AI Stocks Poised for Explosive Growth:
Artificial intelligence (AI) has been a driving force behind the stock market’s strong rebound in 2023. As the rise of AI continues to shape various industries, investors are looking for opportunities to capitalize on this revolution. Two Motley Fool contributors believe that CrowdStrike and Pinterest are prime candidates for investment due to their significant AI exposure and potential for explosive growth.
CrowdStrike, a leading cybersecurity company, has been incorporating AI and machine learning into its operations for over a decade. As cyberattacks using AI become more sophisticated and damaging, the demand for AI-powered cybersecurity technologies is expected to skyrocket. CrowdStrike is well-positioned to benefit from this trend, with the company anticipating a substantial increase in its total addressable market (TAM) from $76.1 billion this year to $97.8 billion in 2025. By 2026, CrowdStrike expects its TAM to reach $158 billion.
In addition to its expanding market, CrowdStrike projects strong financial performance. The company anticipates sales growth of approximately 34% this year, reaching $3 billion, accompanied by a 54% increase in non-GAAP earnings per share. While these figures represent a slight deceleration compared to previous years, CrowdStrike’s market leadership and advanced AI-powered platform position it for ongoing success. Furthermore, the stock currently trades at a significant discount from its peak, making it an attractive option for long-term investors.
Pinterest, known for its image-focused social media platform, also stands to benefit from AI-driven advancements. The company’s use of recommender systems, leveraging AI algorithms to show relevant ads to users, has contributed to its revenue growth. By enhancing the effectiveness of its advertising platform, Pinterest can attract more marketers and increase the return on investment for businesses. Already, Pinterest has witnessed substantial revenue growth from $473 million in 2017 to $2.8 billion in 2022. As AI continues to play a pivotal role in driving revenue, Pinterest’s stock holds potential for further growth.
Despite its promising prospects, Pinterest’s stock is currently valued at a reasonable level. With a forward price-to-earnings ratio of approximately 23, near the lower end of its range, long-term investors may find this an opportune time to invest before the bull market accelerates.
While CrowdStrike and Pinterest may not be pure plays in AI, both companies are poised to benefit from the broader impact of AI within the tech sector. As AI continues to revolutionize industries, these stocks hold the potential for strong business performance and favorable stock returns.
In conclusion, the stock market’s resurgence in 2023 has been driven in part by the rise of AI. CrowdStrike and Pinterest are two companies well-positioned to capitalize on the AI revolution. CrowdStrike’s AI-powered cybersecurity technologies are expected to meet the rising demand for protection against AI-driven cyber threats, while Pinterest’s use of AI algorithms enhances its advertising platform. Investors seeking exposure to the AI market can consider these stocks for potential growth opportunities.
