Beyond Nvidia: 7 Stocks to Play the Next Wave of AI

The impact of artificial intelligence (AI) on the investing world has been virtually impossible to miss over the past year. With wall-to-wall coverage worldwide of its game-changing applications across many industries, and forecasts calling for exponential market growth in the years to come, investors have made a beeline for AI stocks. In fact, the price appreciation in some of these AI stocks has been so parabolic that some experts now warn we are in an AI bubble.

One “on the bubble” stock that has defined Wall Street's AI-led rally is semiconductor designer Nvidia (NVDA), which has more than tripled in value over the past year. Although analysts remain strongly bullish about NVDA stock, and many believe it has considerable upside left, there's more to the AI revolution than specialized chips. To that end, Daniel Newman, the Principal Analyst at Futurum Group, recently told MarketWatch which names he expects to benefit from the next wave of adoption. 

For investors looking to find the next Nvidia, here are 7 stocks set to capitalize as AI expands its reach.

AI Stock #1: Salesforce

Synonymous with customer relationship management, Salesforce (CRM) is a provider of cloud-based CRM software and applications. Its focus lies on various areas including sales, customer service, marketing automation, e-commerce, analytics, and application development. It commands a market cap of $296.1 billion.

Salesforce stock is up 71% over the past year.

Overall, analysts are cautiously optimistic about Salesforce stock, with a consensus rating of “Moderate Buy” and a mean target price of $322.83. This indicates an upside potential of about 5.4% from current levels. 

Out of 40 analysts covering CRM, 25 have a “Strong Buy” rating, 2 have a “Moderate Buy” rating, 12 have a “Hold” rating, and 1 has a “Strong Sell” rating.

AI Stock #2: ServiceNow

Founded in 2003, ServiceNow (NOW) provides a cloud-based platform for managing digital workflows across various enterprise operations. Its "Now Platform" allows for low-code development and customization of workflows. Its offerings include IT service management (ITSM), customer service management (CSM), human resources service delivery (HRSD), security operations, and more.

Commanding a market cap of $155.3 billion, ServiceNow stock has rallied 76% over the past year.

Overall, analysts are quite bullish about the stock, deeming it a “Strong Buy” with a mean target price of $783.77. This denotes an upside potential of roughly 3.8% from current levels. 

Out of 32 analysts covering NOW stock, 28 have a “Strong Buy” rating, 2 have a “Moderate Buy” rating, and 2 have a “Hold” rating.

AI Stock #3: Oracle

An established player in the cloud space for decades, Oracle (ORCL) develops and sells a wide range of enterprise software products and cloud services. A prominent player in relational databases, it also focuses on cloud-based applications in enterprise resource planning (ERP), CRM, and supply chain management (SCM). It also has ownership over the popular Java programming language.

Its market cap currently stands at $309 billion, and Oracle stock is up 33.4% over the past year. The stock also offers a dividend yield of 1.42%.

Overall, analysts are positive on Oracle stock, with an average rating of “Moderate Buy” and a mean target price of $125.40. This denotes an upside potential of about 10% from current levels. Out of 26 analysts covering ORCL, 13 have a “Strong Buy” rating and 13 have a “Hold” rating.

AI Stock #4: Workday

Founded in 2005, Workday (WDAY) provides a cloud-based enterprise management platform that integrates human capital management (HCM), financial management (FDM), and analytics. While HCM offerings include human resources, payroll, benefits, talent management, and workforce planning, FDM solutions encompass accounting, financial planning & analysis, enterprise resource planning (ERP), and procurement. Its market cap currently stands at $69.5 billion.

Workday's share price is up 45.8% over the past year.

Overall, analysts are bullish on Workday stock, which has a consensus rating of “Moderate Buy” with a mean target price of $300.97. This indicates an upside potential of roughly 13% from current levels. 

Out of 35 analysts covering WDAY, 22 have a “Strong Buy” rating, 2 have a “Moderate Buy” rating, 10 have a “Hold” rating and 1 has a “Strong Sell” rating.

AI Stock #5: IBM

International Business Machines (IBM), popularly known as IBM, was founded in 1911. Over the years, the company has transitioned its focus from hardware manufacturing to cloud computing, enterprise services, AI, and quantum computing. Its market cap currently stands at $179.6 billion.

IBM stock is up 59% over the past year, and it also offers a dividend yield of 3.39%.

Overall, analysts have deemed the stock a “Hold,” with a mean target price of $181.54 - a slight discount to IBM's current price, although the Street-high target of $215 is a premium of 12.1%.

Out of 14 analysts covering IBM stock, 3 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, 8 have a “Hold” rating, and 2 have a “Strong Sell” rating.

AI Stock #6: Dell

Founded in 1984 by Michael Dell as a college freshman at the University of Texas, Dell (DELL) has come a long way. From its start - selling customized personal computers built from readily available components - to its current form as a diversified technology conglomerate, its operations have grown to encompass Dell Client Solutions (dealing in hardware), Dell Technologies Infrastructure Solutions (data center servers), and Dell Technologies Services (IT services and consulting).

With a market cap of $82.7 billion, Dell stock is up a whopping 214% over the past year. The stock also offers a dividend yield of 1.3%.

Overall, analysts have deemed DELL stock a “Strong Buy,” although the shares are trading above Wall Street's mean target price of $111.40. However, the high target price of $140 indicates an upside potential of roughly 20.9% from current levels. 

Out of 14 analysts covering Dell, 10 have a “Strong Buy” rating, 2 have a “Moderate Buy” rating, 1 has a “Hold” rating, and 1 has a “Strong Sell” rating.

AI Stock #7: Snowflake

We conclude our list of “alternative” AI stocks with Snowflake (SNOW). The company was founded in 2012 and is a provider of a cloud-based data storage and analytics platform, often referred to as “data-as-a-service.” Their unique architecture separates storage and compute, allowing for elastic scaling and cost optimization. Its market cap currently stands at $53.5 billion.

Snowflake stock is up 18.8% over the past year.

Overall, analysts are cautiously optimistic about SNOW stock, with a rating of “Moderate Buy” and a mean target price of $205.39. This denotes an upside potential of about 26.5% from current levels. 

Out of 39 analysts covering Snowflake, 23 have a “Strong Buy” rating, 3 have a “Moderate Buy” rating, 11 have a “Hold" rating, and 2 have a “Strong Sell” rating.