Over the last thirty years, there has always been a trend that captures the attention of investors. Currently, the most exciting trend in the investing community is the artificial intelligence (AI) revolution.
AI uses software and systems to handle tasks traditionally done by humans. The incorporation of machine learning is what sets AI apart, allowing software and systems to evolve and improve over time. With applications across all sectors and industries, artificial intelligence is projected to add over $15 trillion to global GDP by the end of the decade, according to experts at PwC.
Wall Street and analysts are well aware of the huge potential of AI solutions. Most analysts foresee continued growth in AI stocks over the next year, including market leader Nvidia (NASDAQ: NVDA).
Nvidia might not have the highest potential among AI stocks
Analyst Ananda Baruah of Loop Capital believes that shares of Nvidia could reach $1,200, which suggests a 52% increase from the closing price on Feb. 23, 2024. This would add $1 trillion in market cap, potentially making Nvidia the largest publicly traded company in the world.
Baruah’s optimism is likely due to Nvidia’s strong position as the infrastructure backbone of the AI industry. The company’s A100 and H100 GPUs may make up to 90% of GPUs used in high-compute data centers in 2024. With demand exceeding supply, and Nvidia enjoying pricing power, it has consistently beaten Wall Street’s sales and profit predictions.
However, Nvidia faces challenges this year, including increased competition and the development of AI chips by its largest customers, Meta Platforms and Microsoft.
There is a possibility that Nvidia might impact its own margins as A100 and H100 GPU production ramps up. If GPU scarcity decreases, it could reverse the pricing power that has boosted Nvidia’s data-center sales.
While Baruah believes Nvidia could offer a 52% return from its closing price, three other AI stocks are expected to have higher potential, according to some Wall Street analysts.
Baidu: Potential upside of 89%
One AI stock that an analyst believes can surpass Nvidia in terms of potential upside is China-based Baidu (NASDAQ: BIDU). Fawne Jiang at Benchmark predicts that Baidu’s stock could reach $210 per share, representing an 89% increase from the closing price on February 23.
Baidu is well-known for its dominant internet search engine in China. The company has consistently held a significant share of internet search in China for the past nine years. Advertisers rely on Baidu due to its strong ad-pricing power.
Baidu’s future relies heavily on AI. Its AI Cloud and autonomous ride-hailing service, Apollo Go, have shown impressive growth rates, particularly in generative AI solutions.
Jiang’s price target of $210 is feasible given Baidu’s historical growth rate, strong cash position, and low forward earnings multiple. Non-online marketing revenue could drive Baidu’s stock to $210.
Mobileye Global: Potential upside of 203%
Another AI stock with significant potential is Mobileye Global (NASDAQ: MBLY), a developer of ADAS and autonomous driving solutions. Analyst Itay Michaeli of Citigroup believes Mobileye Global stock could triple to $72 per share.
Next-gen vehicles are incorporating technology like Mobileye’s SuperVision ADAS, enhancing the driving experience. Mobileye’s profitability in Q4 2023 and substantial order backlog demonstrate its growth potential.
While Mobileye has promising technology and financials, potential economic headwinds in 2024 might hinder its stock price.
Tesla: Potential upside of 64%
The third AI stock with more upside potential than Nvidia, according to one analyst, is EV manufacturer Tesla (NASDAQ: TSLA). Dan Ives of Wedbush Securities believes Tesla’s stock could reach $315 per share, offering a 64% increase.
Tesla heavily relies on AI solutions for its EVs, with Autopilot software aiding in driving decisions. Despite strong growth and profitability, Tesla faces challenges such as price cuts, increasing competition, and declining gross margin.
The high price target for Tesla might be challenging to achieve in the current economic climate.
Key Takeaway:
The potential of AI stocks like Baidu, Mobileye Global, and Tesla surpasses that of Nvidia according to select Wall Street analysts.
forget-nvidia-these-3-artificial-intelligence-ai-stocks-have-up-to-203-upside-according-to-select-wall-street-analysts
