JP Morgan: 5 Top Stocks For The AI Explosion

JP Morgan’s research team has just published an investor report revealing its top AI stock picks, shows CNBC. These are 5 of the firm’s ‘buy-rated’ stocks that should profit from the huge growth in AI. “We are at a pivotal point for its adoption today due to the availability of big data, high-powered computing and advances in algorithms – which all make AI cheaper and faster to implement,” states JP Morgan analyst Stacy Pollard. She calculates that the AI-related hardware, software, and services market could hit $58 billion by 2021 from just $12 billion this year.

Here we take a closer look at these five stock ideas- and order them according to the analyst consensus outlook on TipRanks. The TipRanks screenshots below also reveal the range and average of analyst price targets on each stock, and whether this translates into upside potential from the current share price. By gauging the Street’s take on a stock, investors can get a better idea of which stocks represent the most compelling investing opportunities.

Now let’s begin with the Street’s most bullish stock- Twilio Inc:

Twilio Inc (NYSE: TWLO)

Cloud communications app maker Twilio recently reported a stronger than expected 3Q:17 results and a better than expected 4Q:17 outlook. As a result, analysts are feeling bullish on the stock’s potential to ‘play catch up’ following a year of meaningful underperformance.

In October, Twilio announced the GA (general availability) of its Speech Recognition capabilities. This “enables users to convert speech to text and analyze intent during any voice call” notes JP Morgan. The firm adds that “Twilio’s Automated Speech Recognition uses Google’s Cloud Speech API, which supports various languages.”

Twilio has a Strong Buy analyst consensus rating on TipRanks. This breaks down into 7 bullish ratings and just one hold rating in the last three months. According to the average analyst price target of $39, Twilio has big upside potential of 47% from the current share price. For further insights into how individual analysts rate the stock, simply click on the screenshot below.

 

Oracle (NYSE: ORCL)

On database giant Oracle, JP Morgan says: “Apart from using AI and Machine learning across many parts of its cloud applications, Oracle is now using AI and machine learning to automate administration of its latest Oracle Database 18c.” And with this new self-driving database technology, the company has created the world’s first autonomous cloud.

“This is the most important thing we’ve done in a long, long time,” says ORCL CTO Larry Ellison. “The automation does everything. We can guarantee availability of 99.995 percent, less than 30 minutes of planned or unplanned downtime.” The cloud eliminates human labor, human error and the need for manual tuning.

The Street also has a Strong Buy consensus rating on Oracle. In the last three months, 17 analysts have buy ratings on this stock vs just 3 hold ratings. With an average analyst price target of $58.81, analysts are predicting 20% upside potential from the current share price.

Facebook (Nasdaq: FB)

Social media giant FB has been investing heavily in AI for years. “Mark Zuckerberg considers AI to be one of the company’s 10-year bets, and believes that AI should replicate—and exceed—human senses such as vision and hearing so that FB is better able to serve users.” For example, FB is now using its  “proactive detection” AI technology to scan posts for suicidal thoughts. It can then contact mental health resources or local first-responders if necessary.  “This is about shaving off minutes at every single step of the process, especially in Facebook Live,” says VP of product management Guy Rosen.

Overall this Strong Buy stock has 28 buy ratings, 1 hold rating and 1 sell rating in three months. These analysts have an average FB price target of $208.24. Given that the stock is now trading at $182.42, this translates into 14.15% upside from the current share price.

Palo Alto Networks (NYSE: PANW)

This next-generation security platform says effective machine learning can help prevent malware and protect endpoints. “The most promising weapon in the endpoint security arsenal is machine learning, with its ability to quickly learn, make instant decisions and enable rapid response to prevent threats rather than dealing with them during execution or after the fact” PANW states in a report. In light of this, PANW uses machine learning in Traps, its advanced endpoint protection solution.

Analysts, in general, are cautiously optimistic on PANW. In the last three months, this Moderate Buy stock has received 19 buy, 5 hold and 1 bearish sell rating. Altogether, these analysts have an average price target on Palo Alto of $170.32 (14.2% upside potential).

Workday Inc (NYSE: WDAY)

Workday is a leading provider of enterprise cloud applications for finance and human resources. According to JP Morgan: “AI is an integral part of the Workday system and surfaces in terms of intelligent recommendations to predictive analytics across HR as well as Finance.”

Analysts are very divided over the outlook for Workday. The stock has received 10 buy ratings in the last three months, as well as 11 hold ratings and 2 sell ratings. Interestingly, the average analyst price target of $110.81 now suggests a downside from the current share price of over -3%.

However, top JP Morgan analyst Mark Murphy maintained his buy rating on the stock on November 28. His buy rating comes with a $120 price target (4.57% upside). He says that channel checks came out positive for WDAY’s European traction and Financials product.

 

 

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Michael Molman 7 years ago Contributor's comment

AI has huge potential and there a lot firms working on ways to monetize and take advantage of the coming boom. Its good to have a list of potential investment options.