Beyond Nvidia: 5 AI Stocks to Buy this June | InvestorPlace
A recent drawdown has created good entry prices for the highest-quality AI firms. Last month, my AI-powered stock-picking system, MarketMaster AI, awarded Nvidia (NASDAQ:NVDA) a C-rated “hold” grade. Analysts were still raising their earnings estimates for the chipmaker, which was enough to offset the bearish pressure of high valuations. The result was a relatively muted outlook.
However, my AI-powered stock-picking system downgraded Nvidia to a “D” this month, the equivalent of a “sell.” An unexpectedly strong first-quarter earnings season means shares of the company have now risen too far, too quickly, and MarketMaster AI is taking that cue to downgrade the AI stock. The system forecasts Nvidia will, on average, underperform the market by 3% over the next six months. That means there are far better AI opportunities now on the market. And the best thing is you don’t have to sacrifice growth or quality for these plays.
Microsoft (NASDAQ: MSFT)
The world’s largest software maker tops this month’s list of AI stocks to buy. Microsoft is expected to see earnings growth accelerate to 17% by 2027, and trades at a reasonable 32 times forward earnings.
Driving Microsoft’s gains is Azure, the company’s cloud computing business. The segment grew at 30% in 2023, and analysts believe cross-selling Office customers will keep growth rates high. MarketMaster AI now sees a 10.5% outperformance over the next six months — the highest upside of any major stock. Microsoft also tops the algorithm’s list for its relative stability.
Cadence Design Systems (NASDAQ: CDNS)
Shares of Cadence Design Systems sank 15% in April after the firm announced relatively weak Q1 results and a gloomy second-quarter outlook. Revenues are now expected to only hit $1.04 billion next quarter, a 2% year-over-year increase that mirrors a broader deceleration in AI-related chip spending. MarketMaster AI sees the selloff as overdone.
Cadence Design Systems is a provider of electronic design automation (EDA), the software used to design and test semiconductor chips. It’s a duopolistic market that it shares with larger rival Synopsys. MarketMaster AI now projects a 10.4% outperformance over the next six months.
Synopsys (NASDAQ: SNPS)
Synopsys is the other half of the EDA market. The larger firm has greater scale and growth prospects than Cadence. Synopsys is an EDA firm that specializes in digital chip design, the technology that underpins most modern microchips.
MarketMaster AI now sees a 10.2% return over the next six months. Synopsys also benefits from a solid balance sheet and relatively capital-light business. However, investors should note that Synopsys trades close to its justified value.
Meta Platforms (NASDAQ: META)
Meta Platforms has long been a strange AI company. The firm generates little revenue from artificial intelligence and has no obvious strategy for monetizing the technology. Yet Meta continues to have one of corporate America’s biggest AI budgets.
MarketMaster AI now agrees with this assessment and sees 8.9% outperformance over the next six months. One of the largest drivers of this recommendation is Meta’s stunning recovery in profits. Analysts have revised their 2025 earnings estimates, and MarketMaster AI sees even more upside for the stock.
Datadog’s (NASDAQ: DDOG)
Finally, Datadog’s shares plummeted 13% last month after President Amit Agarwal announced he would step down at the end of the year. MarketMaster AI awards Datadog a 8.6% outperformance rating over the next six months. The fundamentals of Datadog remain stellar.
Traders should be increasingly cautious about chasing the market too much higher. F-rated Super Micro has even worse prospects. MarketMaster AI believes that, on average, companies like Super Micro will lose 0.7% relative to the market.
