Equities can continue their rally, especially these three stocks below, which have either improved their profitability significantly or will do so in the short term.
Advanced Micro Devices (AMD)
2024 will be a big year for Advanced Micro Devices (NASDAQ:AMD). This year AMD will finally break the monopolistic hold Nvidia (NASDAQ:NVDA) has had on the advanced chip market for artificial intelligence. The chipmaker announced the MI300x GPU chipset almost a year ago in their second quarter 2023 earnings report. To follow that up, in their third-quarter earnings report, AMD announced it expects to sell $2 billion in AI chips next year. Because these AI chips are still in high demand in North America, Europe, and Asia, AMD will likely reap a significant profit upon entering the space.
Anticipating AMD’s long-awaited entrance into the AI chip market, a number of Wall Street firms have also boosted their target prices for the chipmaker. The investment bank Jefferies raised their target price for AMD to $200/share from $130/share. JPMorgan, Goldman Sachs, Baird, and a host of other investment banks also made significant increases to their target prices in late January 2024. Moreover, Japanese bank Mizuho Securities has recently raised its target price for $200/share to $235/share.
Palantir (PLTR)
Peter Thiel’s Palantir (NYSE:PLTR) has made significant strides in improving profitability. The data analytics firm reported its first quarter of positive GAAP net income in its fourth-quarter earnings print for 2022. Similarly, throughout 2023, Palantir continued its improvements in bottom-line margins, mostly driven by strong growth in its commercial and government segments.
In the latter half of 2023, Palantir released AIP, which can deploy commercial and open-source large language models onto internally held data sets and, from there, recommend business processes and actions. Subsequently, during the company’s Q3 results, overall revenue increased 17% to $558 million from $478 million a year earlier. However, most notably, Palantir’s “U.S. Commercial business segment” increased revenue figures by 37% on a year-over-basis driven by demand for Palantir’s Artificial Intelligence Platform.
Success with AIP also helped Palantir to beat Wall Street’s estimates for the company’s fourth-quarter report. While the company is only completed 600 pilot tests for AIP, the platform could rise to be a significant product for the company, driving strong profitability for quarters to come.
SentinelOne (S)
SentinelOne (NYSE:S) is a global provider of cloud-based cybersecurity solutions, best known for its ‘Singularity Extended Detection and Response Platform.’’ The concept leverages artificial intelligence to power cybersecurity solutions on an organization’s cloud network. Singularity’s value proposition was simple. AI technology would create a human-like experience for the platform’s users, thus significantly decreasing upfront costs for customers. Addressing this pain point in cybersecurity, SentinelOne roared into prominence with a record $1.2 billion in its 2021 initial public offering.
In recent years, SentinelOne still showcases robust revenue growth, which has been in the high double-digits in the first, second, and third quarters of 2023. The cybersecurity firm’s third-quarter earnings figures were able to beat Wall Street’s estimates primarily due to robust cybersecurity spending from enterprise customers. The company’s adjusted loss came in at 3 cents per share, while Wall Street was predicting 6 cents per share. Growth in revenue and robust product traction could help SentinelOne reach breakeven while also adding to the firm’s market share.
On the date of publication, Tyrik Torres 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.
Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.