Wall Street serves as a hub for innovation, a place where trends ebb and flow, but few manage to reach the zenith of the internet’s emergence in the mid-1990s. Enter artificial intelligence (AI), the current frontier with the potential to spark a business renaissance.
AI, in this context, denotes the deployment of software and systems to manage tasks conventionally handled by humans. The ability to train these systems, fostering their growth and adaptability over time, imbues AI with versatile applications across sectors and industries.
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History reflects the cyclical nature of next-big-thing trends over the past three decades, with early-stage bubbles characterizing the emergence of phenomena like the internet. The trajectory of the AI revolution, despite ambitious growth projections, is unlikely to deviate from this pattern. Nevertheless, discerning long-term winners is feasible, especially those resilient to an AI bubble burst, unlike Nvidia.
Herein lie three historically affordable AI stocks ripe for investment in the month of April, promising long-term potential in the years to come.
Golden Opportunity: Baidu
Amidst the realm of AI stocks offering bargains, stands China’s Baidu (NASDAQ: BIDU).
Baidu’s intrinsic strength, evident in its internet search supremacy, positions it favorably if history echoes itself through an AI bubble burst. With a commanding 60.1% share of China’s internet search market in February, Baidu has maintained a stronghold, overseeing between 60% and 85% of China’s internet searches over nine years. This dominance makes it the prime choice for businesses seeking to engage consumers and wield significant pricing power in ad realms.
Moreover, China’s ongoing economic recovery post-COVID-19 turbulence, coupled with resurging advertising expenditures, forebodes well for Baidu. Noteworthy is Baidu’s involvement in the AI realm through its rapidly evolving non-online marketing segment, with Baidu’s AI Cloud standing as China’s fourth-largest cloud-infrastructure service platform by expenditure as of March 31, 2023. Plans are afoot to integrate generative AI solutions into AI Cloud, empowering businesses to enhance customer interactions and develop applications.
Furthermore, Baidu boasts parentage of Apollo Go, an intelligent-driving entity heralding the most prosperous autonomous ride-hailing service globally. Notably, Apollo Go recently exceeded 5 million cumulative rides since its inception, a testament to Baidu’s innovation and market acumen.
Despite regulatory uncertainties shadowing Chinese investments, Baidu beckons opportunistic investors with shares trading below 9 times forward-year earnings, excluding its substantial net cash reserves surpassing $17 billion — constituting nearly half of its present market capitalization.
Treasure Trove: Meta Platforms
Adding to the roster of historically economical AI stocks is the unmistakable Meta Platforms (NASDAQ: META).
Meta, a bastion of social media dominance, is geared to capitalize on the AI realm’s future, should the predicted AI bubble deflate. The conglomerate presides over a social media empire drawing 3.07 billion monthly active users (MAUs) on Facebook alone, surpassing all competitors globally. Inclusive of other renowned sites like Instagram, WhatsApp, and Threads, Meta boasts a collective 3.98 billion MAUs within its ecosystem, oozing advertiser appeal. Nearly 98% of Meta’s $134.9 billion net sales in 2023 stemmed from advertising, underscoring its commercial potency.
CEO Mark Zuckerberg’s bold foray into future investments, spanning augmented and virtual reality device development, metaverse solutions integration, and generative AI deployment for personalized advertisements, underscores Meta’s commitment to innovation. Bolstering this vision is Meta’s colossal financial arsenal, culminating in a $65.4 billion stash of cash, cash equivalents, and marketable securities by 2023’s end — galvanized further by over $71 billion in net cash from operations. No other social media titan exhibits the financial flexibility to undertake daring endeavors akin to Meta.
Riding the Wave With Alibaba
When it comes to captivating investment opportunities, China’s premier e-commerce giant Alibaba shines like a beacon in the tumultuous waters of the financial world. Amidst the labyrinth of stocks, Alibaba emerges as a knight in shining armor for investors seeking refuge and reward.
Despite the echoes of caution reverberating through the market, Alibaba stands tall as a fortress of stability. Its e-commerce prowess, epitomized by Taobao and Tmall, resonates with a commanding 50.8% market share in the thriving Chinese landscape. This dominance, coupled with the burgeoning potential of China’s consumer base, positions Alibaba as a formidable force in the realm of online retail.
Not content with mere mediocrity, Alibaba’s innovative strides extend to the ethereal realm of cloud computing. In a twist of fate that rivals the finest of literary tales, Alibaba Cloud emerges as a phoenix from the ashes, seizing the crown of China’s cloud-infrastructure arena with grace and grandeur.
The Glittering Treasure Trove of Alibaba
In an era where cash is king, Alibaba sits atop a throne of riches. Boasting a staggering $92 billion in cash reserves and investments, the company wields financial prowess that rivals even the fabled dragons of old. This war chest not only signifies stability but also heralds the dawn of a new age of investment and innovation.
As the tides of fortune ebb and flow, Alibaba remains steadfast in its commitment to offering value to investors. With shares trading at a modest multiple of 8 times forward-year earnings, Alibaba beckons to those seeking undervalued gems in a sea of uncertainty.
What sets Alibaba apart is not just its offerings but its resilience in the face of adversity. Weathering storms and navigating uncharted waters, Alibaba stands as a testament to the enduring spirit of innovation and determination.