AI Analysis: 3 Promising S&P 500 Stocks Deserving Attention

AI Analysis: 3 Promising S&P 500 Stocks Deserving Attention

It’s no surprise that the biggest new arrivals on the S&P 500 all have strong ties to the world of artificial intelligence (AI). Recent reports suggest that the generative AI boom which helped to drive forward Wall Street in 2023 is set to become a $1.3 trillion industry by 2032, growing at a compound annual growth rate (CAGR) of 42%. 

Astronomical growth is sweeping some of AI’s biggest players. And, new AI arrivals are becoming more commonplace in the S&P 500, which is stronger than ever. In 2023, driven largely by the generative AI boom, the index rallied 24%, despite a forecasted challenging year.

Early signs suggest 2024 will bring even more joy to the S&P 500. The 10% first quarter growth puts the index on the brink of its strongest start to a year since 2019. 

With the following notable additions, the S&P 500 could enjoy more record-breaking outperformance over the next three quarters, too. 

Super Micro Computer Inc (SMCI)

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Rallying 250% in a single quarter, few superlatives are left to describe Super Micro Computer’s (NASDAQ:SMCI) recent performance.

March 2024 saw the company join the S&P 500 following the its innovations in application-optimized total IT solutions. 

The sheer performance of SMCI is astonishing, even when zooming out over a longer timeframe. The company recorded growth of 877% over the past 12 months. And, it boasts growth of more than 4,500% over the past five years. 

This impressive market rally stems from Super Micro Computer’s partnership with semiconductor giant Nvidia (NASDAQ:NVDA). In fact, the AI boom is driving greater demand for AI infrastructure. Crucially, SMCI builds AI servers for Nvidia, helping the stock to reach astonishing heights in recent months. 

According to JPMorgan analysts, the stock shows room for further growth. In the wake of the its arrival on the S&P 500, the investment bank placed a price tag on the stock of $1,150. 

Uber Technologies (UBER)

2 Critical Reasons Uber Stock Will Weather the Pandemic

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With more than its fair share of PR crises in recent years, Uber Technologies (NYSE:UBER) is rebounding. It had experienced an electric Wall Street recovery after being hit hard by 2022’s tech stock sell-offs. Now, it’s joined the S&P 500 off the back of a 2023 that featured growth of nearly 150%. 

Also, the first quarter of 2024 has been prosperous for Uber, which has become a key innovator in AI logistics. Further, the stock recorded growth of over 30% at the beginning of the year. 

A strong Q4 2023 earnings report saw monthly active user (MAU) growth of 15% year over year (YOY) and a 22% YOY gross bookings increase. And, we’ve seen some major institutions increase their exposure to UBER in recent months. Notably, Raymond James Financial Services Advisors Inc. lifted its holdings in the tech firm by 13% in Q4.

As a result of this wave of positive performance metrics sweeping Uber, Truist Securities recently raised its price target for the stock to $94. That’s up from an initial $90 price tag, while maintaining a buy rating for the stock. 

Jabil Inc (JBL)

JBL stock: the Jabil logo on the side of a building.

Source: Sundry Photography / Shutterstock.com

Another Q4 2023 S&P 500 arrival was Jabil Inc (NYSE:JBL). As a key player in the contract electronics manufacturing industry, Jabil makes strong strides. Alongside the growth of the AI market, it recorded gains of 86% over the course of 2023. 

Additionally, the outlook appears bright for the stock. Recently, independent research firm CFRA upgraded JBL to buy from its initial hold rating while setting a 12-month price target of $151

This positive sentiment toward the stock has been drawn from the strides it has made in the healthcare, electric vehicles (EVs), and renewable energy sectors. 

Although Jabil reported a slight decline in net revenue for Q1 2024 owing to softer demand volumes, the firm shows a YOY increase in earnings per share. And, Jabil’s exposure to AI-driven data centers is a key strength as emerging technologies continue to draw both attention and investment. 

Finally, one key driver for future growth is the company’s new agreement with BYD Electronics. This brings fresh prominence in EV and sustainable energy markets. With these sectors ripe for future growth, Jabil is undoubtedly an S&P 500 newbie to monitor.

On the date of publication, Dmytro Spilka did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dmytro is a finance and investing writer based in London. He is also the founder of Solvid, Pridicto and Coinprompter. His work has been published in Nasdaq, Kiplinger, FXStreet, Entrepreneur, VentureBeat and InvestmentWeek.

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