Shares of companies active in the field of artificial intelligence have achieved massive price increases in recent months. If analysts are to be believed, some stocks have already shot well past their peak.
• AI remains a trending topic on the stock exchanges
• AI stocks with sometimes significant price premiums
• Analysts see downside potential in some AI stocks
Artificial intelligence is a hype topic – even on the stock market. This becomes particularly clear when looking at the chip manufacturer NVIDIA, which is considered one of the biggest beneficiaries of AI. Recently, the US company was even responsible for a market rally on the world’s largest stock exchanges, because the eagerly awaited quarterly results exceeded even the wildest expectations of investors and resulted in a buying spree that not only helped NVIDIA shares reach new record highs, but also the stock markets in general.
Big tech giants still have room for improvement
Even though there are always voices that speak of a significant overvaluation, analysts see further potential for the NVIDIA share in particular: the average price target for the share is still around 14.5 percent above the current one at $886.52 Course levels.
Experts also believe that Microsoft, one of the largest investors in ChatGPT maker OpenAI, is far from reaching the end of the road: TipRanks has an average price target for Microsoft shares of more than 13 percent above the current price level.
Alphabet, Meta and AMD are other tech giants that are rated very positively by analysts: Alphabet shares still have 19 percent upside potential on the stock market, if you take the average price target as a basis. Meta could still go up by around nine percent from the current price level, and experts also believe that AMD will still achieve an increase of more than 2.1 percent.
However, the high-flyer when it comes to analyst ratings is the Chinese company Baidu. The average price target for the company’s ADRS shares is $169.34, a whopping 67 percent higher than the current share price – experts are currently not more confident about any AI stock.
AI titles with a risk of crashing: Palantir, Arm & Co.
But while the valuations for AI tech giants are characterized by confidence, it is worth taking a look at smaller AI stocks on the market, which have also achieved strong price increases, but may have risen more significantly than can be justified from an expert perspective.
One of these titles is the US software company Palantir. Over the last twelve months, the share price has increased by a whopping 215 percent; since the start of the year alone, the price increase on the NYSE has been around 46 percent. Too much, as analysts believe: The average price target on TipRanks is $18.55 – at a current price of $25.08 (closing price on February 29, 2024), this would correspond to a downside potential of around 19 percent. It was particularly a successful quarterly balance sheet that convinced Palantir investors of the company’s further potential. However, this was not a reason for experts to revise their ratings for Palantir upwards.
The AI hope for the stock market newcomer Arm has also been reflected in a strong price increase. Arm Holding’s shares have increased by around 87.7 percent since the beginning of the year and are well above the price level at which the shares were traded at the time of the IPO: the issue price was 51 US dollars when entering the stock market, and investors now have to pay for one Arm shares on the NASDAQ put $141.04 on the table. Arm recently impressed with its quarterly results and exceeded market expectations in terms of both revenue and sales forecast. Regardless, analysts apparently do not expect the upward trend on the stock market to continue, as a look at the average price target for Arm shares shows: At $100.29, this is around 25 percent below the current price level.
Experts also expect a price slide for C3.ai. According to analysts, the AI company is trading around 23 percent above the average price target, so they assume that the share is already too expensive. In fact, the share price has increased by 28.77 percent since the start of the year, resulting in a whopping price increase of 73.5 percent over the year.
The AI title of the moment, Super Micro, has overtaken NVIDIA in terms of performance: with a price increase of almost 205 percent since January and a share price increase of more than 780 percent in the last twelve months, hardly any AI title can compete with the storage and server company expire. This is also a reason for analysts to take a skeptical look at the value. However, the market valuations and the expectations of experts at Super Micro do not diverge too far: the average price target is $809.50, which is around 6.5 percent below the current share price.
Editorial team finanzen.net
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