3 Top-Rated AI Stocks Wall Street Analysts Are Loving Now: January 2024

Stocks to buy

Top-rated AI stocks enjoyed a dominant 2023 as more investors realized the potential of this technology. But, when stocks experience significant rallies, it’s easy to wonder if they are due for corrections. 

Many AI stocks have continued to perform well in 2024, including some of the picks on this list. However, some AI stocks have missed out on the fun and look more reasonably valued given the sector’s fanfare. 

Some investors turn to Wall Street analysts to gauge whether they should buy a stock or stay away from it. Analysts study stocks for a living and have a better grasp on what to look. Investors looking to get more exposure to top-rated AI stocks may want to consider these Wall Street favorites.

Supermicro (SMCI)

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Supermicro (NASDAQ:SMCI) is a surging AI stock that has won praise from many analysts. The software and service provider has an average price target of $361.33 which implies an almost 7% upside. The median price target is $400 while the high is $500. 

The company’s data center servers can process the high intensity of artificial intelligence. A partnership with Nvidia (NASDAQ:NVDA) bodes well for the company and can fuel more revenue and earnings growth.

The stock outperformed Nvidia and most of the competition over the past year. Shares surged by over 300% during that time and are up by nearly 2,164% over the past five years. Shares currently trade at a 31 P/E ratio.

Supermicro started fiscal 2024 with 14.4% year-over-year revenue growth in the first quarter. The company raised its fiscal 2024 outlook from $10 billion to $11 billion in revenue. The ongoing GPU supply constraints have not stopped the company from growing. Once this headwind fades away, hypergrowth may resume.

Axcelis Technologies (ACLS)

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Axcelis Technologies (NASDAQ:ACLS) is an undervalued semiconductor stock that offers ion implantation technology. Instead of making chips, the company assists chipmakers with making more efficient chips. 

Its Purion systems have experienced robust demand with order backlog exceeding the company’s revenue for all of 2022. The significant backlog is present in the context of booming revenue and earnings growth. 

In the third quarter, revenue increased by 27.6% year-over-year while net income jumped by 63.7% year-over-year. The stock has been battered in recent months without much news to warrant the decline. Shares now trade at a 16 P/E ratio which looks like a bargain. 

The stock has an average price target of $183 among five analysts. That price target implies a 60% upside from the current price. The highest price target is $215 while the lowest price target is $134. Even the lowest price target still suggests the stock can rally by 17.5% from here.

Nvidia (NVDA)

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Nvidia seems to attract fans left and right while converting most, if not all, of its bearish investors. Any stock with a 209% gain over the past year and a 5-year gain of 1,295% is bound to draw attention.

The valuation was one of the few concerns investors had about the stock. However, Nvidia has silenced valuation concerns with stellar revenue and earnings growth. Revenue grew by 206% year-over-year while net income soared by 1,259% year-over-year. Investors don’t come across those types of numbers often. 

It’s the first time I’ve seen a company achieve those growth rates for multiple quarters, and Nvidia isn’t even a microcap. The tech giant’s market cap exceeded $1 trillion in 2023 and it’s not a stretch to say that this company’s market cap can exceed Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) within a few years.

There’s been a lot of AI hype, but Nvidia’s financial strength comes with a 28-forward P/E ratio and a 0.55 PEG ratio. There’s a lot to like about the stock, and analysts seem to agree. The average price target of $662 suggests a 21% upside from the current price. This average price target comes from 35 analysts. Of those analysts, 32 of them rated NVDA as a “Buy” while four of them rated it as a “Hold.”

On this date of publication, Marc Guberti held long positions in SMCI, ACLS and NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.

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