AI Hype is Waning. Is It Time to Buy AI Stocks?
πππThe hottest AI Stocks have fallen in recent weeks. In fact some of the hottest AI Stocks have entered correction territory. That is when shares have fallen 10% from a recent peak.
Could this be a short term blip? Or is it a reaction to higher for longer interest rates which could depress high growth tech stocks? Or could it be that investors are getting tired of the AI hype and concerned that this technology could take years to generate real profits if ever?
The biggest gainer in AI this year is $NVIDIA Corp(NVDA)$
Its share price has dropped to USD 416.10 at the last closing from a high of USD 502.66. Is Nvidia's growth story over? On August 23, Nvidia reported outstanding Q2 results. Revenues grew 101% year over year to USD 13.5 billion, significantly beating its own revenue guidance of USD 11 billion provided in the last quarter.
GAAP EPS showed extraordinary growth as well, surging by 854% year over year and 202% sequentially to reach USD 2.48 per share. Gross margin soared to an impressive 70% compared to 43% in the previous year and 64% in the last quarter.
For Fiscal Q3 2024, Nvidia expects revenue to grow to USD 16 billion, much higher than analysts expectations of USD 12.5 billion.
Is this a one off event for Nvidia? If you look at the last 6 years, Nvidia's revenues have almost quadrupled from USD 6.9 billion in 2017 to USD 26.9 billion in 2023.
Nvidia has achieved a market capitalisation of over USD 1 Trillion in June 2023.
I believe that AI growth is here to stay and Nvidia is significantly ahead of its competitors. Wall Street Analysts are also bullish on Nvidia with a Buy rating and Target Price of USD 636.32, an upside potential of 50%.
provides software that allows its users to roll out AI applications. In fact C3.ai is one of the few pure play AI Stocks involved in directly creating AI projects.
C3. ai share price is down 16% in the past month but still up 121% year todate. The company commenced trading in 2020 and has rallied in the past year. Analysts predict significant average yearly EPS growth over the next 3 years.
has been using AI in its search engine, apps and Google Nest for a long time.
Google's share price is only up 0.28% in the past month but up 46% year todate.
Wall Street Analysts are bullish on Google and rate it a Strong Buy, Target price of USD 140.17, an upside potential of 7%.
$Meta Platforms, Inc.(META)$
Meta's virtual event, Meta Connect is scheduled for September 27 and September 28 and will provide more details on its AI plans.
Wall Street Analysts are bullish on $Meta Platforms, Inc.(META)$
With a median target price of USD 377.50, an upside potential of 26%.
AI is here to stay and even though the rally of AI Stocks has somewhat cooled down recently, AI is now racing ahead with a mind of its own. AI has caught on like a wildfire, unstoppable as we race into the next century, changing our lives like never before.
I believe that the current weakness in AI Stocks present a unprecedented opportunity to buy quality AI Stocks and wait for their explosive growth in the future.
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AI has already experienced a speculative surge in the first half of the year, and the CPO concept has also been hyped. The AI sector may have lost its luster for tomorrow.
But what can be certain is that artificial intelligence is reshaping every industry, and beneath this transformation, new wealth opportunities are bound to emerge.
AI-related sectors can be seen as strong bottom repairs during a period without a clear trend, as they have not yet reached the downward trend line.
There is currently no new track to replace AI, and this year's main focus is on AI and semiconductors.
The essence of stock trading lies in others abandoning, while I seize the opportunity.
$C3.ai, Inc.(AI)$ is the worst I wouldnβt buy it.