From Morningstar: 2024-04-23 08:08:00

The rise in AI technology has seen stocks of companies involved in the sector soar. First-quarter earnings announcements from tech companies will reveal which AI stocks are turning hype into actual revenue and growth. Nvidia and Broadcom are standout winners with stock gains of over 200% and 100% respectively in the past year. Majority of the highlighted AI stocks are either fairly valued or overvalued, with Adobe being the only undervalued stock. There is high uncertainty in the sector due to the opaque nature of revenue streams, with hardware companies like Nvidia and Intel benefitting more than software companies. Adobe, AMD, Amazon, Arista Networks, and Arm Holdings are some key AI stocks to watch, each facing unique challenges and prospects. Adobe remains an attractive entry point despite a recent slide in shares due to strong competition in the AI space. Advanced Micro Devices shows promise with its AI GPU sales, but may face challenges in other business segments. Amazon expects strong growth from Amazon Web Services and generative AI initiatives, while Arista Networks sees a significant opportunity in data center switching for AI model training. Arm Holdings is positioned for growth as a supporter of the AI ecosystem, but not to the extent of Nvidia.



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