Artificial intelligence (AI) is expected to continue evolving and transforming the way businesses work. Many industries have already benefited from implementing AI in their business processes. For example, the introduction of virtual shopping assistants and chatbots has helped e-commerce companies offer a better experience to their customers. The continued evolution of AI and rising demand from almost all industries should drive the performances of companies operating in this space.
Investors’ interest in the AI stocks is evident in the Global X Robotics & Artificial Intelligence ETF’s (BOTZ) 5.3% gains over the past month, versus the SPDR S&P 500 Trust ETF’s (SPY) 3.5% returns. Due to consistent technological improvements and growing demand, the AI industry is expected to grow rapidly. Indeed, according to a ResearchAndMarkets report, the global AI market is expected to reach $171.02 billion in 2025, growing at a 35% CAGR.
Given this backdrop, we think it could be wise to bet on quality AI stocks Intel Corporation (INTC), International Business Machines Corporation (IBM), and Micron Technology, Inc. (MU). These companies have solid fundamentals and are expected to continue growing.
Intel Corporation (INTC)
Established technology company INTC operates in the following segments: Data Center Group (DCG); Internet of Things Group (IOTG); Mobileye, Non-Volatile Memory Solutions Group (NSG); and Programmable Solutions Group (PSG). Its solutions are based on AI, and 5G network transformation, among others. INTC is headquartered in Santa Clara, Calif.
SADA, a leading global business and technology consultancy, this month announced a pilot program with INTC. SADA’s CEO, Tony Safoian, said, “With the latest Intel technologies, SADA is further equipped to help our customers get the most out of Google Cloud.”
INTC’s non-GAAP revenue for the second quarter, ended June 30, 2021, were $18.50 billion, versus$18.20 billion in the year-ago period. The company’s operating margin increased by 0.6 ppt to 31.6%. Its non-GAAP net income increased 6% year-over-year to $5.20 billion, while its non-GAAP EPS came in at $1.28, representing a 12% year-over-year rise.
Analysts expect INTC’s revenue to decline 0.5% year-over-year to $18.24 billion for the current quarter, ending September 30, 2021. However, its EPS is expected to grow at 10% per annum over the next five years. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has gained 15% over the past nine months to close yesterday’s trading session at $52.44.
INTC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an A grade for Value, and a B grade for Stability, Momentum, Sentiment, and Quality. We’ve also graded INTC for Growth. Click here to access all INTC ratings. INTC is ranked #9 of 99 stocks in the B-rated Semiconductor & Wireless Chip industry.
International Business Machines Corporation (IBM)
Headquartered in Armonk, N.Y., IBM provides integrated solutions and services worldwide. The company operates through five segments: Cloud & Cognitive Software; Global Business Services; Global Technology Services; Systems; and Global Financing. In addition, its Cloud & Cognitive Software Solutions segment delivers integrated and secure cloud, data, and AI solutions to its clients.
On August 3, IBM and Black & Veatch announced a collaboration to jointly market Asset Performance Management (APM) solutions, including remote monitoring technologies that combine near real-time data analytics with AI to help customers keep equipment and assets running at peak performance and reliability. The collaboration is expected to boost IBM’s revenue.
For the second quarter, ended June 30, 2021, IBM’s total revenue increased 3.4% year-over-year to $18.75 billion. The company’s gross profit came in at $9 billion, representing a 3.5% year-over-year rise. Its net income increased 38.7% sequentially to $1.33 billion. Also, its non-GAAP EPS increased 31.6% sequentially to $2.33.
IBM’s revenue is expected to increase 2.1% year-over-year to $75.13 billion in its fiscal year 2021. The company’s EPS is expected to be $4.19 for the quarter ending December 31, 2021, up 102.4% year-over-year. Furthermore, it surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past six months, the stock has soared 16% to close yesterday’s trading session at $138.02.
IBM’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, the stock has a B grade for Value, Momentum, and Quality.
In addition to the POWR Rating grades we’ve just highlighted, one can see IBM’s ratings for Growth, Stability, and Sentiment here. IBM is ranked #15 of 45 stocks in the B-rated Technology - Hardware industry.
Micron Technology, Inc. (MU)
MU in Boise, Idaho, designs, manufactures, and sells memory and storage products worldwide. The company’s operating segments include its Compute and Networking Business Unit; Mobile Business Unit; Storage Business Unit; and Embedded Business Unit. Its broad portfolio of technology solutions is based on disruptive breakthroughs, such as AI and autonomous vehicles.
On August 10 MU made available its Crucial P5 Plus PCIe SSDs to offer consumers high-performance internal Gen4 storage options. Teresa Kelley, vice president and general manager of MU’s Consumer Products Group, said, “By using our powerful, industry-leading 176-layer 3D NAND, coupled with the latest high-bandwidth storage interface, the P5 Plus Gen4 SSD makes lightning-fast computing storage accessible for a broad spectrum of consumers in the market.”
MU’s revenue increased 19% year-over-year to $7.42 billion for its fiscal third quarter, ended June 3, 2021. While its non-GAAP operating income increased 141% year-over-year to $2.36 billion, its non-GAAP net income came in at $2.17 billion, representing a 130.9% year-over-year rise. Also, its non-GAAP EPS increased 129.3% from the same period last year to $1.88.
For the current quarter, ending August 31, 2021, analysts expect MU’s revenue and EPS to increase 35.6% and 114.8%, respectively, year-over-year to $8.21 billion and $2.32. It has surpassed the Street’s EPS estimates in each of the trailing four quarters. Moreover, the stock has gained 13.7% over the past nine months to close yesterday’s trading session at $70.28.
It’s no surprise that MU has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has a B grade for Value, Momentum, and Quality.
INTC shares were trading at $52.20 per share on Friday morning, down $0.24 (-0.46%). Year-to-date, INTC has gained 7.38%, versus a 18.93% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.3 Top AI Stocks to Buy Right Now appeared first on StockNews.com