Artificial intelligence (AI) has become a game-changer across industries, reshaping how businesses operate and innovate. From Tenet Healthcare Corporation (THC) leveraging AI in healthcare delivery to Pinterest, Inc. (PINS) enhancing user experience through visual AI, and Jones Lang LaSalle Incorporated (JLL) optimizing real estate management with AI-driven insights, these companies exemplify the technology’s transformative power.
Goldman Sachs (GS) analyst David J. Kostin underscores these advancements, predicting substantial growth for these companies from AI adoption, including enhanced labor productivity and triple-digit bottom-line growth.
As AI continues to evolve, these firms stand ready to capitalize on its transformative potential, making them compelling choices for investors seeking long-term returns in the AI-driven economy. Let’s take a closer look.
AI Stock #1: Tenet Healthcare
With a market cap of $13.3 billion, Dallas-based Tenet Healthcare Corporation (THC), founded in 1967, is a powerhouse in U.S. healthcare services. With two main segments – Hospital Operations and Ambulatory Care – it offers a broad spectrum of services, from acute and critical care to specialized procedures like cardiovascular and neurosurgery. Tenet's network includes hospitals, ambulatory surgery centers, and imaging centers, making it a key player in healthcare with innovative services like telemedicine and robotic surgery.
Tenet Healthcare is tapping into AI to revolutionize patient care and streamline operations. It has harnessed AI to predict patient outcomes, automate admin tasks, and modernize HR and payroll processes. Delray Medical Center uses Viz Vascular Suite's AI to detect vascular conditions, optimizing treatment workflows. At Tenet Health Central Coast hospitals, Viz.ai speeds up stroke diagnosis and response. This tech-driven approach not only cuts costs, but also boosts service quality, making Tenet a surprising AI player in healthcare.
In an impressive run, shares of Tenet Healthcare have rallied 74.3% over the past 52 weeks, powered by a stunning 83% surge in 2024 alone - easily outpacing the S&P 500 Index’s ($SPX) 25.2% return and 14.9% gains over the same respective periods.
THC stock currently trades at 0.65 times sales, lower than its industry peers, like Universal Health Services (UHS), which trades at 0.90x.
On April 30, Tenet Healthcare reported Q1 earnings of $3.22 per share, which more than doubled year over year and surpassed Wall Street’s expectations by an impressive 122.1%. Also, the company's revenue grew 7% annually to $5.4 billion, beating the forecast by 4.1%. Plus, the company produced a free cash flow of $346 million for the quarter, compared to $214 million in the prior-year quarter.
Management forecasts adjusted EPS to range between $1.58 and $1.98 for the fiscal Q2 of 2024, while revenue is projected between $4.9 billion and $5.1 billion. For the full fiscal year, adjusted EPS is projected to be between $8.37 and $9.41, while revenue is expected to range between $20 billion and $20.4 billion.
Goldman Sachs highlights Tenet Healthcare's commanding position within the healthcare sector, projecting a remarkable 135% potential increase in baseline earnings through AI advancements.
Analysts tracking Tenet Healthcare expect fiscal 2024 EPS to reach $8.55, up 22.5% year over year, and increase by 1.9% in fiscal 2025 to $8.71.
Tenet Healthcare stock has a consensus “Strong Buy” rating. Out of the 18 analysts offering recommendations for the stock, 16 give a “Strong Buy,” one advises a “Moderate Buy,” and one analyst is playing it safe with a “Hold” rating.
Even though the stock currently trades above the average analyst price target of $134.33, the Street-high price target of $165 suggests a potential upside of 19.3%.
AI Stock #2: Pinterest
Pinterest, Inc. (PINS) began its journey in 2008 as Cold Brew Labs Inc. before rebranding in April 2012. This San Francisco-based visual search and discovery platform, now valued at $30.3 billion by market cap, lets users worldwide find and save ideas, from recipes to home and style inspiration.
The social media site began its AI journey to revolutionize user experience, starting with personalized content recommendations and evolving into advanced visual search capabilities. Over time, the platform's AI analyzed user behavior to deliver tailored suggestions, while its image recognition technology enabled photo-based product searches.
CEO Bill Ready emphasized their commitment to "inclusive AI," ensuring diverse representation in search results. This seamless integration of AI has positioned Pinterest as a Gen Z favorite for shopping, blending discovery and purchase effortlessly.
Shares of Pinterest have gained 67.1% over the past 52 weeks, with a 19.1% surge on a YTD basis. PINS stock significantly outperforms the SPX over the same periods, showcasing its solid market momentum.
Priced at 9.64 times sales, the stock trades at a discount to its own five-year average of 10.88x.
Shares of the image-browsing platform rose over 21% in the subsequent trading session after the company reported its Q1 earnings results on April 30, which sailed past Wall Street’s projections on both the top and bottom lines. The company’s revenue of $740 million improved 23% year over year, edging past estimates by 5.7%. Its EPS surged 150% annually to $0.20, also beating forecasts. Pinterest recorded 518 million global monthly active users, up 12% year over year.
Recently, Pinterest teamed up with Amazon.com (AMZN) and Alphabet (GOOG) (GOOGL), and these partnerships started to yield in Q1. Pinterest is snagging a bigger slice of ad budgets as clients see its effectiveness. For major clients, Pinterest now claims around 5% of their ad spend. This small but growing share hints at even more gains as advertisers ramp up their investment.
Looking ahead to fiscal Q2, Pinterest projects revenue between $835 million and $850 million, marking an 18% to 20% annual growth rate. While slightly lower than Q1, this forecast reflects the platform's strong momentum. Non-GAAP operating expenses are expected to range between $490 million and $505 million, up 11% to 15%, driven by increased investments in R&D, particularly in expanding its AI capabilities with new talent across the company.
Goldman Sachs projects a staggering 162% potential increase in baseline earnings for Pinterest through AI advancements.
Analysts tracking Pinterest expect the company’s profit to reach $0.44 per share in fiscal 2024, up 175% year over year, and rise 59.1% to $0.70 per share in fiscal 2025.
Pinterest stock has a consensus “Moderate Buy” rating overall. Out of the 29 analysts offering recommendations for the stock, 19 suggest a “Strong Buy,” two advise a “Moderate Buy,” and the remaining eight give a “Hold” rating.
The average analyst price target of $44.61 is nearly flat with the current price levels. However, the Street-high price target of $52 suggests that the stock could rally as much as 17.9%.
AI Stock #3: Jones Lang LaSalle
Incorporated in 1997, Chicago-based Jones Lang LaSalle Incorporated (JLL) operates globally as a commercial real estate (CRE) and investment management firm. With a market cap of approximately $9.5 billion, JLL spans across the Americas, Europe, the Middle East, Africa, and Asia Pacific. It specializes in acquiring, developing, managing, and investing in diverse properties, offering comprehensive real estate services for institutional and retail investors worldwide.
AI is reshaping the real estate landscape, and JLL is at the forefront. From analyzing trillions of data points to creating efficient workplaces, JLL uses generative AI to enhance global operations and empower its workforce. JLL leverages extensive industry data to create advanced AI solutions customized for CRE leaders. These tools streamline operations, enhance productivity, and accelerate client outcomes. JLL’s secure, compliant AI tools empower non-technical staff to effectively use GPT solutions, turning business data into informed decisions and operational efficiencies in CRE.
JLL stock has gained 34.5% over the past 52 weeks and 8.3% on a YTD basis.
In terms of valuation, the stock is trading at 17.08 times forward earnings and 0.47 times sales, lower than its real estate services industry peer CBRE Group (CBRE).
On May 6, the company reported stronger-than-expected Q1 earnings results, which sent JLL stock up 3%. Revenue rose 3.5% year over year to $5.1 billion, topping expectations by 6.4%. Its adjusted EPS of $1.78, up 150.7% from the year-ago quarter, exceeded projections by 109.4%.
JLL defied the high-interest rate climate, showcasing robust growth across its core segments. The Work Dynamics segment delivered double-digit gains, buoyed by strong Workplace Management momentum. Property Management rose 8%, driven by global contributions. Capital Markets expanded broadly by 6%, while leasing in the U.S. office sector outpaced declines elsewhere, underscoring JLL's resilient market performance.
The real estate company aims to navigate a high interest rate landscape, capitalizing on robust demand for sustainable, premium spaces. Targeting an adjusted EBITDA margin between $950 million and $1.15 billion in fiscal 2024, the company prioritizes expanding margins and driving mid-term growth through strategic initiatives.
Goldman Sachs anticipates that JLL could experience a significant 120% boost in baseline earnings from AI, signaling a promising transformation in its operational efficiency and profitability strategies.
Analysts tracking JLL expect the company’s profit to reach $12.36 per share in fiscal 2024, up 67% year over year, and rise another 29% to $15.94 per share in fiscal 2025.
Jones Lang LaSalle stock has a consensus “Moderate Buy” rating overall. Out of the eight analysts covering the stock, five suggest a “Strong Buy,” and the remaining three recommend a “Hold.”
The average analyst price target of $213 indicates a potential upside of 4.2% from the current price levels. The Street-high price target of $254 suggests that the stock could rally as much as 24.2%.
On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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