximately ten-fold during the height of the pandemic. This means that ZM stock price is around 90% below its all-time record high. However, the company has since integrated AI and evolved into a tech company trading at a reasonable price-to-earnings (P/E) ratio of 21.3x for a tech. This is well below the S&P 500 average of 29.3.
Analysts expect continued growth, making Zoom one of the stocks to buy with an average price target signaling over 30% upside. Notably, Zoom has beaten consensus EPS consistently over the prior several earnings reports, with surprises ranging in double-digit territory.
Autodesk (ADSK)
Autodesk (NASDAQ:ADSK) is known for its AutoCAD software, which serves as the backbone of engineering and architectural development.
The company is positioning itself as the leader in 3D AI evolution through the use of generative AI to produce functional 3D shapes. In addition to AutoCAD, Autodesk offers other products like Fusion 360 and Maya that serve the construction, manufacturing and media industries.
While it applies AI to many industries, the company has not seen significant investor interest as its share price is up less than 5% for the year. However, Autodesk is particularly compelling because of its very low expenses due to a subscription-based business model. This results in a gross profit margin of 92%, with the largest cost being sales and marketing to acquire new customers.
Autodesk expects 10% revenue growth in 2024 through consistent growth that is not reliant on short-term AI trends. Also, analysts are optimistic about the ADSK stock, with 19 out of 23 recommending buying Autodesk shares.
On the date of publication, Stavros Tousios 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
