Last year was a groundbreaking year for artificial intelligence (AI), as both Wall Street and Main Street were introduced to the power of AI’s next-generation algorithms. Investors quickly noticed that some of the best-performing stocks in the market had one thing in common – they were infused with AI technology.
Bank of America analyst Michael Hartnett coined the term “Magnificent Seven” to describe a group of high-growth stocks that included Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. While these stocks have been the focus of much attention, there are other AI stocks with significant potential that should not be overlooked.
Here are three AI stocks that have the potential for explosive upside, outside of the Magnificent Seven:
1. Arm Holdings (NASDAQ: ARM) is a leader in creating central processing unit (CPU) blueprints used in various technologies, particularly in cloud computing and data centers. With the rise of generative AI, Arm’s designs have become essential for handling AI processing needs. The company’s recent financial results show strong growth potential, with record revenue and earnings per share (EPS) increases. Despite seeming expensive by traditional valuation metrics, Arm’s forward price/earnings-to-growth (PEG) ratio suggests it is undervalued.
2. Super Micro Computer (NASDAQ: SMCI) provides specialty servers designed for AI processing, catering to the energy efficiency needs of AI systems. The company’s recent financial performance has been impressive, with record revenue and earnings growth. Super Micro’s forward PEG ratio indicates that it may be undervalued, despite appearing expensive by other valuation metrics.
3. Palantir Technologies (NYSE: PLTR) has a long history in AI, offering data mining and business analytics services fueled by AI technology. The company’s Artificial Intelligence Platform (AIP) has been instrumental in helping businesses adopt generative AI solutions. Palantir’s recent financial results show strong growth, particularly in U.S. commercial revenue. Like the other AI stocks mentioned, Palantir’s forward PEG ratio suggests it is undervalued.
While the “Magnificent Seven” stocks have garnered significant attention, these three AI stocks offer compelling opportunities for investors looking for explosive upside potential. As AI continues to shape the future of technology and business, these companies are well-positioned to capitalize on the growing demand for AI solutions.
