Artificial intelligence (AI) stocks have had an impressive run in 2023, with some companies’ stock prices soaring over 35%. Despite these significant gains, investors might be wondering whether it’s still a good time to buy into these companies.
One example is Microsoft, which has seen its stock price surge thanks to its partnership with OpenAI and the success of its Azure OpenAI Service. However, Microsoft’s fundamentals are equally impressive, with the company recently reporting $53 billion in revenue for Q1 2023, beating Wall Street estimates. Despite AI’s contribution to the company’s success, Microsoft’s diverse business segments make it a solid long-term investment option.
Palantir Technologies, on the other hand, provides software platforms that help governments and private sector organizations analyze data for better decision-making. The company has recently turned a profit for the second straight quarter and has a promising future, with analysts forecasting annual EPS growth of 56% over the next three to five years. While Palantir’s stock price has risen rapidly, its earnings growth potential and reasonable valuation make it a potential long-term investment.
Nvidia is another AI stock that has seen significant gains in 2023, with its stock price rising 169% since the beginning of the year. The company’s dominance in graphics processing units (GPUs), particularly for data centers supporting AI applications and workloads, is the driving force behind its success. However, Nvidia’s current high P/E and P/S ratios may limit its growth potential in the near term.
In conclusion, while AI stocks have experienced significant gains in 2023, there are still investment opportunities available. Microsoft, Palantir Technologies, and Nvidia are all strong options for investors looking for long-term growth potential. However, it’s important to consider each company’s fundamentals, diversification, and valuation before making any investment decisions.
