The 3 Best AI System Integrator Stocks to Buy Now: May 2024

Stocks to buy

System integrators combine multiple technology products, usually made by a variety of companies, on behalf of clients. Among the world’s best-known system integrators are Accenture (NYSE:ACN) and India’s Wipro (NYSE:WIT). Many companies around the world are looking to utilize AI. Indeed, according to a recent survey by Gartner, 46% of chief information officers globally are seeking to implement AI systems, but only 4% have experience with launching AI. As a result, many if not most of the companies which decide to utilize AI on a wide scale for the first time are likely to hire system integrators. For investors who want to exploit this trend, here are the three best AI systems integrator stocks to buy now.

C3.ai (AI)

Source: shutterstock.com/Below the Sky

C3.ai (NYSE:AI) is known for creating and marketing its own software which enables companies to easily implement AI. However, C3.ai also helps its clients utilize systems from other vendors, including third party data, sensor networks and applications from the major cloud infrastructure firms, including Microsoft (NASDAQ:MSFT). As a result, I view C3.ai as a system integrator.

The firm has accumulated an impressive list of customers, including Shell (NYSE:SHEL), Bank of America (NYSE:BAC), the U.S. Air Force, Duke Energy (NYSE:DUK) and Raytheon Technologies. And C3.ai has become very ubiquitous in federal agencies, as it closed 65 deals with Washington last year alone. What’s more, the company’s revenue from the federal government jumped over 100% last year.

On May 29, C3.ai reported very impressive Q4 results as its revenue jumped 20% versus the same period a year earlier to $86.6 million. Moreover, its net cash used in operating activities dropped to $62.36 million from $115.69 million in Q1 of 2023.

Booz Allen Hamilton (BAH)

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Booz Allen Hamilton (NYSE:BAH) specializes in carrying out system integration on behalf of federal agencies. AI is becoming a major revenue generator for the company. Indeed, it estimates about 5.6% of its revenue, or about $600 million, during fiscal year 2023 was related to AI. The firm is looking to nearly double that number to $1 billion in the next couple of years.

Since the Biden Administration recently ordered federal agencies to step up their use of AI, I believe that Booz Allen can meet its goal, greatly boosting its financial results and BAH stock in the process.

The company reported strong overall Q4 2023 results as its top line climbed 14% year-over-year to $2.77 billion. Meanwhile, its operating income nearly doubled to $254 million versus $138.8 million YOY.

Booz Allen’s high leverage to the federal government which is poised to rapidly implement AI make Booz one of the best AI system integrator stocks.

IBM (IBM)

Source: shutterstock.com/LCV

In recent weeks, IBM (NYSE:IBM) has made several key deals that should enable it to meaningfully expand its AI integration business.

On May 8, the company disclosed that it would partner with European software giant SAP (NYSE:SAP) to create new generative AI and cloud solutions. Specifically, IBM will add AI functionality to SAP’s offerings. The agreement should lead to IBM getting many new deals to help SAP’s many customers learn how to effectively integrate and utilize these new capabilities. Indeed, the companies noted that IBM’s consultants will “transform the way they deliver SAP solutions to boost productivity and mitigate risk by leveraging generative AI.”

On May 15, IBM announced that its consultants would begin integrating Palo Alto’s (NASDAQ:PANW) AI-powered security products to customers. Given the high popularity of Palo Alto’s IT security tools, the deal should be a positive needle mover for IBM.

Finally, IBM recently said that it would buy software maker HashiCorp (NASDAQ:HCP). According to Bank of America, the deal will make IBM’s software for private clouds more appealing. As a result, IBM will likely get more cloud migration deals, many of which c0uld also include AI integration opportunities, going forward.

On the date of publication, Larry Ramer did not hold (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.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.

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