2 AI Powerhouse Stocks That Could Rise as Much as 115%, According to a Select Wall Street Analyst

One of the biggest factors driving the market’s rebound over the past year or more has been the rapid and ongoing adoption of artificial intelligence (AI). The latest developments have marked a huge leap forward in technology, promising to automate a large number of mundane tasks, thereby increasing productivity and saving money.

In recent weeks, however, the AI ​​rally has taken a break, with some of the most recognizable names in the space losing ground. That’s not surprising, given the relentless run that began early last year. The news isn’t all bad. Most experts agree that we’re still in the early stages of AI adoption, so the rally likely has a ways to go, despite the recent pullback. That gives savvy investors an opportunity to invest in companies that still have room to grow.

Here are two AI-related stocks that a select few Wall Street analysts say have the potential to grow by 111%.

Palantir Technologies: Expected growth of 854%

One of the bottlenecks in generative AI adoption is that many companies lack the expertise to implement the technology while still getting the most for their money. Given the complexity of the systems in question, this is not surprising. However, Palantir Technologies (PLTR -3.01%) bridged the gap between knowledge and implementation.

The company has a long history of developing AI tools for the U.S. government and its allies, and has expanded its mandate to help companies discover useful information from reams of corporate data. That expertise allowed Palantir to quickly pivot to develop generative AI tools that companies could actually use. The result of that effort is the company’s Artificial Intelligence Platform (AIP), which helps deliver common-sense solutions to everyday business problems.

In addition, to address the knowledge gap, executives have developed hands-on sessions they call boot camps, where users pair up with Palantir engineers to create solutions to company-specific problems. This unmet need has attracted a ton of companies, with 1,300 boot camps hosted since Palantir began offering them late last year, 500 in the past three months.

That’s fueling solid results. Palantir’s commercial revenue in the U.S. rose 40% year over year in the first quarter, even as the segment’s customer base grew 69%. More importantly, its remaining transaction value — which provides insight into its future trajectory — rose 74%, suggesting that growth will continue.

Wedbush analyst Dan Ives is the most bullish among his Wall Street peers, suggesting Palantir shares will hit $50 by 2025, implying an 85% upside potential from Monday’s closing price. Ives believes these bootcamps will continue to attract converts, boosting Palantir’s fortunes.

At 227 times earnings and 27 times sales, Palantir seems scarily expensive. But its price-to-earnings-to-growth (PEG) ratio, which takes into account its accelerating growth, is 0.3, while any number less than 1 suggests underrated warehouse.

Supermicrocomputer: Alleged 115% increase

As Palantir helps companies harness the power of artificial intelligence, Super microcomputer (SMCI -4.19%)Also known as Supermicro, it creates high-end servers equipped with the computing power needed to bring artificial intelligence to life.

As AI adoption accelerates, many users are looking to curb the enormous power consumption that AI processing creates, and Supermicro’s focus on energy-efficient solutions is well-documented. Additionally, the company prides itself on its building block architecture that helps users create a system that best suits their needs. Supermicro offers a wide range of cooling technologies across free air, liquid, and traditional air cooling, ensuring there’s a system to fit every budget.

In the third quarter of fiscal 2024, Supermicro’s revenue increased year over year by 200% to about $3.8 billion, while diluted earnings per share increased by 329% to $6.56. The company is seeking to expand its production capacity to meet growing demand.

Supermicro stock is up a massive 750% since the start of 2023, but some believe there’s still plenty of upside ahead. Loop Capital analyst Ananda Baruah has set a $1,500 high and given the stock a buy rating. That means a potential upside of 115% from Monday’s closing price.

The analyst is bullish on Supermicro’s “position” in the AI ​​server industry, and sees the company as a leader in both complexity and scale. Perhaps more importantly, Baruah believes Supermicro could generate revenue of around $40 billion by the close of fiscal 2026. By comparison, Supermicro generated revenue of $7.1 billion in fiscal 2023 (ended June 30, 2023) and is on track to generate revenue of $14.5 billion in fiscal 2024. This suggests that there is a Still There are many development opportunities ahead of us.

The analyst is not alone in his bullish attitude. Of the 17 analysts who expressed an opinion in June, 12 rated the stock as a buy or strong buy, while nothing recommended sale.

Finally, Supermicro stock is a bargain if you consider the possibility. It currently trades at 1.4 times projected sales.