Machine learning stocks are currently riding a wave of success in 2024, buoyed by significant advancements in AI technologies and supportive regulatory landscapes. Among the standout performers, Nvidia (NASDAQ:NVDA) has captured attention with an astounding 145% growth. However, beneath the shadow of Nvidia lies a realm of untapped potential in the machine-learning market, which is forecasted to swell to a colossal $503.4 billion by 2030, growing at a brisk 36% rate from 2024.
The engine propelling the machine learning stocks is notably revving loudest in North America, where a favorable policy environment has nurtured the sector’s growth. The 2023 National AI Research and Development Strategic Plan emphasizes collaborative efforts across industries, while President Biden continues to issue executive directives fortifying America’s leadership in AI and machine learning technologies.
With the machine learning market still in its nascent stages, investors often gravitate towards familiar names like Nvidia or Advanced Micro Devices (NASDAQ:AMD). However, the astute investor recognizes the allure of lesser-known machine learning stocks trading at a discount, possibly hiding substantial value.
In a climate where inflation figures persist above the 2% target range, echoing economic uncertainties, the Federal Reserve’s inclination towards a single interest rate cut this year comes as no surprise. Amid this volatile backdrop, sage advice from JPMorgan Chase (NYSE:JPM) and Morgan Stanley (NYSE:MS) directs investors towards companies garnering positive analyst reviews and trading below historical valuations.
Discovering ServiceNow (NOW)
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ServiceNow (NYSE:NOW) stands as a beacon in the realm of machine learning stocks, holding a “Strong Buy” consensus rating with an average price target of approximately $865. This forecast hints at a potential 15% upswing from its current $749 price point.
Championing new AI tools and witnessing robust growth in membership sales, NOW has strategically focused on integrating machine learning into its services, positioning itself as a standout player in the market.
Leveraging the platform of Knowledge 2024, ServiceNow has unfurled a slew of innovative machine-learning products aiming to streamline corporate processes and enrich user experiences.
Even beyond its machine learning initiatives, NOW stands as a stalwart performer, eclipsing analyst expectations in 11 out of the last 12 quarters. Its latest triumph in the first quarter of 2024, boasting an EPS figure of $3.41 (outperforming estimates of $3.14) and $2.60 billion in sales (surpassing analyst projections of $2.59 billion), underscores ServiceNow’s resilient growth narrative. Analysts foresee this growth momentum persisting, forecasting a 118% surge in EPS for fiscal 2024 and a further 28% uptick in 2025.
Unveiling Adobe (ADBE)
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Adobe (NASDAQ:ADBE) has faced a spell of turbulence, with its shares dipping 10% over six months following pessimistic forecasts for fiscal Q2. This swift decline marked the steepest single-day drop since September 2022.
Despite this downturn, 26 experts maintain a “Moderate Buy” stance on Adobe, envisioning a 16% ascent from $533 to $617. The stock’s current slump presents a golden opportunity for savvy investors eyeing machine learning companies marching to a different beat.
Adobe’s foray into machine learning is exemplified by its increasing utilization of creative AI. Features like the Adobe Lightroom Generative Elimination leverage AI to seamlessly eradicate superfluous elements from images.
Similarly, Creative AI integrated into Adobe Premiere Pro empowers users to manipulate shots, add or remove elements, and craft films woven with inspired ingenuity.
Revolutionizing the Financial Frontier with AI Integration
Adobe Innovations
In a bold move to enhance its capabilities, Adobe is integrating AI models OpenAI and Runway into its platform, amplifying its upgrading potential manifold.
Not stopping there, Acrobat and Reader are now offering a bridge to the AI Assistant through PDFs, where complex terminology is deciphered into digestible facts and actionable insights.
Furthermore, despite a challenging forecast, Adobe remains steadfast in its expectations for the fiscal year 2024, with sales projected to surge by 10.4% to $21.42 billion and earnings per share (EPS) to elevate by 11.8% to $17.96.
While dividends may not be in the cards, the recent approval by Adobe’s board for a $25 billion stock repurchase program underscores the company’s confidence in its financial trajectory.
The Underrated Power of Alphabet (GOOG, GOOGL)
Renowned investor Louis Navellier boldly asserts that Alphabet (NASDAQ: GOOG, NASDAQ: GOOGL) is the dark horse among the tech giants and who can argue otherwise. Despite a remarkable 29% surge in its stock value this year, Alphabet holds more than 10% growth potential with a unanimous “strong buy” consensus rating, making it a stalwart contender in the world of machine learning investments.
Google Research continues to push boundaries in natural language processing (NLP), computer vision, and reinforcement learning. Innovations like BERT have set higher standards in contextual understanding of search query words, significantly enhancing search accuracy and user satisfaction. Moreover, platforms like TensorFlow and AutoML on Google Cloud are empowering businesses to tailor-make their own AI models.
Alphabet’s brainchild, Jigsaw, leverages machine learning algorithms to combat toxicity on the internet. Perspective, a tool trained on a myriad of toxic comments, swiftly identifies and mitigates harmful content, fortifying user trust and saving Alphabet hefty legal expenditures.
Despite the machine learning landscape presenting its fair share of challenges, Alphabet’s impeccable financial performance is sure to resonate well with investors. The 15% spike in sales revenue to a staggering $80.5 billion further solidifies its position as a favored choice among investment portfolios, especially with the introduction of its maiden dividend and a colossal $70 billion share repurchase program.
