Investors have witnessed a steep decline in portfolio values since the start of 2022. While the markets somewhat staged a comeback last month, there are several tech stocks trading at a deep discount compared to historical valuations.
Moreover, there might be more pain ahead for investors with exposure to tech stocks. But there are a few companies that are part of rapidly expanding markets and are well poised to benefit from multiple secular tailwinds in the upcoming decade.
One such fast-growing vertical is artificial intelligence (AI), which is forecast to grow by 38% annually through 2030 to US$1.81 trillion, according to a Grand View Research report. So, let’s take a look at the top two AI stocks you can buy right now.
One of the leading cybersecurity companies globally, CrowdStrike Holdings (NASDAQ:CRWD) is currently valued at a market cap of US$25.9 billion. Down 64% from all-time highs, the high-flying growth stock has trailed the broader market by a wide margin in the last year.
CrowdStrike is known for its path-breaking portfolio of enterprise-facing cloud-based products. Its Falcon security platform leverages AI technology to identify and detect potential threats. Due to its machine-learning features, Falcon aims to become smarter with time, improving its ability to respond to cyber threats.
Due to its robust portfolio of products, CrowdStrike has managed to increase its gross retention rate to 98% in fiscal 2022 (ended in January), up from 94% in fiscal 2018. Its dollar-based net retention rate is well over 120% in this period, which indicates existing customers have increased spending by at least 20% year over year since fiscal 2018.
These customers continue to add new CrowdStrike subscriptions. For instance, at the end of the quarter ended in October, 60% of its clients subscribed to at least five cloud module products.
CRWD has increased its sales from US$481 million in fiscal 2020 to US$1.45 billion in fiscal 2022. While top-line growth is decelerating, revenue is forecast to touch US$2.23 billion in fiscal 2023 and US$3 billion in fiscal 2024. Comparatively, its adjusted earnings might triple to US$2 per share in fiscal 2024.
Analysts remain bullish on CRWD stock and expect it to gain over 50% in the next 12 months.
Semiconductor giant Nvidia (NASDAQ:NVDA) has already gained massive traction in the AI space. Its graphic cards are among the most popular ones used to power data centres globally, which has been a key revenue driver for the company.
Now, Nvidia is looking to build expertise in the self-driving vertical on the back of its AI capabilities and has already developed software and hardware platforms to integrate autonomous-driving features.
Typically, self-driving cars need to process vast amounts of data and make complex decisions on a real-time basis. Nvidia’s chips successfully deliver this computing power, making it one of the hottest stocks on Wall Street.
Nvidia stock has returned a whopping 6,740% to shareholders in the last 10 years. However, NVDA stock is currently trading 41% below all-time highs, allowing you to buy the dip.
If you remain bullish on the long-term prospects of AI-powered technologies, it makes sense to add Nvidia stock to your portfolio in 2023.