AI Stocks Show Promising Potential This Year 🚀
Advanced Micro Devices (NASDAQ: AMD) stands out as a vital player in the artificial intelligence (AI) industry, attracting considerable attention while navigating a competitive landscape. The landscape shows promise for you as a reader interested in AI investments.
The current year has seen AMD achieve a growth rate of over 12%, with the stock eyeing fresh highs backed by optimistic fundamentals. Of significant note is the impending launch of the MI325 and MI350 accelerators, anticipated to rival Nvidia’s (NASDAQ: NVDA) primary offerings and serve as a potential catalyst for expansion.
While AMD remains a strong contender, there are two alternative stocks identified that could rival its growth prospects in 2025, suggesting the possibility of turning a $100 investment into $1,000.
Qualcomm Inc. (NASDAQ: QCOM) 🌐
Qualcomm (NASDAQ: QCOM) has embraced a surge in AI, seeing its stock rise over 20% so far this year. This upward trend is primarily attributed to an exciting product range. The firm is broadening its GenAI applications with the Snapdragon 8 Gen 3 Mobile Platform, capable of managing up to 10 billion parameters for smartphones.
Analysts at Baird highlight Qualcomm’s additional potential, particularly regarding the increasing adoption of its AI technology in premium smartphones produced in China. Their forecasts indicate a target stock price of $200, as shared by various analysts.
Furthermore, strong partnerships, particularly with major corporations like Microsoft (NASDAQ: MSFT), position Qualcomm for success. Microsoft’s decision to incorporate Qualcomm’s chips in its Surface Laptop and Surface Pro lines will enable various AI functions without needing internet connectivity. These collaborations are likely to boost revenues and enhance investor confidence in Qualcomm.
Qualcomm is not only focused on mobile phones but is also making headway into the Internet of Things (IoT) and automotive fields, which collectively contributed to 27% of its revenue in the second quarter of 2024. Analysts anticipate Qualcomm will achieve a 10% revenue upturn in 2025, with earnings projected to increase by 13.1%. This prediction follows a reported revenue of $9.39 billion for Q2 2024, marking an 11% increase from the previous year.
Qualcomm’s ambitions extend further as reports have surfaced regarding its attempts to acquire the struggling chipmaker Intel. If successful, this merger could drastically change the landscape, despite Intel’s slower advancements in AI.
Despite a recent drop in stock value following the Intel acquisition news, Wall Street maintains a mainly optimistic view. Analysts expect Qualcomm to trade at an average price of $219 within the next 12 months, indicating an approximate 30% potential profit. The high-end forecast suggests the stock could reach $270, with a conservative low end of $170.
Intel Corporation (NASDAQ: INTC) 💻
Intel (NASDAQ: INTC) has faced significant challenges in 2024, with the stock plummeting about 54% year-to-date as it struggles within the competitive AI chip sector. However, a recent surge in interest, stemming from possible acquisition news from Qualcomm, has sparked some positive momentum for INTC.
At the conclusion of the trading session on September 20, Intel’s stock was valued at $21, experiencing a daily increase of over 3%. Within the last month, the stock gained 8.6%.
For those considering alternatives to AMD, Intel presents an intriguing option based on fundamental strengths such as securing substantial contracts. Recently, the U.S. government awarded Intel a $3.5 billion contract designed to produce military chips, enhancing revenue prospects following a less-than-stellar Q2 2024 performance.
Intel’s revenues showed a slight decline of 0.9% year-over-year, totaling $12.83 billion, falling short of analysts’ predictions of $12.94 billion. In response, Intel pursues a restructuring plan aimed at regaining investor confidence, including a workforce reduction of 15% and a target of reducing expenses by $10 billion. Analyst Roy Chua from AvidThink suggests that focusing on core competencies and innovation will be vital for restoring trust in the brand.
In a bid to reclaim its standing in semiconductor manufacturing, Intel plans to erect chip plants within the United States, aiming to regain its competitive edge in the AI domain.
Additionally, outlooks from 34 Wall Street analysts remain favorable for Intel, forecasting an average price of $25 over the next year. The bullish sentiment suggests a possible peak price of $42, contrasting with a conservative low of $18.
While AMD continues to thrive in the AI landscape, competitors like Qualcomm and Intel are establishing themselves as noteworthy alternatives. It remains crucial for you, as a reader, to keep in mind the significant influence of broader market trends on these stocks.
Hot Take 🧐
The AI sector continues to evolve, presenting various opportunities alongside emerging competitors. As you consider your options this year, both Qualcomm and Intel are positioning themselves strategically to carve out substantial market share. The time looks promising for you to explore these avenues while being cognizant of overall market trends.
For more information, consider exploring detailed analysis and predictions. Each step in this journey can provide insights that lead to informed decisions.
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