The stock market is experiencing a surge, buoyed by better-than-expected economic data and strong financial performances from influential companies. These developments, along with anticipation of interest rate cuts by the Federal Reserve, suggest a potential for a prolonged bull market.
Despite this upward trend, which has elevated the share prices of some well-known companies to record highs, there remain outstanding investment opportunities in stocks still trading significantly below their previous peaks. Two Motley Fool contributors have pinpointed a pair of artificial intelligence (AI) growth stocks, currently down 38% and 44%, as prime picks for investors aiming to capitalize on the bull market.
Palantir Technologies, highlighted by Parkev Tatevosian, stands out for its potential for long-term growth at a reasonable price. Despite a significant increase in value over the past year, Palantir’s shares are still 38% below their peak in early 2021. As a leading AI software provider for enterprises and governmental bodies, Palantir has seen its sales jump approximately 275% from 2018 to 2023. The company’s expansion into the private sector and smaller businesses represents its next growth frontier. Palantir has already begun making its services more accessible to smaller entities, potentially broadening its market. With operating losses turning into operating income between 2018 and 2023, Palantir’s scaling benefits are evident. Despite its recent price increase, Palantir’s stock remains attractively priced compared to historical valuations, suggesting significant upside potential.
Keith Noonan recommends Snowflake as a strategic investment to leverage the AI revolution’s dependency on data. Snowflake, a leader in data warehousing and analytics, enables the integration and analysis of data across major cloud platforms, which is crucial for training AI systems. Despite the positive impact of AI on cloud services demand, as demonstrated by Amazon and Microsoft’s earnings, Snowflake’s stock remains 44% below its peak, possibly undervaluing its prospects. Snowflake anticipates a 29.5% year-over-year increase in product revenue for the fourth quarter of its 2024 fiscal year and a 37% annual increase for the full year. The company is also enhancing its AI service offerings, aiming for a 30% adjusted free cash flow margin and $10 billion in product revenue by its 2029 fiscal year, indicating an acceleration in growth. Snowflake’s current valuation presents an opportunity for investors to achieve substantial returns as the market has yet to fully recognize its growth potential.
