While artificial intelligence (AI) has made immense strides, text-based AI models admittedly still lack the nuanced understanding of the stock market that human experts can develop over years of experience.
However, AI can be a useful tool for discovering intriguing investment ideas that we might not have otherwise considered. In this article, I decided to leverage the stock-picking capabilities of the new AI system Bard to generate some fresh stock ideas for 2024. Although Bard has faced criticism in certain domains, it has consistently excelled at identifying stocks with high upside potential. Of course, I won’t just blindly invest in Bard’s stock picks. Once the AI points me in a promising direction, I’ll conduct my own careful due diligence before making any investment decisions. But AI models like Bard can eliminate much of the grunt work involved in stock screening and provide a jumping-off point for further research.
After prompting Bard to suggest stocks it believes could deliver triple-digit returns next year, I identified three particularly compelling candidates for further investigation. In the following sections, I’ll walk through my analysis of each stock, discuss the bullish factors Bard highlighted and evaluate the potential risks and rewards. I aim to provide an objective perspective on whether these stocks are worth buying for 2024 or if caution is warranted.
While Bard’s suggestions should be taken with a grain of salt, its track record indicates these ideas are worth exploring with an open but critical mindset. My goal is to leverage AI to discover promising opportunities while still maintaining my own independent judgment as an investor. So, without further ado, let’s dive into the three AI stock predictions Bard believes will be big winners next year and examine the potential upside.
Bard: “CrowdStrike (NASDAQ:CRWD) is a cybersecurity company that uses artificial intelligence to detect and respond to cyber threats. The company has a strong track record of growth and profitability, and its stock has outperformed the market in recent years.”
In my view, CrowdStrike deserves its premium valuation, which some investors may see as lofty. The company has not missed analyst expectations for both earnings and revenue in any quarter since going public. Furthermore, CrowdStrike consistently beats Wall Street estimates by a wide margin. Considering analysts anticipate the company’s earnings per share to expand nearly sixfold over the next decade, alongside revenue growing by a similar magnitude, the current valuation seems justified if CrowdStrike keeps overdelivering.
Unlike many cybersecurity firms, the buzz around CrowdStrike hasn’t faded. While pandemic-induced tailwinds for cybersecurity spending have receded, CrowdStrike continues posting impressive financials quarter after quarter. With cyber threats only intensifying, CrowdStrike’s AI-powered solutions remain in high demand. According to its estimates, the company still has substantial room for growth, with a $76 billion addressable market.
Therefore, I believe CrowdStrike stock offers tremendous upside for 2024 and beyond. The premium valuation is warranted based on its consistent overperformance. As long as CrowdStrike maintains this trajectory, its stock should have no trouble delivering more returns.
Bard: “Twilio (NYSE:TWLO) is a cloud communications platform that enables businesses to build and deploy communication applications. The company’s platform is used by a wide range of businesses, including Fortune 500 companies and startups. Twilio is expected to benefit from the continued growth of cloud computing and the increasing demand for communication applications.”
Twilio’s story has been rocky lately, with its stock plunging 88% from its peak without staging a recovery yet. However, I believe Twilio still offers substantial upside from current levels. Despite the stock’s poor performance, Twilio’s underlying business keeps growing. While risks exist, much negativity appears priced in already following the steep decline.
After all, Wall Street has essentially baked in Twilio’s weaknesses after its staggering plunge. But significant opportunities remain. Revenue grew over 10% year-over-year in Twilio’s latest quarterly results. Additionally, Twilio expects revenue growth to reaccelerate in 2024 as sales execution initiatives gain traction.
Therefore, I believe Twilio stock trades at a depressed valuation that underestimates its long-term potential. Given substantial growth isn’t dead for Twilio yet, I believe its battered stock offers a sizable upside in 2024 as the business keeps expanding.
Skyworks Solutions (SWKS)
Bard: “Skyworks Solutions (NASDAQ:SWKS) is a semiconductor company that provides analog and mixed-signal semiconductors for mobile devices, networking and other applications. The company is a leading provider of semiconductors for 5G devices, and it is expected to benefit from the rollout of 5G networks around the world.”
Skyworks was one of Wall Street’s top darlings in the post-pandemic boom. However, its stock has since tumbled over 25% from its 2023 peaks. The recent AI buzz hasn’t rescued Skyworks much either, with shares declining again recently. Still, I believe little downside remains for Skyworks here. Even if the overall market stumbles, pushing Skyworks lower, paying 11 times forward earnings seems like a bargain. Skyworks’ growth should persist at double-digit clips, with both earnings and revenue likely beating Wall Street expectations if history is any indicator.
Naturally, Skyworks faces near-term headwinds, such as inventory corrections rippling through the semiconductor industry. But semiconductor demand trends overwhelmingly point toward long-term expansion. As 5G proliferation continues, Skyworks should see tailwinds from providing critical chips enabling 5G devices. Plus, Skyworks is diversifying into other promising markets like automotive and infrastructure.
With shares beaten down and long-term growth still intact, I expect Skyworks stock to stage a powerful recovery in 2024. Even the slightest market-wide catalyst could spur a rally from current lows. Thus, Skyworks offers triple-digit upside potential, in my view, making it a compelling AI-driven pick for 2024.
On the date of publication, Omor Ibne Ehsan did not hold (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.