Saturday, 10 June 2023

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3 Lesser-Loved Tech Stocks with AI Upside – TipRanks Financial Blog

3 Lesser-Loved Tech Stocks with AI Upside – TipRanks Financial Blog

It’s been off to the races for the artificial intelligence (AI) trade, with any tech firm remotely touching AI being rewarded with hype-driven gains. Though the AI trade may be getting a tad long in the tooth for some of the more obvious plays — think Nvidia (NASDAQ:NVDA) and its significant rise today — I still think there’s value to be had with lesser-loved tech firms that may play a pivotal role in the AI race.

There are many ways for investors to make money from a tech-driven trend. The most obvious ways may not be the best plays, given that they tend to be a lot pricier. From a hardware perspective, Nvidia seems like the obvious play to stash in one’s portfolio to get a front-row seat to the AI show. Nevertheless, NVDA isn’t the only stock out there.

Therefore, let’s use TipRanks’ Comparison Tool to check in with three “Strong Buy” tech stocks that may have more upside than Nvidia after its historic single-day surge.

Snowflake stock is melting today over a disappointing outlook that accompanied an otherwise decent quarterly result. Indeed, the data cloud company has a track record of underpromising and overdelivering.

With a choppy usage-based revenue recognition model and the uncertain macro climate, I’d argue Snowflake is smart to be cautious. At the end of the day, it’s always better to set a low bar if any question marks may be ahead. I don’t think SNOW stock should have been punished for ever so slightly lowering the bar. As such, I’m staying bullish.

For the full year, Snowflake expects product revenue to come in at $2.6 billion, just shy of the prior guide for $2.7 billion. Non-GAAP operating margins also got trimmed by a mere percentage point from 6% to 5%. Indeed, these are very slight downward adjustments, but investors won’t have it — not when other high-tech, AI-driven companies like Nvidia continue to defy the laws of gravity.

The actual quarter was overshadowed by the guidance. Snowflake clocked in 48% revenue growth year-over-year, beating estimates calling for $608 million. Alongside the nice top-line beat, CEO Frank Slootman delivered some encouraging comments about AI and the longer-term future.

Slootman views generative AI technologies as providing his firm with a “tremendous gravitational pull.” Indeed, Snowflake may be as much of an AI company as Nvidia, given any AI model is only as good as its data.

Given the incredibly negative stock price reaction,…

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