Five cloud infrastructure stocks to buy for artificial intelligence exposure feature some of the top names in technology.
The five cloud infrastructure stocks to buy for artificial intelligence growth opportunities are ready to reap the rewards from one of the hottest technology breakthroughs in years. Companies that may not have been regarded as leading-edge in recent years are gaining increased attention and buy ratings.
Despite inflation, a tight Fed money supply and a brewing banking crisis after several recent financial institution failures, the NASDAQ Composite’s tilt toward technology has led to a 28.34% year to date, as of June 27. A champion of technology investing in 2013 has been Mark Skousen, PhD, an economist who serves as a Presidential Fellow at Chapman University and heads the Forecasts & Strategies investment newsletter. Skousen, a descendant of founding father, diplomat and inventor Benjamin Franklin, used to work for IBM (NYSE: IBM) as a consultant in the early 1980s.
Mark Skousen, head of Forecasts & Strategies, meets with Paul Dykewicz.
Five Cloud Infrastructure Stocks to Buy Offer Ripe Opportunity
Skousen, who also heads the TNT Trader advisory service that recommends both stocks and options, as his Home Run Trader does, instructed subscribers to take a profit on May 25 of 323.96% by selling call options in Nvidia Corp. (NASDAQ: NVDA) 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%.
“The bears are on the run,” Skousen quipped to his Forecasts & Strategies subscribers. As they say on Wall Street, “Bull markets climb a wall of worry,” wrote Skousen, quoting his own “Maxims of Wall Street” book (www.skousenbooks.com).
I plan to meet with Skousen July 12-15 at the annual FreedomFest that he organizes, featuring a variety of investment, political and social opinion leaders who include former presidential candidate Steve Forbes, current presidential prospects like former radio host Larry Elder and skilled trades advocate Mike Rowe, who hosts the popular “Dirty Jobs” TV series. Rowe, who I will try to interview there about how AI could might affect skilled trades workers, taped an amusing video about some of the reasons why he plans not only to attend FreedomFest but serve as a keynote speaker. To register for a discount, use the code EAGLE50. If you attend, be sure to drop by the Eagle Publishing booth to meet and talk to me.
“Monetarists like Steve Hanke and Timothy Congdon are predicting a severe recession in 2023-24 due to the Fed’s tight money policy,” Skousen opined. “The broad-based money supply (M3) is actually declining.”
Skousen, a proponent of the Gross Output (GO) indicator of economic growth that includes intermediate stages of production, said recent data show slowing growth in the United States and the global economy. First-quarter GO will be released this Thursday, June 29.
A recession is quite possible, Skousen conceded, but the technology bull market is still intact, aided by “robust corporate earnings” and a gradual decline in price inflation, especially gasoline prices.
Jump on the AI Wave, Seasoned Stock Picker Says
“When a tech wave like this is roaring into shore, it behooves investors to jump on it early,” said Jim Woods, who heads the Intelligence Report investment newsletter and the Bullseye Stock Trader advisory service that offers both stock and option recommendations.
Paul Dykewicz meets with Jim Woods, head of Bullseye Stock Trader.
Woods has amassed a track record of success in recommending profitable stock and option trades in artificial intelligence stocks. For example, he recently reaped rewards from the rapid rise of C3.ai Inc. (NYSE: AI) and Rambus, Inc. (NASDAQ: RMBS). He produced a 167.20% gain on the 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.
Microsoft Heads Five Cloud Infrastructure Stocks to Buy
Artificial intelligence, also called AI, is starting to drive revenue growth at Redmond, Washington-based Microsoft (NASDAQ: MSFT) and is boosting use of the company’s many apps. One example is that Microsoft’s Bing web browser has quadrupled its downloads since Microsoft added an AI-aided chatbot.
Microsoft reported better-than-expected results for its fiscal third quarter, with its Microsoft Cloud up 25%. Now in its fiscal fourth quarter, Microsoft faces pressure from the macro environment, according to the Chicago-based investment firm William Blair. Microsoft’s management seemed more upbeat compared to prior earnings calls, the investment firm added.
Chart courtesy of www.stockcharts.com
Even though growth of Microsoft Azure is expected to keep slowing, it still should reach mid-20% gains in the fourth quarter, with demand for AI infrastructure providing a tailwind, William Blair wrote in a recent research note. Microsoft’s tool consolidation sales pitch is “resonating” with cost-conscious customers who want to cut the number of products and vendors they use for collaboration, software development, security and workflow management, the investment firm wrote.
“While the company is not yet out of the woods in terms of a slowing demand environment, as it laps tougher comparisons from fiscal 2022 and demand for AI-based services grows, expect healthy growth ahead and upside potential for the stock,” William Blair wrote.
META Makes List of Five Cloud Infrastructure Stocks to Buy
Meta Platforms Inc. (NASDAQ: META), of Menlo Park, California, received a $320 price objective from BofA, based on 19x 2024 estimated Generally Accepted Accounting Principles (GAAP) earnings per share (EPS). BofA predicts the company’s accelerating revenue growth and conservative expense management can lead to three-year EPS growth above the S&P 500.
Revenue drivers include a recovery in online advertising markets, an acceleration in Reels or messaging monetization and AI/machine learning (ML) benefits driving better content engagement and incremental ad spending.
Risks to Meta stem from decline in user activity from competition, such as TikTok, subscription video on demand (SVOD), privacy or data issues that impact revenue generation and potential for Wall Street to assign a negative value for Metaverse — e.g., Reality Labs — given massive investments and new regulations that impact monetization, according to BofA.
Chart courtesy of www.stockcharts.com
Amazon.com Earns Spot Among Five Cloud Infrastructure Stocks to Buy
Amazon.com (NASDAQ: AMZN), a technology company in Seattle, Washington, focuses on e-commerce, cloud computing, online advertising, artificial intelligence and digital streaming. BofA gave Amazon.com a buy rating and a price objective of $154, based on a sum-of-the-parts (SOTP) analysis.
“We think some conglomerate discount is warranted with elevated regulatory/antitrust risk, but long-term we believe that in-line to discount multiples are warranted given growth rates in excess of peers,” BofA wrote in a recent research note.
Risks to Amazon.com achieving the BofA price objective include increasing competition from offline and local retailers, a “rich” P/E multiple, possible price cuts and regulatory pressure on the third-party marketplace. Another risk is investments in Amazon Web Services, Inc., a subsidiary of Amazon that provides on-demand cloud computing platforms.
“The stock has been subject to heavy volatility in the past, based on margin trends, and this volatility could increase due to economic uncertainty, BofA wrote.
Chart courtesy of www.stockcharts.com
Five Cloud Infrastructure Stocks to Buy Include Alphabet
Alphabet (NASDAQ: GOOG), a Mountain View, California-based technology company that also is the parent of Google, offering search, advertising, operating systems and platforms, as well as enterprise and hardware products. The company generates revenue primarily by delivering online advertising and by selling apps and contents on Google Play, as well as hardware products. Plus, Alphabet provides its products and services in more than 100 languages and in 190 countries, regions and territories.
The company received a buy rating and a price objective of $128 from BofA, based on 18x 2024 estimated core Google GAAP EPS plus cash. Alphabet has traded at an average multiple of 23x GAAP price-to-earnings (P/E) ratio over the last 10 years. BofA wrote that the multiple is reasonable, in light of the company’s history and projections of reduced, but still 10%-plus revenue growth in future years.
BofA continued that Alphabet is well-positioned long term with leading search technology, Android and YouTube. Alphabet is an advertising industry leader, and the company should generate incremental revenue growth from increasing mobile usage, video usage, Google Play activity and connected device activity — including autos. Plus, Alphabet should trade at a premium to a media peer group given technology leadership, high margins and cash flow for buybacks, BofA wrote.
Risks for investors in Alphabet include an uncertain macro backdrop that may impact cloud and network business growth and margins, large language models (LLM) integration in search may take longer than expected or negatively impact search. Other risks encompass query share loss to Bing, concerns about a new regulatory framework in the European Digital Markets Act (DMA) and the U.S. Department of Justice’s recent lawsuit challenging Google’s ad exchange business and the importance of keeping Samsung and Apple search distribution deals.
Chart courtesy of www.stockcharts.com
Connell Chooses Oracle as One of Three Big Artificial Intelligence Stocks to Buy
Michelle Connell, who heads the Dallas-based Portia Capital Management, commented on a TDAmeritrade Network program aired June 12 about the recent rise of Oracle (NYSE: ORCL), a computer technology company headquartered in Austin, Texas. Connell commented about the company’s latest earnings report when it beat projections.
“While Amazon and Microsoft are experiencing slowdowns in their cloud infrastructure businesses, that is not the case for Oracle,” Connell said.
Oracle’s infrastructure business revenue was up 76% when it reported results in May. Its cloud infrastructure business is taking market share in the AI space for two reasons: lower cost and superior features, Connell counseled.
“Larry Ellison has stated that his company’s product is the number one choice in running AI generative workloads,” Connell said. “Oracle wants to be the Netflix of AI.”
Year to date (YTD), Oracle’s stock has zoomed 46%. In the last year, it has soared 78%.
Oracle definitely is aiming to unlock the potential for AI, while investing millions of dollars in AI company start-ups. That is not a bad idea, Connell continued.
“Most of these start-ups may eventually become customers of ORCL’s cloud infrastructure products as well, Connell concluded.
Chart courtesy of www.stockcharts.com
“Two-thirds of Oracle’s revenues come from their cloud infrastructure products,” Connell commented. “Companies that use AI or make AI software review millions of pieces of data. Having the ability to store that data in the cloud is critical and companies are bulking up on their capacity. Oracle is thought to have the most economic cloud infrastructure platform for AI.”
Michelle Connell heads Portia Capital Management.
Since the stock reported results on June 12, several Wall Street analysts increased their estimates and price targets. However, the new average price target is $120 per share while the stock is only slightly below that level. Thus, it seems overvalued — especially over the next several months, Connell counseled.
Thus, the stock is “getting pretty expensive,” Connell cautioned. Its current price-to-earnings (P/E) ratio is about 41, even though its average P/E is 26, she added.
“But now, it’s a case of what we do not know,” Connell said. “And what we do not know is ORCL’s potential in the AI arena. It could be huge.”
The stock looks compelling from a long-term view, Connell continued. Its estimated revenue for 2026 is in the $65 billion range. That’s a 50% increase from the 42 million it produced in 2022, Connell added.
Investors should consider buying Intel shares on pullbacks, Connell counseled.
“When the Federal Reserve stops ratcheting up interest rates, I would expect strong growth stories to continue to profit,” said Connell. “On the other hand, forecasts that the Fed may raise rates further later this year warrant caution for technology investors, if those increases occur.”
Belarus President Lukashenko Intervenes to Help Putin Halt Civil War Threat from Wagner Group
Political risk for investors heightened last weekend due to a conflict that briefly challenged President Vladimir Putin’s regime in Russia. The Wagner Group, hired to help Russia with its invasion of Ukraine, rebelled against the country’s military leaders last weekend, but agreed to stand down within about 48 hours at the urging of Belarus President Alexander Lukashenko, who brokered a deal with Russia’s President Vladimir Putin to give participants immunity from prosecution. Wagner Group’s leader Yevgeny Prigozhin agreed to seek safe haven in Belarus. His fighters, who include thousands of former prison convicts, were given the option to go home, sign contracts to fight with Russia’s military or join Prigozhin in Belarus, which borders five countries: Poland to the west, Lithuania to the northwest, Latvia and the Russian Federation to the north, the Russian Federation to the northeast and east, with Ukraine to the south.
Risk of a budding civil war in Russia arose late on Friday, June 23, when Prigozhin claimed that Russian military personnel attacked Wagner camps in eastern Ukraine and caused the deaths dozens of his men who had been serving as mercenaries to back Putin’s ongoing invasion of Ukraine. Prigozhin then led his men out of Ukraine and into Russia on Saturday, June 24, to take control of the government’s military headquarters in Rostov-on-Don for the country’s southern region. His forces were headed to Moscow but stopped about 125 miles, or 200 km, away when he agreed to go into exile in Belarus at Lukashenko’s invitation to end his short-lived threat to Putin’s government.
“The evil that the military leadership of Russia must be stopped,” according to the translation of a Prigozhin Telegram post on June 23. “I ask no one to resist (!). Anyone who tries to resist – we will destroy. Justice for the troops will be restored, & after that, justice for all of Russia.”
Putin praised Russian soldiers in June 27 remarks outside the Kremlin for preventing a “civil war” during Wagner’s armed rebellion. A moment of silence was held for Russia’s military pilots who were shot down and killed by Wagner troops as the conflict escalated. Pro-Kremlin bloggers wrote that Wagner forces killed at least a dozen pilots, but Putin did not specify a number. The controversial Wagner Group consists of entities that operate as a battle-hardened private military company that governments may hire for combat or security services.
“The state paid to the Wagner Group 86.262 billion rubles [approximately $1 billion] for salaries for fighters and incentive rewards between May 2022 and May 2023 alone,” Putin said on June 27 during a televised meeting with members of law enforcement. Putin, adding that Prigozhin had received about the same amount of government money for his food and catering business to feed Russia’s troops as he had from payments by Russia’s Ministry of Defense, said he would order a probe of the payments.
“I do hope that, as part of this work, no one stole anything… but we will, of course, investigate all of this,” Putin said, without naming Prigozhin, who he reportedly granted immunity from criminal prosecution for his role in the fleeting uprising.
Russia’s Short-lived Wagner Group Mutiny Does Not Stop Political Risk from Renewed Attacks Against Ukraine
The challenge to Putin’s authority did not stop him from ordering new attacks against Ukrainian civilians. Russian missiles hit the center of Kramatorsk in eastern Ukraine on Tuesday, June 27, killing four people and injuring many more, Ukrainian officials said. A residential community and its citizens took the blow as a restaurant filled with diners and a shopping area were slammed by the strike. Kramatorsk is under Ukrainian control but close to Russian-occupied parts of Ukraine.
The United States recently warned that drinking water supplies could be harmed for more than 700,000 people after the destruction of the Kakhovka dam in southern Ukraine as the latest catastrophe that has accompanied Russia’s unrelenting attacks. With the threat from Russia unabated, Ukraine’s President Volodymyr Zelensky keeps rallying his country’s people to defend their nation and freedom from the invaders.
Russia reportedly has moved tactical nuclear weapons to neighboring Belarus as a potential launch site against Ukraine, which is starting a counteroffensive to push the attackers back to their own country. However, President Zelensky has acknowledged gains on the battlefield have proven to be “slower than desired.”
With Russia’s invasion of Ukraine heightening political risk for businesses in the affected nations, as well as countries that export and import with them, the ongoing conflict adds uncertainty for investors. As a result, investors may like the prospects of the five cloud infrastructure stocks to buy for benefitting from artificial intelligence opportunities that offer the potential to profit from cutting-edge technology advances.
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 of 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.