The broader stock market seems to have flatlined over the past few weeks. Undoubtedly, the summer season could see more sideways action as many of us begin to “tune out” for some much-needed time off. Certainly, after a record run, it’s only natural to have some consolidation activity.
Despite a flattening S&P 500, though, a lot of action has been going on underneath the hood. With earnings season wrapping up, many stocks have rocketed while others have crumbled. The rewards and punishments for recent earnings have been quite drastic.
Nvidia (NASDAQ:NVDA) can’t stop rallying higher following its latest incredible number. Shares of NVDA added another 7% in gains on a flat Tuesday that kicked off the shortened trading week. Moving ahead, some of the other AI darlings that fell flat on earnings could be in a spot to rally. Nvidia’s euphoria may very well spread across the board in the coming months.
Here are three AI “cheapies” that look cheap as the S&P 500 exits the month of May with relative silence. Could this be the silence before a storm? For the following undervalued AI stocks, perhaps a storm higher.
Nvidia (NVDA)
Betting against Nvidia is a great way to punch your ticket to steep losses, with shares continuing to blast off as investors have more of a chance to consider just how good those latest quarterly numbers were.
Not only did Jensen Huang, a man that Wedbush Securities’ Dan Ives refers to as “the godfather of AI,” pull off another magical beat, but he also stunned many analysts who already had unrealistically high hopes.
For the quarter, Nvidia reported 262% in revenue growth year over year. That’s almost impossible to even fathom for a company with a $2.8 trillion market cap. It looks to be “full speed ahead” for the AI boom. And at this pace, Nvidia could become the world’s most valuable company as soon as this summer.
Indeed, topping estimates that were already absurdly lofty does not happen often. The latest earnings prove that Nvidia is in a league of its own. As it continues innovating on AI accelerators, software and the Omniverse, Nvidia’s work-focused vision of the metaverse, please do not bet against NVDA stock. It hasn’t worked, and it probably won’t anytime soon.
Apple (AAPL)
If you seek a timelier AI stock to buy by May’s end, perhaps Apple (NASDAQ:AAPL) is worth checking out, with shares rallying hard ahead of its big WWDC 2024 conference, which is penciled happen from June 10-14, 2024.
WWDC 2024 marks an exciting event, and it could be the biggest since the unveiling of the Apple Vision Pro. One year later, another technology, generative AI, could bring forth a “renaissance of growth” for Apple, as Dan Ives put it.
Ives also views the coming event as the “most important event in a decade,” recently hiking his price target on AAPL stock to $275, a street-high target. I think Ives is right to be pounding the table so loudly right now. The stage isn’t just set for incredible AI innovation on June 10 but for a potential breakout in Apple stock.
With a $2.91 trillion market cap, Apple’s market cap lead over Nvidia has narrowed recently. Can it gain ground? We’ll just have to wait and see what’s in store for June.
Snowflake (SNOW)
Snowflake (NYSE:SNOW) reported a fantastic quarter, initially taken well by investors. Fast forward to today, and it’s hard to Snowflake’s meltdown has brought it to $150 and change per share. With SNOW stock close to 52-week lows, I’d not be afraid to buy if you seek an affordable hyper-growth company to play the AI boom.
Sure, growth has come down quite a bit in recent years. Snowflake is still in the trenches regarding AI, with collaborations, acquisitions and organic innovations coming in rather quickly. The organic innovations have me most excited now that Neeva (an AI search startup) founder Sridhar Ramaswamy has access to significant resources as CEO of Snowflake to push forward his AI vision.
AI hardware will boom in the early days and then AI applications and AI-assisted big-data services (think storage, cleaning, sharing, visualization and querying) could be next in line. Once it is, I’ll want to be in SNOW stock before the meltdown can turn into a melt-up of sorts.
On the date of publication, Joey Frenette held shares of Apple and Snowflake. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.