Top Three AI Stocks to Purchase in April 2024

Top Three AI Stocks to Purchase in April 2024

Artificial intelligence stocks are a hot topic on Wall Street. Remember, a stock’s valuation is always important. You undoubtedly can’t pay any price, even for the best companies, and expect the returns you want.

With this in mind, some quality stocks are trading at attractive prices today. Among them are Metaplatforms (NASDAQ:META), Selling power (NYSE:CRM)And SentinelOne (NYSE:S).

Here’s the pitch for each stock and why investors can buy them with confidence today.

1. Metaplatforms

Social media giant Meta Platforms uses artificial intelligence (AI) to make more money from the nearly 4 billion people who use its apps every month. Brands can now leverage AI tools to increase the effectiveness of ads reaching their target audience. Meta has reached a valuation of over $1 trillion across Facebook, Instagram and WhatsApp, but Threads is gradually emerging as the next potential social media winner.

CEO Mark Zuckerberg noted during the company’s fourth-quarter earnings conference call that Threads, which competes with Elon Musk’s X (formerly Twitter), now has more than 130 million monthly active users. There is still virtually no monetization on Threads as Meta focuses on growing its user base. This momentum is nonetheless promising for a company that has proven it can turn social media into cash cows.

Do not mistake yourself ; Meta is a tough buy, even without knowing what impact Threads will eventually have on the company. Shares have surged over the past 18 months, but still trade at a forward price-to-earnings ratio of 24. Analysts estimate the company will grow earnings by an average of 19% to 20% annually over the next three to five next few years, making the stock a potential boon for its expected growth. No company offers social media like Meta Platforms.

2. Sales force

Enterprise software has become a large industry in which Salesforce sits squarely in the middle. The company was built on its customer relationship management software, but has expanded into virtually every aspect of what you need to run a business. After some targeted acquisitions, Salesforce also offers collaboration tools via Slack and data tools on Tableau.

Salesforce uses AI to improve its existing businesses. This generative AI, which Salesforce calls Einstein, is implemented in Salesforce to make its various products more useful. It’s like having a digital assistant at your side. It’s an internal AI that helps users answer questions, understand and predict customer behaviors, and create content across all parts of Salesforce’s software suite.

Financially, Salesforce is trading at attractive levels today. The stock trades at 31 times 2024 earnings, but that’s supported by strong earnings growth that analysts are forecasting on average near 18% over the coming years. This represents a fair PEG ratio of 1.8. Investors can chip away at this blue-chip tech stock and become more aggressive if shares fall to a more attractive price.

3. SentinelOne

Other companies, like SentinelOne, have built their products on AI. SentinelOne is a cybersecurity company that uses AI to proactively scan devices and their networks for viruses and other threats. Cybersecurity is very competitive, so SentinelOne must stay at the forefront of technology. The company has received accolades from third parties such as Gartner for its excellence in protection.

SentinelOne is criticized for not being a profitable company. However, its quarterly cash burn has improved from $32 million to just $10 million over the past year, so free cash flow generation appears imminent. Additionally, SentinelOne has a sparkling balance sheet, with no debt and $925 million in cash. The company should be largely profitable by the time cash runs out.

This lack of profitability caused shares to fall. Its most direct competitor, Crowd strike Assets, trades at more than twice SentinelOne’s price-to-sales (P/S) ratio. It’s fair today, but long-term investors who believe SentinelOne can balance growth and generate profits could benefit from picking up shares at a low price. The stock’s P/S ratio is now just 9, while it was once over 100 when the stock went public.

Should you invest $1,000 in meta platforms right now?

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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. Justin Pope holds positions within SentinelOne. The Motley Fool ranks and recommends CrowdStrike, Meta Platforms and Salesforce. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.

3 Artificial Intelligence (AI) Stocks to Buy This Month: April 2024 was originally published by The Motley Fool

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