The Zacks Analyst Blog Highlights like Amazon.com, Procter & Gamble, Abbott and NVE

Artificial intelligence (AI) is rapidly transforming industries across the globe. As AI capabilities evolve and improve, tech companies can create more value while expanding into new markets.

Several companies stand to benefit significantly from the advancement of AI. While top tech giants like Nvidia , Microsoft , and AMD are obvious choices, there are a few emerging tech companies that might also profit extensively in the long run from their AI investments.

#1. CrowdStrike Holdings

CrowdStrike Holdings has emerged as a market leader in the rapidly growing cybersecurity market. Unlike traditional cybersecurity companies, CrowdStrike's cloud-native platform, the Falcon Platform, uses AI, machine learning (ML), and data analytics to detect and mitigate threats in real-time.

Valued at $78.4 billion by market cap, shares of the cybersecurity company have rallied 29.6% year-to-date, compared to the S&P 500 Index's gain of 25.2%.

Total revenue for the second quarter of fiscal 2025 increased 32% year on year to $963.9 million. The company's subscription model led to annual recurring revenue (ARR) growth of 32%. Adjusted earnings soared 40.5% to $1.04 per share.

Analysts predict earnings growth of 17.7% in fiscal 2025 and 18.2% in fiscal 2026. CRWD is trading at 74 times forward earnings. For the time being, the company's rapid revenue and earnings growth warrants a higher valuation. The company's collaboration with tech titans such as Nvidia, Tata Consultancy Services, Amazon , and others will help strengthen the Falcon platform's market position.

Furthermore, the global cybersecurity market is expected to reach $298.5 billion by 2028, growing at a CAGR of 9.4%. CrowdStrike, with its advanced AI-driven technology and strong market position, is poised to capitalize on this growth.

Wall Street analysts are bullish on CRWD stock, with an overall “strong buy” rating. Among the 43 analysts in coverage, 34 have rated it as a “strong buy,” three as a “moderate buy,” and seven maintain a “hold” rating. The stock is trading close to its average 12-month price target of $325.54, while the Street-high price estimate of $424, suggests more than 28% expected upside from current levels.

#2. Palantir Technologies

Palantir Technologies is a significant player in the software and data analytics markets. Its data analytics platforms, namely Gotham and Foundry, serve both government and commercial clients.

Valued at $124.3 billion by market cap, shares of this software firm have surged an eye-catching 234.9% YTD, crushing the broader market's gain, with recent upside driven by strong Q3 results.

In Q3 of 2024, revenue increased 30% from the previous year to $726 million, while adjusted EPS increased 43% to $0.10.

Palantir's government business remains its core, but the company has made a significant push into the commercial sector. Growth of 54% in U.S. commercial revenue and 40% growth in U.S. government revenue drove this performance. Strong adoption of its Artificial Intelligence Platform (AIP) enabled the company to secure 104 contracts in Q3 alone.

Looking ahead, Palantir's commercial expansion may allow it to reach new clients and industries, increasing its revenue base and decreasing its reliance on government spending.

Analysts predict 52.8% earnings growth in 2024, followed by 22.1% in 2025. Palantir's stock is expensive, trading at 119 times forward 2025 earnings and 33 times forward sales. However, investors appear to believe in the company's long-term potential, which has driven its stock performance this year.

Overall, analysts are neutral about PLTR stock, rating it a “hold” due to its lofty valuation. With the YTD surge, PLTR stock has surpassed its average 12-month price target of $30.29, and closed Thursday just 2% away from its newly raised Street-high price target of $57.

#3. MongoDB

MongoDB is a leading provider of modern database solutions, best known for its open-source, document-driven database. MongoDB's flagship product is MongoDB Atlas, a fully managed cloud database service that allows businesses to deploy MongoDB on major cloud providers such as Amazon Web Services (AWS), Microsoft Azure, and Alphabet's Google Cloud. Other notable offerings include MongoDB Stitch, MongoDB Compass, and MongoDB Realm, among others.

Valued at $20.7 billion by market cap, shares of MongoDB have fallen 28% in 2024, lagging the overall market. However, this presents a buying opportunity, as Wall Street sees more upside in store.

In the second quarter of fiscal 2025, total revenue increased 13% to $478.1 million, led by a 13% increase in subscription revenue. Adjusted earnings per share were $0.70, down from $0.93 the previous year. Its flagship product, MongoDB Atlas, contributed 71% of total revenue, up 27% year on year.

The company ended the second quarter with $2.3 billion in cash, cash equivalents, short-term investments, and restricted cash.

At the midpoint, management expects fiscal 2025 revenue of $1.925 billion and adjusted EPS of $2.40, compared to $1.68 billion and $3.33 in fiscal 2024. Analysts predict that the company's revenue will rise by 14.6% and 17.6% over the next two fiscal years. In fiscal 2026, the company could report a $3.16 profit. MDB stock is trading at nine times forward sales, a discount from its five-year historical average of 20.8x.

Wall Street analysts are bullish on MDB, with an overall “strong buy” rating. Among the 31 analysts covering the stock, 22 have rated it as a “strong buy,” three as a “moderate buy,” five maintain a “hold” rating, and one suggests a “strong sell.” Its average 12-month price target of $337.85 implies an upside potential of 14.9%. Plus, the high price estimate of $440 suggests nearly 49.6% expected upside from current levels.

A team of Goldman analysts led by Ryan Hammond believes "platform" stocks like MongoDB and Snowflake will be the "primary beneficiaries of the next wave of generative AI investments."

#4. Snowflake

Snowflake offers a cloud-native data platform that allows businesses to seamlessly store, analyze, and share data across multiple clouds.

Valued at $40.7 billion by market cap, shares of Snowflake have fallen 37.9% this year, widely trailing the tech-led Nasdaq Composite’s ($NASX) gain of 28.4%.

Snowflake has shown strong customer confidence in its products, as evidenced by its net retention rate of 127% in the second quarter of fiscal 2025. Product revenue increased 30% year on year to $829.3 million. Snowflake's business model is based on usage-based billing, which means that revenue streams are relatively predictable. The remaining performance obligations, or RPO (contracted revenue to be realized in the future), increased by 48% to $5.2 billion in the second quarter.

The company has not yet achieved consistent profitability, and its Q2 net loss stood at $0.95 per share. Analysts predict that Snowflake's fiscal 2025 losses will be around $0.60, with profits of $0.92 by fiscal 2026. Revenue is expected to rise by 25.8% and 23.4% in fiscal years 2025 and 2026, respectively. SNOW, trading at nine times forward sales, is a reasonable AI stock to buy right now.

Overall, analysts are moderately bullish about SNOW stock. Among the 41 analysts in coverage, 24 have rated it as a “strong buy,” three as a “moderate buy,” 12 maintain a “hold” rating, and two suggest a “strong sell.” Its average 12-month price target of $170.25 implies an upside potential of 37.8%. Plus, the high price estimate of $220 suggests 78% expected upside from current levels.

On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

Today’s episode of Full Court Finance at Zacks explores the stock market’s surge to fresh highs following the presidential election. The episode then dives into three growth-heavy Zacks Rank #1 (Strong Buy) stocks—Shopify, Nu Holdings, and Vertiv—to consider buying and holding for the next 10 years.

See the Zacks Earnings Calendar to stay ahead of market-making news.

The market roared to all-time highs on Wednesday following the presidential election. The Nasdaq and the S&P 500 added to their mid-week gains on Thursday as Wall Street celebrates the end of uncertainty and the likelihood of lower corporate taxes, less red tape, and economic growth-focused efforts during a second Trump term.

It is also worth remembering that partisan politics does not drive the stock market. For instance, average annual stock market returns during the Trump and Obama administrations—which included periods of unified and divided governments—were almost the same: 16.0% and 16.3%, respectively.

Plus, the bull market is only two years old (bull markets have lasted roughly five and a half years on average), and the November-January stretch is the best three-month period for Wall Street dating back to 1971.

Given this backdrop, investors likely want to add exposure to the stock market in November. So let’s explore the three growth-heavy Zacks Rank #1 (Strong Buy) stocks investors might want to buy and hold for the next decade.

Is Shopify a Must-Buy Growth Tech Stock Trading 50% Below Its Highs?

Shopify Inc. SHOP shares have blown away Amazon and the Tech sector since its 2015 IPO and over the past two years. Yet SHOP trades 50% below its all-time highs heading into its Q3 2024 earnings report on November 12.

Shopify grew its revenue from $1 billion in 2018 to $7 billion in 2023 by expanding its offerings and its reach across entrepreneurs, small and mid-businesses, and larger enterprises.

Shopify helps its clients with everything from website creation and design to sales, marketing, payments, automation, inventory, shipping, and more across digital commerce and brick and mortar.

Shopify is thriving in an Amazon-dominated e-commerce industry by catering to sellers and businesses, while Amazon AMZN is ruthlessly focused on consumers.

Shopify raised its prices in 2023 (by roughly 30% for its various plans) for the first time in over a decade to help make up for slowing sales growth. Shopify is also prioritizing streamlining efforts and profits.

In a move to enhance its delivery capabilities during the holiday season, Walmart is rolling out new financial incentives for its independent delivery drivers. This initiative is part of Walmart’s broader strategy to improve the efficiency of online order deliveries from its U.S. stores to customers’ homes.

What Happened: Josh Havens, a spokesperson for Walmart, confirmed that the company is offering incentives and increased earning opportunities for its current drivers. However, specific details regarding these incentives were not disclosed, Reuters reported on Friday.

Walmart’s strategy aims to attract upper-income households and compete with Jeff Bezos‘ Amazon.com . The retailer leverages the Spark Driver app, enabling freelance drivers to deliver goods directly from stores, thereby boosting e-commerce sales and Walmart Plus subscriptions.

See Also: Bitcoin, Ethereum, Dogecoin Slingshot To The Moon After Trump Victory But ‘Sharp’ Correction Might Be In Store: Analyst Views BTC Between $80-90K By End Of Year

In addition, Walmart has slashed the Walmart Plus membership fee by 50% for the holiday season, offering it for $49 until Dec. 2. This move is anticipated to increase membership to 32 million by year-end, according to Emarketer. Meanwhile, Amazon offers a $99.99 fast grocery delivery service for its Prime members, who pay $139 annually.

Why It Matters: The competition between Walmart and Amazon has intensified, with both companies vying for a larger share of the grocery market. In September, Amazon expanded its Prime member benefits, offering significant discounts at Amazon Fresh stores. This move made grocery shopping more affordable and convenient for Prime members.

In October, Amazon further enhanced its Prime membership by offering gas savings and EV charging discounts, intensifying the battle for subscribers against Walmart.

Earlier in June, Walmart announced enhancements to its Walmart+ membership program, offering perks like free shipping, store delivery, and fuel savings, positioning it as a competitive alternative to Amazon Prime.

Read Next:

• Jeff Bezos Sells $214M Worth Of Amazon Shares In Latest Stock Move, Here’s How Much He Still Owns

Image courtesy of Walmart, Inc.

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Shares of Taiwan Semiconductor Manufacturing Co rose by 2.63% during pre-market trading on Friday, as per Benzinga Pro, despite the company’s October sales showing the slowest growth since February. This slow growth raises concerns about the sustainability of demand for AI chips.

What Happened: As a leading producer of advanced chips, the Taiwanese company is considered a key indicator for the development of AI infrastructure. As per Bloomberg, investor focus on TSMC’s monthly sales has intensified amid growing skepticism about AI’s business potential and its ability to deliver tangible benefits. Notably, TSMC’s stock has surged over 80% this year.

In response to the election of Donald Trump as the next U.S. president, TSMC confirmed that its investment plans in the United States remain unchanged, as per Reuters. The company is investing $65 billion in new factories in Arizona, a move that aligns with its strategic expansion efforts. TSMC, along with GlobalFoundries, is expected to receive final awards from the Biden administration under the Chips and Science Act.

See Also: How To Earn $500 A Month From Nvidia Stock After Trump Win

Why It Matters: TSMC’s recent performance is set against a backdrop of operational challenges and strategic expansions. The company is grappling with rising electricity costs in Taiwan, a consequence of the country’s transition to renewable energy. Since 2022, electricity prices have surged, impacting TSMC’s operations significantly, as highlighted by CFO Wendell Huang. This increase in costs poses a challenge for the semiconductor giant, which is already facing the slowest growth in months.

Despite these challenges, TSMC is doubling its capacity for advanced chip packaging, driven by soaring demand for AI chips from tech giants like Nvidia Corp. , Microsoft Corp , and Amazon.com Inc. . This expansion is expected to be completed by 2025, with Nvidia projected to occupy over half of the new capacity.

Read Next:

• Jeff Bezos Sells $214M Worth Of Amazon Shares In Latest Stock Move, Here’s How Much He Still Owns

Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.