1/23/2024 0 Comments Seamless ai stock![]() As enterprises continue to migrate their workloads to the public cloud, significant obstacles have arisen, compromising the performance of data queries, creating hefty data transformation costs, and yielding erroneous data. "In just over 10 years, Snowflake has culminated into a force that is far from melting, in our view. We also include Nvidia and Microsoft, given their key roles in the development of AI. The most undervalued stock is Snowflake, which is trading at a 38% discount.Ĭolello highlights three of these companies as having dominant AI themes in their outlooks. However, eight stocks are still considered undervalued, bearing 4- or 5-star Morningstar ratings. Colello notes AMD’s potential as an AI play: "they should emerge as the number-two chipmaker behind NVDA for AI processors." But with a recent push higher that extended a rally to more than 80% gains in 2023, its stock moved into fairly valued territory. Until this past week, Advanced Micro Devices ( AMD) was counted among the undervalued names. Big 2023 rallies have left some in overvalued territory, such as Broadcom ( AVGO) (up 77% this year), Arista (up 77%), and Palantir Technologies ( PLTR) (up 211%). Of the 49 stocks in the index, 38 are covered by Morningstar analysts. We screened the Next Gen AI Index for prominent undervalued names. Source: Morningstar Direct, Morningstar Indexes Undervalued AI Stocks Prior to this year, the index outperformed the broader market over the trailing 12-month period, coming in at 50.7% to the broader market’s 13.7%. The increase in popularity and demand for AI is reflected in the performance of the Morningstar Global Next Generation Artificial Intelligence Index, which has risen 64.7% in 2023 through November 16, compared with the Morningstar US Market Index's gain of 18.4% over the same period. This further fuelled the existing race between companies to offer their own versions of AI helpers within their products and platforms. The boom in AI stocks took off after the release of ChatGPT, which allows the public to access AI tools for their personal use. Data center infrastructure – Arista Networks ( ANET).Peripheral chipmakers – Marvell Technology ( MRVL).Chip equipment vendors – Applied Materials ( AMAT).Outsourced chip manufacturers – Taiwan Semiconductor Manufacturing ( TSM).Semiconductor processors – Nvidia ( NVDA).Here are some examples of subthemes, with representative stocks: ![]() Morningstar analysts have broken the AI space down into four broad themes: generative AI, AI data and infrastructure, AI software, and AI Services. "These ongoing AI investments should provide upside for semis and the related supply chain, data management vendors, cloud computing and infrastructure leaders, software vendors, and IT services firms." "We expect AI implementations across all types of software, services, business processes, and consumer experiences," says Colello. ![]() The underlying question for many investors is how to play the AI boom. Cognizant Technology Solutions ( CTSH) Īnd of course, there are two big household names that investors hunting for AI stocks can’t ignore.However, a number of key players in the space remain undervalued, according to Morningstar analysts. Investors have latched onto this theme, and, during the first half of 2023, stocks for companies deemed to have AI potential rallied strongly. Semiconductor firms, notably Nvidia ( NVDA), are experiencing surging demand for AI and data center chip applications." Cloud providers are introducing new services and ramping up capacity. "Software companies are developing and incorporating next-generation AI capabilities within their solutions. ![]() "Currently, the most important catalyst across technology is generative AI," says Dan Romanoff, senior equity research analyst for Morningstar Research Services. "While many exciting technological innovations have emerged in recent years, the rise of generative AI might prove to be the most impactful one since the dawn of the internet," says Brian Colello, technology sector director for Morningstar. The ensuing artificial intelligence (AI) boom has fuelled big rallies in the stock market – and in some ways, even bigger expectations. Nearly one year ago, ChatGPT rolled out to the public.
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