Last month, the AI-driven stock selection system MarketMaster AI awarded NVIDIA (NASDAQ:NVDA) a “hold” rating with a C grade. Analysts continued to raise profit estimates for the chip manufacturer, offsetting the bearish pressure of high valuations. However, this month, the AI-based stock selection system downgraded Nvidia to a “D” rating, equivalent to a “sell.” A strong first-quarter earnings season led to the company’s stock rising too quickly, prompting MarketMaster AI to follow that signal and downgrade the AI stocks. The system predicts that Nvidia will underperform the market by 3% on average over the next six months.
As a result, there are now much better AI opportunities in the market. One of the top picks for the next six months according to MarketMaster AI is Microsoft (MSFT). The tech giant is expected to see a 17% earnings growth by 2027 and is currently trading at a reasonable price compared to Nvidia. Microsoft’s earnings engine is Azure, the company’s cloud computing business, which has been experiencing strong growth. MarketMaster AI forecasts a superior return of 10.5% over the next six months for Microsoft.
On the list of top AI stocks to buy, Cadence (CDNS) is another strong contender. Despite a recent drop in stock price, the high-quality company is trading at a reasonable valuation and is projected to outperform the market by 10.4% over the next six months. Cadence specializes in electronic design automation, catering to the increasing demand for complex chips, especially in the analog chip market.
Synopsys (SNPS) is Microsoft’s counterpart in the EDA market. The larger company boasts scale and growth prospects, with an expected outperformance of 10.2% in the next six months. In the midst of a strong recovery in earnings, Synopsys is seen as a solid pick for AI investors. Despite trading near its justified value, the company is well-positioned to benefit from the ongoing growth in the semiconductor industry.
MetaPlatforms (META) has long been considered an odd player in the AI space, but with a significant AI budget and evolving advertising solutions, the company is poised for growth. MarketMaster AI projects a superior return of 8.9% over the next six months for MetaPlatforms. The election year and the company’s renewed focus on AI solutions are expected to drive its stock performance.
Datadog (DDOG) is another stock to watch, with a strong rebound expected after a recent decline in stock price. The company’s cloud monitoring services are well-positioned to benefit from the AI trend, leading to an anticipated outperformance of 8.6% in the next six months.
Overall, while stocks like Nvidia and Super Micro may face challenges in the near term, there are still plenty of high-quality AI stocks offering good value and growth opportunities for patient investors. MarketMaster AI provides insights and ratings for investors looking to navigate the evolving AI market landscape and capitalize on emerging trends.
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https://investorplace.com/2024/06/beyond-nvidia-5-ai-stocks-to-buy-this-june/