3 AI Stocks With Big Catalysts Coming in Q1

Chris MacDonald

Tue, Jan 16, 2024, 6:03 PM 3 min read

With the artificial intelligence (AI) buzz capturing global attention, discerning investors must identify stocks with concrete revenue gains from AI. Analysts project the AI revolution as the fourth industrial revolution, foreseeing widespread applications across industries. Notable sectors like cybersecurity have successfully employed AI for threat detection, showcasing its potential beyond early adopters like Google.

That said, these innovative players, marked by market dominance and cutting-edge advancements, are poised for growth after a successful 2023. Let’s dive into the reasons these three companies remain among the top AI stocks for the upcoming year.

Nvidia (NVDA)

Nvidia (NVDA) logo on phone screen stock image.

Source: sdx15 / Shutterstock.com

In 2023, Nvidia (NASDAQ:NVDA) defied skeptics and proved to be a financial market favorite.

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Bank of America’s (NYSE:BAC) Vivek Arya notes Nvidia’s robust free cash flow, providing strategic flexibility. In fact, Arya anticipates Nvidia exploring assets for a more substantial recurring revenue profile. Additionally, Wedbush’s Dan Ives is similarly optimistic. He asserts the start of a new tech bull market anchored in AI hardware industry growth.

Also, in 2023, Nvidia dominated the market for generative AI chips, propelling NVDA stock to a remarkable 269% increase. With a revenue surge of 206% in Q3, reaching $18.12 billion, Nvidia became the sixth-largest publicly traded company globally.

Nvidia boasts an 85% market share in accelerator chips. Despite challenges in the China market, NVDA remains robust with excellent fundamentals, trading at just 24-times FY2025 earnings. Therefore, expectations are positive for sustained strength in the coming year.

C3.ai (AI)

C3.ai (AI) logo on a smartphone with computer screen showing graph in background, symbolizing AI stock

Source: shutterstock.com/Below the Sky

C3.ai (NYSE:AI) operates in the AI sector without direct competitors. While large enterprise software firms could be potential rivals, founder Thomas Siebel noted unawareness of a competitive product from Oracle.

C3.ai provides tools for optimizing operations and making data-driven forecasts. Recent agreements Nucor and the U.S. Navy, along with partnerships with Google Cloud, Amazon Web Services, and Microsoft, showcase its growing presence.

In September, Siebel acknowledged the decision to postpone non-GAAP profitability due to heavy investments in generative AI. The Q2 2024 results revealed a 17% year-over-year (YOY) revenue growth. This marks an improvement from previous quarters.

As anticipated, the company brought in a non-GAAP operating loss of $25.0 million in Q2. This was higher when compared to $15.0 million in the previous year. But for those seeking top-line growth, many look to C3.ai as an AI beneficiary that may be able to pick things up in Q1.

Advanced Micro Devices (AMD)

Advanced Micro Devices, Inc. (AMD) logo in the building at CNE in Toronto. AMD is an American semiconductor company.

Source: JHVEPhoto / Shutterstock.com

In 2023, Advanced Micro Devices (NASDAQ:AMD) faced stiff competition due to its delayed entry into generative AI.

However, 2024 brings a turnaround. The release of Instinct MI300 accelerators underscores their capability of running generative AI applications. Projected to ship 400,000 units, AMD anticipates significant revenue growth. The Ryzen 8040 Series processors for laptops add to its revenue streams.

While data center revenue remained stable, client-based revenue increased by 42%. Additionally, gaming segment earnings slightly decreased, and the embedded segment saw a slight decline.

At this year’s Consumer Electronics Show, AMD unveiled new silicon for PCs, featuring desktop CPUs and the budget-friendly Radeon RX 7600 XT graphics card. This marks the introduction of the Ryzen 8000 series for desktops. And the top offerings boast dedicated Neural Processing Units (NPUs), enhancing AI-focused workload capabilities for Photoshop, Zoom, and Windows 11 apps.

With a 120% increase in the last year, AMD stock shows resilience and earns an “A” rating in the Portfolio Grader.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.