Four artificial intelligence stocks to buy in a technology bull market provide a path to potentially potent profits.
The four artificial intelligence stocks to buy in a technology bull market have risen in 2023 and seem poised to climb further. Investors who can withstand volatility may want to take a chance on tempting technology trends to attain towering heights.
Even governments are gaining interest in artificial intelligence with some of them leaning toward regulating the industry. Celebrated technology entrepreneur Elon Musk, the owner and CEO of Twitter, Inc. (NYSE: TWTR), CEO of Tesla Inc. (NASDAQ: TSLA) and founder and CEO of privately held SpaceX, told listeners during a recent podcast with presidential candidate Robert F. Kennedy Jr. that China may start to regulate artificial intelligence.
Despite headwinds that include inflation, a tight Fed money supply and a brewing banking crisis after several recent financial institution failures, the NASDAQ Composite tilt toward technology has led to a 27.45% year to date, as of June 12. For those who consider a bull market anything that jumps at least 20% have found one during 2023 in the technology sector.
Four Artificial Intelligence Stocks to Buy in a Technology Bull Market Feature Microsoft
A champion of technology stocks and funds so far in 2023 has been Mark Skousen, PhD, an economist who serves as a Presidential Fellow at Chapman University and heads the Forecasts & Strategies investment newsletter. Skousen, who is a descendant of founding father, diplomat and inventor Benjamin Franklin, also is a seasoned forecaster who recommended Technology Select Sector SPDR Fund (NYSE: XLK) in Forecasts & Strategies. That fund has jumped 36.61% so far in 2023 through June 12.
Mark Skousen, head of Forecasts & Strategies, meets with Paul Dykewicz.
Professor Picks One of Four Artificial Intelligence Stocks to Buy in a Technology Bull Market
Technology Select Sector SPDR Fund offers a current dividend yield of 0.8%. Professor Skousen said its secret is that the fund’s holdings are heavily weighted toward some of the most successful technology stocks so far in 2023: Microsoft (NASDAQ: MSFT), climbing 39.96%; Apple (NASDAQ: AAPL), soaring 41.81%; NVIDIA (NASDAQ: NVDA), zooming 170.22%; Broadcom (NASDAQ: AVGO), gaining 53.80%; and Salesforce (NASDAQ: CRM), up 58.03%.
Skousen, who also heads the TNT Trader advisory service that recommends both stocks and options, instructed his followers to take a profit on May 25 of 323.96% by selling call options in Nvidia Corp. that he recommended on May 2. The stock rose 34% in just a few months during the time Skousen recommended it, while the options sold in parts at varying levels to produce an average gain during the same time of 196%.
Microsoft (NASDAQ: MSFT), an income-paying software development company in Redmond, Washington, is engaged in artificial intelligence and has leaped about 40% so far this year. The company reported better-than-expected results for its fiscal third quarter, especially in its Microsoft Cloud business, according to Chicago-based investment firm William Blair & Co. Third-quarter revenue for Microsoft finished $1.8 billion ahead of consensus estimates.
The company’s fiscal fourth-quarter revenue guidance came in roughly $640 million ahead of consensus estimates, after adjusting for currency headwinds, according to William Blair. Income investors may appreciate Microsoft paying a dividend yield of 0.82%.
Even though Microsoft Azure — a cloud platform of more than 200 products and cloud services — is expected to keep decelerating to mid-20% growth in the fourth quarter, demand for AI infrastructure is proving to be a growth tailwind. AI has boosted the company’s Azure results and outlook, William Blair wrote in a recent research note.
“Azure growth of 31% was one percentage point ahead of guidance,” according to William Blair. “Nonetheless, this represented a deceleration from second-quarter growth of 38% due to continued pressure from customers looking to reduce consumption and optimize costs.”
Despite increased scrutiny on spending and lower cloud consumption related to weaker macro activity — conditions expected to persist in the near term — Microsoft showing robust momentum for its OpenAI Azure Services offering, which grew to 2,500 customers in the third quarter, when its growth quarter-over-quarter rose 10 times, according to William Blair.
Chart courtesy of www.stockcharts.com
TDIV Tapped as One of Four Artificial Intelligence Stocks to Buy in a Technology Bull Market
A broad-based fund with a decent dividend yield that offers some exposure to artificial intelligence is First Trust NASDAQ Technology Dividend Index (TDIV). The ETF tries to track the Nasdaq Technology Dividend Index, which is composed of technology and telecommunications companies, said Bob Carlson, a pension fund chairman who heads the Retirement Watch investment newsletter.
Bob Carlson, head of Retirement Watch, meets with Paul Dykewicz.
TDIV recently had 94 holdings, and its 10 largest positions accounted for 59% of its assets. The biggest weightings recently were Microsoft (NASDAQ:MSFT), Apple (NASDAQ: AAPL), Intel (NASDAQ: INTC), Broadcom (NASDAQ: AGVO) and IBM (NYSE: IBM). Roughly 13% of the fund is invested in communication services, while the rest fit into the technology sector.
The fund lost 22.12% in 2022 but is up 21.93% so far in 2023. Plus, the stock’s dividend yield hovers near 2.1%.
Chart courtesy of www.stockcharts.com
Woods Recommends Rambus as One of Four Artificial Intelligence Stocks to Buy in a Technology Bull Market
The non-dividend-paying TrueShares Technology, AI & Deep Learning ETF (LRNZ) is the easiest way to gain a broad allocation to some of the best stocks in the AI space, said Jim Woods, who heads the Intelligence Report investment newsletter and the Bullseye Stock Trader advisory service that offers both stock and option recommendations. As an actively managed exchange-traded fund, LRNZ centers its portfolio of global stocks on the development and use of AI and deep learning technologies. The fund holds 20-30 mostly large-cap stocks at a time, all of which either derive at least half of their revenue from AI or have a competitive advantage in the technology.
“When a tech wave like this is roaring into shore, it behooves investors to jump on it early, and LRNZ is the way to do it,” Woods told me.
Paul Dykewicz meets with Jim Woods, head of Bullseye Stock Trader.
Woods is recommending Rambus, Inc. (NASDAQ: RMBS), a semiconductor technology firm that is well positioned to take advantage of the explosion in AI adoption, he advised. The company’s products provide the technology needed to process large language model workloads. That’s the view of Rosenblatt Securities analyst Kevin Cassidy and Jefferies analyst Mark Lipacis, two tech analysts who recently upgraded the shares.
RMBS has earnings per share (EPS) growth is in the top 3% of all companies, while relative price strength is in the top 2%, Woods wrote. The stock also is in a top-performing sector: semiconductors.
Technically speaking, RMBS shares are a bit extended from a bullish cup-with-handle chart pattern, Woods wrote. The company also has bullish “NewsQ,” with AI stocks gaining widespread adoption of their products and services.
RMBS is also benefiting from a spike in fellow AI semiconductor stocks such as NVIDIA Corp (NASDAQ: NVDA). If NVDA is any harbinger of things to come, then RMBS is inexpensive at this price, Woods wrote.
Woods has amassed a quick track record of success in recommending profitable stock and option trades in artificial intelligence companies. For example, he recently reaped rewards from the rapid rise of C3.ai Inc. (NYSE: AI) and Rambus. He produced a 167.20% gain on AI July 21 $25 call options in just 31 days. Woods also achieved an 83.10% profit in RMBS Aug. 18 $50 call options in only 13 days. Both recommendations came in his High Velocity Options trading service. That service only recommends options aimed at producing quick profits.
Chart courtesy of www.stockcharts.com
Technology Delivers Rewards for Investors This Year
For most of 2023, stocks in the technology, and particularly, the mega-cap technology sector, have seen the lion’s share of money flows, Woods wrote in the June 9 issue of his weekly Intelligence Report hotline. Those money flows went from technology to sectors such as energy and small caps, Woods continued.
“Money always flows to where it’s treated best; however, what we also know is that markets are a forward-looking pricing machine,” Woods wrote. “The move into sectors such as small caps and energy suggests that the market thinks the economy is going to continue to grow, and that there will be widespread upside in the market and not just a concentration of money going into mega-cap tech.”
Treasury yields and the dollar have declined on the idea of a dovish Fed pivot that pushed money into super-cap tech stocks, while most sectors and stocks went nowhere or declined, Woods added.
NAPCO Is One of Four Artificial Intelligence Stocks to Buy in a Technology Bull Market
Napco Security Technologies (NASDAQ: NSSC) is an Amityville, New York-based manufacturer of security products, featuring advanced technologies for intrusion, fire, video, wireless, access control and door-locking systems. Its products are sold and installed by tens of thousands of security professionals worldwide to serve commercial, industrial, institutional, residential and government applications.
The company has a heritage of developing innovative technology and reliable security solutions for the professional security community, including StarLink Universal Wireless Intrusion & Commercial Fire Communicators and new StarLink Connect Radios with Universal Full Up/Download for major brands. Napco Security also offers Gemini Security & Fire Systems and the NAPCO Commercial Platform of 24V Addressable/Conventional/Wireless Systems and Firewolf Fire Panels & Devices.
“When the Federal Reserve stops ratcheting up interest rates, I would expect strong growth stories to continue to profit,” said Michelle Connell, who heads the Dallas-based Portia Capital Management. The company’s five-year revenue growth has been 10.45% per year and its five-year earnings growth rate has averaged 28% or more every year, Connell continued.
“EPS growth rate is expected to increase exponentially more than 100% this year,” Connell commented. “That’s well ahead of the industry average expected growth rate of 22%.”
The company is a “strong cash generator,” Connell concluded.
Michelle Connell heads Portia Capital Management.
Connell Comments on Four Artificial Intelligence Stocks to Buy in a Technology Bull Market
For the last three to five years, Napco Security’s annualized growth rate has topped 20%. In contrast, the industry average has only been about 5%-6%, Connell commented.
Napco Security initiated a dividend when it reported results on May 8. While the dividend yield is less than 1%, it’s a start, Connell counseled.
The company’s outlook appears “strong,” Connell opined. Since 2023 began, earnings expectations for the company have risen.
“While the stock is up over 20% YTD, it could return another 20-25% over the next 12-18 months, Connell told me. “However, given its high-octane performance, it can also provide swift downdrafts. The stock has declined more than 60% at certain points. In addition, there is a high short interest of 14%. It makes me cautious in the near-term.”
Chart courtesy of www.stockcharts.com
Avoid overpaying by dollar-cost averaging and purchasing shares amid pullbacks, Connell counseled.
CyberArk Joins Four Artificial Intelligence Stocks to Buy in a Technology Bull Market
Another artificial intelligence stock to buy in a technology bull market is CyberArk Software Ltd. (NASDAQ: CYBR). On May 23, CyberArk announced new products and features across its CyberArk Identity Security Platform, making it the most powerful platform of its kind. Investments to enhance cloud security and deliver automation and artificial intelligence (AI) innovations across the platform make it easier than ever to apply intelligent privilege controls to all identities — human and non-human — from a single vendor, according to the company.
“We continue to strategically expand our use of machine learning and artificial intelligence to improve customers’ defensive capabilities to counter attacker innovation,” said Peretz Regev, chief product officer of CyberArk.
The company is combining its access management capabilities to process data automatically that is collected by CyberArk Endpoint Privilege Manager for immediate risk reduction. CyberArk’s new policy recommendation module is intended to apply advanced artificial intelligence and machine learning technologies.
CyberArk Revenue Growth Gleams Among Four Artificial Intelligence Stocks to Buy in a Technology Bull Market
While other cybersecurity software companies have had weakness in their revenues, CyberArk Software did not incur that problem when it reported its latest quarterly results in May. The company’s annual recurring revenue rose 42% year over year, with subscriptions soaring 84% year over year.
CyberArk boosted its estimates for revenue and earnings per share (EPS) for the rest of the year. BofA Global Securities boosted its stock target on May 25 for CyberArk to $187 from $175, while maintaining its buy rating. The stock further is rated “outperform” by Chicago-based investment firm William Blair & Co.
One area of weakness for CyberArk is its dip in long-term deferred revenue, but it occurred for a “good reason,” said Michell Connell, who heads the Dallas-based Portia Capital Management. The company eliminated multi-year maintenance contracts, she explained.
The company’s contracts are now booked on a yearly basis, Connell counseled. This will allow CYBR to have better control over the pricing for its contracts, she added.
That change caused CyberApp’s cash balance to be a bit low, but it’s still strong, Connell continued. The cash balance currently stands at $1.2 billion, she added.
Connell estimates a potential upside in the next year for CyberApp of 15%. However, the stock can be volatile, Connell counseled.
“At times, it’s down as much as 50%,” Connell continued.
Russia’s February 2022 Invasion of Ukraine Faces a Counteroffensive
Russia’s invasion of Ukraine was followed with an explosion on June 6 that caused heavy damage to the Kakhovka Hydroelectric Power Plant dam, forcing emergency evacuations to sections of the country’s southern region near the port city of Kherson. Ukraine President Volodymyr Zelensky and other officials posted photos and videos showing a huge surge of water flowing from the damaged structure, putting thousands of residents downstream at risk. Ukrainian leaders blame damage to the dam on Russia. However, Russia is accusing Ukrainians of causing the explosion.
Observers indicated the dam and the road across it presented a possible line of attack for Ukrainian forces seeking ways to keep Russian forces off-balance. Military experts told the BBC it is highly likely that Russian forces, which controlled the dam, opted to blow it up, blocking a possible Ukrainian military operation.
Meanwhile, Ukrainian military officials said Russia keeps carrying out missile strikes and air strikes. Ukraine continues trying to repel Russian ground assaults, its officials added.
Increased Ukrainian attempts to stage an effective counteroffensive to push back invading Russian forces are expected in the weeks ahead. Investors need to be mindful of the political risk wars can put on nearby countries, as well as the disruption of exports and imports of goods from nations embroiled in conflict.
Nonetheless, the four artificial intelligence stocks to buy bring a big opportunity to boost the returns of personal portfolios.
Paul Dykewicz, www.pauldykewicz.com, is an award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal omf Commerce, Crain Communications, Seeking Alpha, Guru Focus and other publications and websites. Paul can be followed on Twitter @PaulDykewicz, and is the editor and a columnist at StockInvestor.com and DividendInvestor.com. He also serves as editorial director of Eagle Financial Publications in Washington, D.C. In that role, he edits monthly investment newsletters, time-sensitive trading alerts, free weekly e-letters and other reports. Previously, Paul served as business editor and a columnist at Baltimore’s Daily Record newspaper and as a reporter at the Baltimore Business Journal. Plus, Paul is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The uplifting book is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many other sports figures. To buy signed and specially dedicated copies, call 202-677-4457.