3 Red-Hot AI Stocks That Could Pick Up Steam in Q4

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Investors seeking potential opportunities often gravitate toward high-growth areas of the market. Of late, AI stocks, or companies that are involved in developing the front-end artificial intelligence solutions, or service the back-end technical aspects of this sector, have taken off. Many of the names on this list will certainly be familiar to most investors looking at this space. 

That said, I think there’s good reason why investors should consider these three AI stocks for a potential rebound in Q4. It’s been a rather choppy quarter thus far for these stocks. Here’s the bull case on why that could potentially change in Q4.

Nvidia (NVDA)

Nvidia (NASDAQ: NVDA) excels in the metaverse due to its powerful chips which are well-suited for complex virtual worlds, AI and more. Additionally, Nvidia’s Omniverse links Blender and Adobe Substance 3D for collaborative 3D work, potentially benefiting from the metaverse’s growth.

Nvidia’s collaboration with Hugging Face and the rollout of AI Workbench showcase its machine learning leadership. Plus, reaching $1 trillion in market cap validates its AI strength. The upcoming Q2 2023 release could further boost Nvidia’s reputation if it surpasses expectations.

The GH200 chip’s convenience drives growth in a growing AI market projected to reach $2.5 trillion by 2032. NVDA stock is up 228% year-to-date. The company has also posted strong earnings reaching $7.19 billion in revenue, an EPS of 83 cents and $2 billion net income. Analysts have a wide target for NVDA stock ranging between $368.21 and $767 with the median target price averaging out to $501.65.

C3.ai (AI)

C3.ai (NYSE:AI) stock’s recent decline might be seen as a chance to buy the dip in generative AI stocks.

The sentiment shift might not significantly affect established AI stocks, but it could impact speculative plays. This enterprise AI software provider still has potential despite sentiment changes. However, rushing isn’t necessary.

On the other hand, the company benefits from a favorable ticker symbol amid the AI stock surge. Its price doubled since May. Beyond the symbol, C3.ai is a significant enterprise AI software provider constructing large-scale AI applications. C3.ai embraced generative AI with the C3 Generative AI Product Suite launch. Its influence on earnings is anticipated to grow in this fiscal year ending April 2024. The company is aiming for $295-320 million in revenue. 

Upstart Holdings (UPST)

Upstart (NASDAQ:UPST) is poised for long-term gains due to its advanced AI risk models and efficient automation. Its innovative approach accelerates model development and lowers costs, while a high rate of fully automated loan approvals enhances the customer experience. This positions Upstart at the forefront of AI-enabled lending.

Upstart’s advanced scoring method utilizes machine learning to predict borrower repayment, potentially expanding lending to those with low FICO scores but favorable Upstart scores. As its model proves accurate, interest from small lenders grows, reflected in Q2 revenue of $136 million and a surprising EPS of 6 cents, contrasting with estimated losses.

On the date of publication, Chris MacDonald did not have (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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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