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3 Tech Stocks With Extensive AI Applications to Hold Tight for Now
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The astonishing rally in U.S. stocks that started at the beginning of 2023 was predominantly driven by the technology sector. An unprecedented adoption of generative artificial intelligence (AI) technology across the world was the prime factor.
Lately, a section of market analysts and financial researchers have raised concerns about the potential profitability of massive investments in generative AI by several technology giants. We believe that AI applications will continue to gather pace in the coming years, buoyed by the rapid penetration of digital technologies and the Internet.
At this stage, investors should keenly watch three technology behemoths with extensive applications of generative AI. These companies are - Alphabet Inc. (GOOGL - Free Report) , Amazon.com Inc. (AMZN - Free Report) and Adobe Inc. (ADBE - Free Report) .
These stocks have double-digit price upside in the short term. In the long term, these stocks have a higher earnings per share (EPS) growth rate than the broad-market S&P 500 index, which should drive their stock prices in the next 3 to 5 years. Each of these stocks currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3 Tech Giants With Extensive AI Applications in Focus
Focus on these three technology bigwigs for handsome returns in both the short and long terms.
The chart below shows the price performance of three stocks in the past three months.
Image Source: Zacks Investment Research
Alphabet Inc.
A deepening focus on generative AI technology is a major positive for GOOGL in this data-driven world. Google has been well-poised to capitalize on the growing proliferation of generative AI-backed chatbots on the back of Bard, which enables users to collaborate with experimental AI with new features that include image capabilities, coding support and app integration.
GOOGL is cashing in on the increasing demand for Large Language Models with its most powerful AI model called Gemini. Google Bard and Search Generative Experience are powered with Gemini Pro in order to deliver enhanced user experience. Google Cloud offers Duet AI, which provides pre-packaged AI agents that assist developers in writing, testing, documenting and operating software.
In addition, GOOGL’s Vertex AI enables developers to train, tune, augment and deploy applications using generative AI models. These generative AI capabilities are aiding Google in enhancing search results, accelerating Android development, boosting healthcare reach and delivering enhanced cloud experience.
Huge Price Upside Potential for GOOGL Stock
Alphabet has an expected revenue and earnings growth rate of 14% and 31.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 60 days. Alphabet has a long-term (3-5 year) earnings growth rate of 17.5%.
The average price target of brokerage firms represents an increase of 23.3% from the last closing price of $165.85. The brokerage target price is currently in the range of $170-$225.
Amazon.com Inc.
Amazon is pushing well with its devices strategy. Alexa powered Echo devices are going great guns and help the company sell products and services. Artificial intelligence (AI) driven Alexa has already been integrated into a host of everyday devices for the digital home, which has converted the nascent smart home market into a potential area of growth in a very short time.
Moreover, AMZN is benefiting from an increasing number of Alexa-compatible smart devices. AMZN is racing to build an ecosystem around Alexa and it’s safe to say that it has taken an early lead over Google's smart assistant.
Amazon is the leading provider of cloud infrastructure as a service to enterprise customers. The expanding customer base of Amazon Web Services (AWS) driven by its strengthening cloud offerings, will continue to aid AMZN’s dominance in the global cloud space.
Impressive Price Upside Potential for AMZN Shares
Amazon has an expected revenue and earnings growth rate of 10.4% and 63.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3% over the last 60 days. Alphabet has a long-term (3-5 year) earnings growth rate of 27.4%.
The average price target of brokerage firms represents an increase of 19.9% from the last closing price of $186.33. The brokerage target price is currently in the range of $200-$265.
Adobe Inc.
Adobe has extensively implemented AI applications across its flagship products, such as Photoshop, Illustrator, Lightroom, and Premiere. Earlier this year, ADBE introduced generative AI-driven Adobe Firefly. Moreover, Adobe Acrobat and Reader AI Assistant help users to summarize documents and answer questions, which can save time and help users accomplish tasks faster.
Using its new AI-driven cloud-based platform, ADBE is also diversifying into digital marketing services, offering data mining services, which help businesses measure page views, purchases and social media sites. Adobe Marketing Cloud enables marketers to deliver personalized web experiences across multiple devices, manage multichannel campaigns and optimize media monetization.
These services help businesses streamline marketing and products for targeted consumer groups, including chief marketing officers, chief revenue officers, advertising agencies, publishing executives and digital marketers.
ADBE has launched Adobe Express, an application for quick editing effects. Leveraging generative AI, this tool is useful for short-form video content like Instagram Reels. Adobe also launched an AI-based Express app for iOS and Android.
Solid Price Upside Potential for ADBE Shares
Adobe has an expected revenue and earnings growth rate of 10.5% and 13.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 30 days. Alphabet has a long-term (3-5 year) earnings growth rate of 13.1%.
The average price target of brokerage firms represents an increase of 19% from the last closing price of $517.78. The brokerage target price is currently in the range of $450-$703.
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3 Tech Stocks With Extensive AI Applications to Hold Tight for Now
The astonishing rally in U.S. stocks that started at the beginning of 2023 was predominantly driven by the technology sector. An unprecedented adoption of generative artificial intelligence (AI) technology across the world was the prime factor.
Lately, a section of market analysts and financial researchers have raised concerns about the potential profitability of massive investments in generative AI by several technology giants. We believe that AI applications will continue to gather pace in the coming years, buoyed by the rapid penetration of digital technologies and the Internet.
At this stage, investors should keenly watch three technology behemoths with extensive applications of generative AI. These companies are - Alphabet Inc. (GOOGL - Free Report) , Amazon.com Inc. (AMZN - Free Report) and Adobe Inc. (ADBE - Free Report) .
These stocks have double-digit price upside in the short term. In the long term, these stocks have a higher earnings per share (EPS) growth rate than the broad-market S&P 500 index, which should drive their stock prices in the next 3 to 5 years. Each of these stocks currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3 Tech Giants With Extensive AI Applications in Focus
Focus on these three technology bigwigs for handsome returns in both the short and long terms.
The chart below shows the price performance of three stocks in the past three months.
Image Source: Zacks Investment Research
Alphabet Inc.
A deepening focus on generative AI technology is a major positive for GOOGL in this data-driven world. Google has been well-poised to capitalize on the growing proliferation of generative AI-backed chatbots on the back of Bard, which enables users to collaborate with experimental AI with new features that include image capabilities, coding support and app integration.
GOOGL is cashing in on the increasing demand for Large Language Models with its most powerful AI model called Gemini. Google Bard and Search Generative Experience are powered with Gemini Pro in order to deliver enhanced user experience. Google Cloud offers Duet AI, which provides pre-packaged AI agents that assist developers in writing, testing, documenting and operating software.
In addition, GOOGL’s Vertex AI enables developers to train, tune, augment and deploy applications using generative AI models. These generative AI capabilities are aiding Google in enhancing search results, accelerating Android development, boosting healthcare reach and delivering enhanced cloud experience.
Huge Price Upside Potential for GOOGL Stock
Alphabet has an expected revenue and earnings growth rate of 14% and 31.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 60 days. Alphabet has a long-term (3-5 year) earnings growth rate of 17.5%.
The average price target of brokerage firms represents an increase of 23.3% from the last closing price of $165.85. The brokerage target price is currently in the range of $170-$225.
Amazon.com Inc.
Amazon is pushing well with its devices strategy. Alexa powered Echo devices are going great guns and help the company sell products and services. Artificial intelligence (AI) driven Alexa has already been integrated into a host of everyday devices for the digital home, which has converted the nascent smart home market into a potential area of growth in a very short time.
Moreover, AMZN is benefiting from an increasing number of Alexa-compatible smart devices. AMZN is racing to build an ecosystem around Alexa and it’s safe to say that it has taken an early lead over Google's smart assistant.
Amazon is the leading provider of cloud infrastructure as a service to enterprise customers. The expanding customer base of Amazon Web Services (AWS) driven by its strengthening cloud offerings, will continue to aid AMZN’s dominance in the global cloud space.
Impressive Price Upside Potential for AMZN Shares
Amazon has an expected revenue and earnings growth rate of 10.4% and 63.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3% over the last 60 days. Alphabet has a long-term (3-5 year) earnings growth rate of 27.4%.
The average price target of brokerage firms represents an increase of 19.9% from the last closing price of $186.33. The brokerage target price is currently in the range of $200-$265.
Adobe Inc.
Adobe has extensively implemented AI applications across its flagship products, such as Photoshop, Illustrator, Lightroom, and Premiere. Earlier this year, ADBE introduced generative AI-driven Adobe Firefly. Moreover, Adobe Acrobat and Reader AI Assistant help users to summarize documents and answer questions, which can save time and help users accomplish tasks faster.
Using its new AI-driven cloud-based platform, ADBE is also diversifying into digital marketing services, offering data mining services, which help businesses measure page views, purchases and social media sites. Adobe Marketing Cloud enables marketers to deliver personalized web experiences across multiple devices, manage multichannel campaigns and optimize media monetization.
These services help businesses streamline marketing and products for targeted consumer groups, including chief marketing officers, chief revenue officers, advertising agencies, publishing executives and digital marketers.
ADBE has launched Adobe Express, an application for quick editing effects. Leveraging generative AI, this tool is useful for short-form video content like Instagram Reels. Adobe also launched an AI-based Express app for iOS and Android.
Solid Price Upside Potential for ADBE Shares
Adobe has an expected revenue and earnings growth rate of 10.5% and 13.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 30 days. Alphabet has a long-term (3-5 year) earnings growth rate of 13.1%.
The average price target of brokerage firms represents an increase of 19% from the last closing price of $517.78. The brokerage target price is currently in the range of $450-$703.