After experiencing consistent growth for over a year, numerous AI Stocks related to artificial intelligence (AI) have experienced a decline. The reason behind this pullback appears to be the high stock prices and optimistic forecasts, which have led to some investors selling off their positions as they start to doubt the economic conditions.
Even with obstacles, certain AI stocks are showing long-term growth potential. Therefore, investors should consider the chance that successful companies will thrive regardless of economic conditions. With this in mind, I predict that the following three stocks will see an increase in value by 2025.
1. Palantir
Upon initial inspection, Palantir Technologies is a company that specializes in data analysis and software development. ( PLTR 1.31% ) It appears that this AI stock could be the final addition to a list of stocks that are experiencing an upward trend, given its current high share price and recent performance. The ratio of a company’s stock price to its earnings per share, used to evaluate the valuation of the company. At the age of 86, it may seem that the price reflects perfection during a period of uncertainty.
Nevertheless, the valuation based on earnings could lose its significance as investors start to see the advantages of Palantir’s Artificial Intelligence Platform (AIP). The platform has notably boosted productivity for various organizations, leading to a surge in interest.
Additionally, collaborating with Microsoft Aiming to further enhance its growth, Palantir is seeking to leverage Microsoft’s extensive language models available in Azure OpenAI Service and integrate them with its own analytical tools.
Palantir may have just started to benefit financially. Following a yearly revenue growth in the teens last year, the company saw its revenue increase by 27% to $678 million in the second quarter of 2024.
The company announced its seventh consecutive quarter of profitability, with a net income of $134 million for common shareholders, significantly surpassing the $28 million earned in the same quarter last year. This indicates a fast-paced growth trajectory that is expected to drive the stock price up, unaffected by economic conditions.
2. Qualcomm
Like Palantir, Qualcomm ( QCOM 1.21% ) has the potential to take advantage of the rapid expansion of artificial intelligence. Shares of companies that produce semiconductors. Qualcomm experiences significant fluctuations in its performance and has seen a decrease in sales as the 5G upgrade period came to an end.
The smartphone may undergo its next upgrade cycle soon with the introduction of the Snapdragon 8 Gen 3 chip, which is capable of adding AI features to smartphones, providing users with a motivation to upgrade their devices.
The company has diversified its offerings by introducing chips for Internet of Things, automotive use, and personal computers. These new product lines are expected to contribute to revenue growth in the future.
During the third quarter of the fiscal year 2024, which ended on June 23, revenue increased by 11% compared to the previous year, reaching $9.4 billion. This marked the first time revenue had seen a double-digit growth since the start of the pandemic. Additionally, the company’s net income rose by 18% to $2.1 billion, as it effectively managed and controlled its expenses.
Although this opportunity exists, Qualcomm’s P/E The individual is just 21 years old. Therefore, if we consider that a regular cycle of AI upgrades for smartphones can lead to an increase in value, the stock price might not remain low for an extended period.
3. Extremely Small Computer
Micro computer company ( SMCI -0.82% ) Specializing in manufacturing servers and various IT hardware, the company known as Supermicro has operated under the radar for the majority of its existence. However, as the demand for cloud services increased, the company started to gain recognition, especially through its collaboration with. Nvidia The introduction of Nvidia AI chips into its servers completely revolutionized the game. As a result, there has been a significant surge in demand, particularly in the past year. In the last five years, the stock has increased by over 3,000%.
This involves a decrease of around 55% since March. tech stock retracted after a sharp increase of over 300% from the beginning of the year to mid-March.
The decrease in stock price has resulted in a P/E ratio of 28, which is relatively low despite a significant increase in revenue during the fourth quarter of fiscal 2024 (ending on June 30th) to $5.3 billion, marking a 142% annual growth. However, a rising cost of revenue has impacted profits, although net income still saw a substantial 82% increase compared to the previous year.
This rise in value makes the company’s valuation lower, which is seen as a positive sign as Supermicro aims to regain the value it had lost in recent months.
