Investors traditionally favored mega-cap tech giants such as Nvidia (NASDAQ:NVDA) for their artificial intelligence (AI) investments. That makes sense, just given the kind of run Nvidia has been on of late.
However, overlooked AI stocks hold tremendous potential for even greater gains than some of these heavily-covered stocks. These companies may carry as much upside from this technology. But that value isn’t likely getting priced into their respective stock prices.
Finding these overlooked AI stocks isn’t easy. And in some respects, the names on this list aren’t entirely overlooked. There’s a strong AI thesis many investors are already aware of for these stocks, but it’s not their primary story. A portion of investors focus less on AI and more on the other fantastic business units driving revenue and profitability growth for these giants.
Nonetheless, these stocks have big AI potential. Let’s take a closer look.
Oracle (ORCL)
Oracle (NYSE:ORCL), a global software company, capitalizes on AI demand with its Gen2 cloud infrastructure, essential for processing complex AI workloads. Despite its overshadowing, Oracle’s role in AI infrastructure is gaining recognition, especially with plans for 100 new data centers. With a $20 billion cloud business, Oracle’s AI-driven growth potential is just emerging.
In other Oracle news, Accenture (NYSE:ACN) and Oracle deepened their 30-year partnership, investing in generative AI solutions to drive growth and innovation. Leveraging Oracle Cloud Infrastructure (OCI), these two partners are looking to empower businesses with real-time data analysis for large-scale transformations.
Moreover, Choice Hotels International, a global lodging franchisor, partnered with Oracle Hospitality to deploy Oracle Nor1, an AI-powered merchandising solution. This implementation aimed to boost revenue and enhance guest experiences through personalized services and offers. Oracle Nor1 utilized AI to deliver tailored offers via mobile apps and digital channels, optimizing conversion rates.
Amazon (AMZN)
Although Amazon (NASDAQ:AMZN) announced additional rounds of layoffs lately, the company remains a top stock to buy. The firm’s Q1 saw Amazon report a 13% increase in net sales and a tripling of net income year-over-year (YOY). AMZN’s online marketplace remains their key revenue driver. Additionally, its Amazon Web Services (AWS) and advertising segments are gaining traction.
Moreover, Amazon is seeing impressive sales and net income profit over the years despite inflation surge. However, recent challenges from inflation have impacted e-commerce and cloud sales. Nevertheless, Amazon adapted by optimizing its cost structure and transitioning to a regional fulfillment model, enhancing efficiency and reducing costs.
A $9 billion investment in Singapore for cloud computing underscores its commitment to regional expansion. This move followed Microsoft’s (NASDAQ:MSFT) lead in Southeast Asia. Also, Amazon is continuing to increase its focus on generative AI, including ChatGPT and Amazon Bedrock. And this is strengthening its core capabilities and enhancing operational efficiency.
These factors and a 21% year-to-date (YTD) stock increase have led analysts to rate Amazon as a strong buy.
Qualcomm (QCOM)
Capitalizing and growing on AI trends, Qualcomm (NASDAQ:QCOM) is not only focusing in smartphones. The company has now a strong position that strengthens the demand that grows through the years. Moreover, through more AI-powered innovations, Q2 is set to show more growth.
Its recent Snapdragon X Elite, which is based on an ARM chip, aims to offer more enhance performance and efficiency for computers. This includes M3-chip MacBooks and Windows laptops. These chips will be groundbreaking and are set to be released mid-2024. In other QCOM news, Ampere Computing announced a partnership with Qualcomm to introduce a new solution to reduce power consumption for AI chips.
Founded by former Intel president Renee James, Ampere utilizes Arm Holdings technology to produce energy-efficient central processing chips used by Oracle, Google and more. The startup prioritizes energy efficiency over industry leaders like Intel and AMD.
On the date of publication, Chris MacDonald did not have (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.