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3 Artificial Intelligence (AI) Stocks Down 25% to Buy Now and Hold
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The Nasdaq’s mid-week tumble marked its worst drop since October 2022, sending it below its 50-day moving average for only the second time in 2024. The stock market and artificial intelligence-based stocks were due for significant pullbacks following the massive first-half rally that saw many stocks climb well over 50%.
The Nasdaq’s quick haircut has it approaching its 21-week moving average and hitting some of its most oversold RSI levels over the past three years. AI stocks such as Nvidia, Super Micro Computer, and others such as nuclear energy and AI-play Constellation Energy (CEG - Free Report) finally experienced the recalibration they needed.
AI-centric stocks and the market could experience more selling and volatility throughout earnings season, especially since big tech set the bar very high. But investors who can block out the noise and look long-term should start to take advantage of the sale going on right now.
Some of the best times to buy great stocks is when seemingly everyone else is selling.
Today we dive into three AI-focused stocks—Micron Technology, Inc. (MU - Free Report) , Vistra Corp. (VST - Free Report) , and Constellation Energy (CEG - Free Report) —that long-term investors might want to buy after they tumbled roughly 25% from their highs.
Micron ((MU - Free Report) ) is a memory chip powerhouse transformed into a major player in the artificial intelligence arms race. Micron projects that AI will drive record demand for memory chips. Micron is rolling out chips designed to support the heavy workloads required at AI data centers. Micron is set to post record revenue in FY25, fueled by “robust AI demand.”
Image Source: Zacks Investment Research
Micron grew its Q3 FY24 sales (reported on June 26%) by 82%, as AI demand drove 50% sequential data center revenue growth and record high data center revenue mix. MU is projected to grow its revenue by 60% in FY24 and another 55% in FY25 to reach $38.63 billion—crushing FY22’s $30.76 billion record.
Micron is projected to swing from an adjusted loss of -$4.45 per share last year to $1.16 in FY24 and skyrocket 700% next year to $9.32 per share. MU has crushed our bottom-line estimates recently and its positive EPS revisions earn Micron stock a Zacks Rank #2 (Buy).
On top of its impressive Zacks Rank, 24 of the 27 brokerage recommendations Zacks has are “Strong Buys.” MU also pays a dividend, supported by its strong balance sheet.
Image Source: Zacks Investment Research
Micron stock has soared nearly 1,600% in the last 15 years, crushing the Zacks Tech sector’s 585% and matching the Chip market. MU shares are up 80% in the past two years, outpacing Tech’s 65%. Yet, Micron is trading roughly 30% below its June peaks and 50% below its average Zacks price target.
Micron trades at its most oversold RSI levels over the past five years as it approaches its 200-day moving average, having recently slid below its 21-week.
Micron trades at a 48% discount to the Zacks Tech sector and 62% below the Semiconductor Market. Micron trades well over 50% below its various highs over the last 10 years at 13.9X forward 12-month earnings.
Vistra ((VST - Free Report) ) is thriving as Wall Street embraces companies that will power the U.S. as the country goes full steam ahead on nuclear energy and other alternative energy sources right as the artificial intelligence boom sends energy demand soaring.
Vistra is an integrated retail electricity company and the largest competitive power generator in the country, serving roughly 5 million residential, commercial, and industrial retail customers across 20 states. Google, Amazon, Microsoft, and other tech companies are racing to land energy deals with companies like Vistra for nuclear, battery storage, solar, and more.
Image Source: Zacks Investment Research
Vistra owns the second-largest competitive nuclear fleet and a rapidly growing solar and battery energy storage portfolio. VST is also in the natural gas business, which will remain vital for years.
Vistra said last quarter that the U.S. Inflation Reduction Act provides the opportunity to “realize material benefits with respect to its renewables and energy storage projects, as well as provide strong price support via the nuclear production tax credit for its nuclear facilities.”
Image Source: Zacks Investment Research
Vistra is projected to grow its revenue by 14% in 2024 and over 11% in FY25. Vistra is projected to expand its adjusted EPS by 39% and 24%, respectively. VST’s consensus earnings estimate for FY25 has soared 42% since its Q1 release, helping it earn a Zacks Rank #1 (Strong Buy).
Vistra shares soared roughly 125% during the first six months of 2024, lagging only Super Micro Computer and Nvidia ((NVDA - Free Report) ) in the S&P 500. VST is still up 150% in the past 12 months despite falling over 30% from its late-May highs.
Vistra’s pullback was due after soaring far above its 50-day and 21-week moving averages. VST now trades below its 21-week and 50-day moving averages—any move down to its 200-day (around $60 per share) would mark a screaming buy.
Image Source: Zacks Investment Research
Vistra trades 58% below its average Zacks price target and near its most oversold RSI levels of the last year five years (the lowest level in the last 12 months). VST trades at a 55% discount to its highs and 15% below the Zacks Utilities sector at 12.7X forward earnings. Vistra also pays a dividend.
Constellation Energy ((CEG - Free Report) ), like Vistra, sits at the confluence of two megatrends: the energy transition and artificial intelligence. Constellation Energy is a nuclear energy powerhouse, producing roughly 10% of all clean and renewable energy in the U.S.
Constellation Energy’s nuclear power facilities, alongside its smaller hydro, wind, and solar units power the equivalent of 16 million homes. CEG has already landed nuclear deals with Microsoft to power some of its AI data centers.
Once left to decay, nuclear energy is transforming into the star of the global energy transition, and Constellation is a part of the vanguard. Nuclear energy provided 50% of America’s carbon-free electricity in 2023, making it the largest domestic source of clean energy.
Image Source: Zacks Investment Research
The U.S. co-led in 2023 a coalition of over 20 countries that pledged to triple nuclear energy capacity by 2050. The recently signed Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy (ADVANCE) Act aims to accelerate nuclear energy growth. Constellation was already benefitting from the nuclear-focused aspects of the IRA, which essentially provides a price floor for nuclear power.
Constellation is poised to improve its current nuclear power plants and expand into the next generation of nuclear technology. CEG aims to expand through mergers and acquisitions and return more capital to shareholders.
Constellation said in February it plans to grow its dividend per share by 25% in 2024, exceeding its 10% annual growth target, while targeting long-term base EPS growth of at least 10% through the decade.
Image Source: Zacks Investment Research
Constellation is projected to grow its adjusted EPS by 54% in FY24 and another 19% in FY25. CEG earns a Zacks Rank #2 (Buy) right now, driven by its soaring FY24 and FY25 earnings estimates.
Constellation was one of the top S&P 500 performers in the first half and CEG is still up 200% in the past two years. CEG has fallen over 25% from its May records and trades 33% below its average Zacks price target. Constellation is attempting to find support at its 200-day moving average. The stock could also find buyers at its late February levels following its Q4 earnings release surge.
Constellation trades at its most oversold RSI levels over the last two years. CEG’s recent fall, mixed with its strong earnings outlook has it trading near its median at 20.6X forward 12-month earnings. Constellation could be ready for another breakout if it provides impressive guidance when it reports on August 6.
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3 Artificial Intelligence (AI) Stocks Down 25% to Buy Now and Hold
The Nasdaq’s mid-week tumble marked its worst drop since October 2022, sending it below its 50-day moving average for only the second time in 2024. The stock market and artificial intelligence-based stocks were due for significant pullbacks following the massive first-half rally that saw many stocks climb well over 50%.
The Nasdaq’s quick haircut has it approaching its 21-week moving average and hitting some of its most oversold RSI levels over the past three years. AI stocks such as Nvidia, Super Micro Computer, and others such as nuclear energy and AI-play Constellation Energy (CEG - Free Report) finally experienced the recalibration they needed.
AI-centric stocks and the market could experience more selling and volatility throughout earnings season, especially since big tech set the bar very high. But investors who can block out the noise and look long-term should start to take advantage of the sale going on right now.
Some of the best times to buy great stocks is when seemingly everyone else is selling.
Today we dive into three AI-focused stocks—Micron Technology, Inc. (MU - Free Report) , Vistra Corp. (VST - Free Report) , and Constellation Energy (CEG - Free Report) —that long-term investors might want to buy after they tumbled roughly 25% from their highs.
Micron Technology, Inc. (MU - Free Report) Stock
Micron ((MU - Free Report) ) is a memory chip powerhouse transformed into a major player in the artificial intelligence arms race. Micron projects that AI will drive record demand for memory chips. Micron is rolling out chips designed to support the heavy workloads required at AI data centers. Micron is set to post record revenue in FY25, fueled by “robust AI demand.”
Image Source: Zacks Investment Research
Micron grew its Q3 FY24 sales (reported on June 26%) by 82%, as AI demand drove 50% sequential data center revenue growth and record high data center revenue mix. MU is projected to grow its revenue by 60% in FY24 and another 55% in FY25 to reach $38.63 billion—crushing FY22’s $30.76 billion record.
Micron is projected to swing from an adjusted loss of -$4.45 per share last year to $1.16 in FY24 and skyrocket 700% next year to $9.32 per share. MU has crushed our bottom-line estimates recently and its positive EPS revisions earn Micron stock a Zacks Rank #2 (Buy).
On top of its impressive Zacks Rank, 24 of the 27 brokerage recommendations Zacks has are “Strong Buys.” MU also pays a dividend, supported by its strong balance sheet.
Image Source: Zacks Investment Research
Micron stock has soared nearly 1,600% in the last 15 years, crushing the Zacks Tech sector’s 585% and matching the Chip market. MU shares are up 80% in the past two years, outpacing Tech’s 65%. Yet, Micron is trading roughly 30% below its June peaks and 50% below its average Zacks price target.
Micron trades at its most oversold RSI levels over the past five years as it approaches its 200-day moving average, having recently slid below its 21-week.
Micron trades at a 48% discount to the Zacks Tech sector and 62% below the Semiconductor Market. Micron trades well over 50% below its various highs over the last 10 years at 13.9X forward 12-month earnings.
Vistra Corp. (VST - Free Report) Stock
Vistra ((VST - Free Report) ) is thriving as Wall Street embraces companies that will power the U.S. as the country goes full steam ahead on nuclear energy and other alternative energy sources right as the artificial intelligence boom sends energy demand soaring.
Vistra is an integrated retail electricity company and the largest competitive power generator in the country, serving roughly 5 million residential, commercial, and industrial retail customers across 20 states. Google, Amazon, Microsoft, and other tech companies are racing to land energy deals with companies like Vistra for nuclear, battery storage, solar, and more.
Image Source: Zacks Investment Research
Vistra owns the second-largest competitive nuclear fleet and a rapidly growing solar and battery energy storage portfolio. VST is also in the natural gas business, which will remain vital for years.
Vistra said last quarter that the U.S. Inflation Reduction Act provides the opportunity to “realize material benefits with respect to its renewables and energy storage projects, as well as provide strong price support via the nuclear production tax credit for its nuclear facilities.”
Image Source: Zacks Investment Research
Vistra is projected to grow its revenue by 14% in 2024 and over 11% in FY25. Vistra is projected to expand its adjusted EPS by 39% and 24%, respectively. VST’s consensus earnings estimate for FY25 has soared 42% since its Q1 release, helping it earn a Zacks Rank #1 (Strong Buy).
Vistra shares soared roughly 125% during the first six months of 2024, lagging only Super Micro Computer and Nvidia ((NVDA - Free Report) ) in the S&P 500. VST is still up 150% in the past 12 months despite falling over 30% from its late-May highs.
Vistra’s pullback was due after soaring far above its 50-day and 21-week moving averages. VST now trades below its 21-week and 50-day moving averages—any move down to its 200-day (around $60 per share) would mark a screaming buy.
Image Source: Zacks Investment Research
Vistra trades 58% below its average Zacks price target and near its most oversold RSI levels of the last year five years (the lowest level in the last 12 months). VST trades at a 55% discount to its highs and 15% below the Zacks Utilities sector at 12.7X forward earnings. Vistra also pays a dividend.
Constellation Energy (CEG - Free Report) Stock
Constellation Energy ((CEG - Free Report) ), like Vistra, sits at the confluence of two megatrends: the energy transition and artificial intelligence. Constellation Energy is a nuclear energy powerhouse, producing roughly 10% of all clean and renewable energy in the U.S.
Constellation Energy’s nuclear power facilities, alongside its smaller hydro, wind, and solar units power the equivalent of 16 million homes. CEG has already landed nuclear deals with Microsoft to power some of its AI data centers.
Once left to decay, nuclear energy is transforming into the star of the global energy transition, and Constellation is a part of the vanguard. Nuclear energy provided 50% of America’s carbon-free electricity in 2023, making it the largest domestic source of clean energy.
Image Source: Zacks Investment Research
The U.S. co-led in 2023 a coalition of over 20 countries that pledged to triple nuclear energy capacity by 2050. The recently signed Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy (ADVANCE) Act aims to accelerate nuclear energy growth. Constellation was already benefitting from the nuclear-focused aspects of the IRA, which essentially provides a price floor for nuclear power.
Constellation is poised to improve its current nuclear power plants and expand into the next generation of nuclear technology. CEG aims to expand through mergers and acquisitions and return more capital to shareholders.
Constellation said in February it plans to grow its dividend per share by 25% in 2024, exceeding its 10% annual growth target, while targeting long-term base EPS growth of at least 10% through the decade.
Image Source: Zacks Investment Research
Constellation is projected to grow its adjusted EPS by 54% in FY24 and another 19% in FY25. CEG earns a Zacks Rank #2 (Buy) right now, driven by its soaring FY24 and FY25 earnings estimates.
Constellation was one of the top S&P 500 performers in the first half and CEG is still up 200% in the past two years. CEG has fallen over 25% from its May records and trades 33% below its average Zacks price target. Constellation is attempting to find support at its 200-day moving average. The stock could also find buyers at its late February levels following its Q4 earnings release surge.
Constellation trades at its most oversold RSI levels over the last two years. CEG’s recent fall, mixed with its strong earnings outlook has it trading near its median at 20.6X forward 12-month earnings. Constellation could be ready for another breakout if it provides impressive guidance when it reports on August 6.