Large companies benefiting from the growing demand for artificial intelligence (AI) services has been one of the main catalysts for the rise of artificial intelligence. S&P500 And Nasdaq Composite to new heights this year. Investors who invest in the right stocks could make a lot of money over the next decade in this booming new industry.
Here are two promising stocks that could generate wealth-generating returns for shareholders.
1. C3.ai
C3.ai (NYSE:IA) is a leading developer of enterprise AI software. Some of the world’s largest companies use C3.ai, including the federal government. The US Air Force uses C3.ai to predict failure points during operation and identify spare parts needed for repairs. Shell uses C3’s advanced software to monitor and maintain more than 10,000 pieces of equipment across its energy assets. Although the stock hasn’t kept pace with the broader market this year, these relationships with large organizations point to huge opportunities on the horizon.
The company’s partnerships with leading cloud providers like Amazon Web Services and AlphabetGoogle Cloud is working to its advantage. These partnerships are a key driver of C3.ai’s growth and help reduce friction when acquiring new customers.
C3.ai recently moved to a consumption-based pricing model, in which customers pay for the resources they use, which is the standard by which cloud service providers price their products. While this has reduced costs for customers, it caused revenue growth to slow more than a year ago, but it is starting to pick up. Management’s guidance calls for full-year revenue growth of between 19% and 27%, providing a catalyst for the stock.
C3 continues to report great interest from many organizations. In its latest earnings report, the company said it received nearly 50,000 inquiries from businesses regarding its operations. Generative AI applications. This shows that the transition to a consumption-based model has made its offering more attractive to new customers by reducing costs.
The recent acceleration in growth has led to price/sales ratio from 16 a year ago to a more reasonable 12. Assuming the company meets its revenue guidance, the lower valuation could attract more investors and take the stock to new highs later this year.
2. Metaplatforms
A stronger digital advertising market has led to accelerated revenue growth for Metaplatforms (NASDAQ:META) over the past year, but the stock still trades at a reasonable valuation that could warrant additional new highs. Meta is making progress in integrating AI services into its social media platforms, which contributes to revenue growth.
Meta AI has been deployed across Instagram, Facebook, WhatsApp and Messenger, and is already helping drive higher user engagement. The bonus is higher ad revenue, which is how Meta Platforms monetizes the billions of users on its platforms.
Meta’s revenue grew 27% year-over-year in the first quarter, with AI-based recommendation systems and advertising tools contributing to the company’s revenue momentum. business.
Investors are concerned about growing competition from other social media apps, such as TikTok. However, Meta’s AI infrastructure is becoming a competitive advantage. More than half of recommended content on Instagram is AI-driven, with short-form videos on Instagram Reels being a significant engagement driver.
Meta has enough liquidity to continue investing heavily in AI. The company generated $49 billion in free cash flow over the trailing 12 months and its growth prospects appear strong. Analysts expect earnings per share to grow 18% on an annualized basis over the next few years, which should translate into similar returns for shareholders given that the stock is valued at a price ratio /market average forward profit of 25.
Should you invest $1,000 in C3.ai right now?
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Ballard has positions in meta-platforms. The Motley Fool holds positions and recommends Alphabet, Amazon and Meta platforms. The Motley Fool recommends C3.ai. The Motley Fool has a disclosure policy.
2 Top Artificial Intelligence (AI) Stocks Poised for a Bull Run was originally published by The Motley Fool
