Meta, NVDA, or TTD: Which “Strong Buy” AI Stock Has More Room to Grow?
The Generative AI wave has boosted the prospects of several companies. Here, we will discuss analysts’ opinions about three AI stocks and compare them to pick the one with the highest upside potential. The buzz around generative artificial intelligence (AI) has grabbed investors’ attention, with many tech stocks rallying significantly over the past year. Generative AI is expected to drive major changes across various industries through automation, improved efficiency, and cost reduction.
Meta Platforms (NASDAQ:META)
Social media giant Meta Platforms delivered upbeat results for the first quarter of 2024, thanks to the recovery in the online advertising market and efficiency initiatives. The company’s earnings per share (EPS) surged 114% to $4.71, driven by a 27% rise in revenue to $36.5 billion and margin expansion.
However, investors are concerned about Meta Platform’s aggressive planned capital expenditure of $35 billion to $40 billion in 2024, which would mainly go towards its AI ambitions. The company is confident about its AI roadmap, with CEO Mark Zuckerberg optimistic about Meta’s ability to “be the leading AI company in the world.”
The integration of AI into Meta’s key apps is already improving user engagement and delivering more value for advertisers. Interestingly, almost 30% of the posts on Facebook feed are currently delivered by Meta’s AI recommendation system and more than 50% of the content seen on Instagram is now recommended by AI.
Most analysts are bullish about Meta Platform’s long-term growth story. Raymond James analyst Josh Beck boosted META stock’s price target to $550 from $525 and reiterated a Buy rating, calling the company a generative AI leader.
Nvidia (NASDAQ:NVDA)
Semiconductor giant Nvidia is benefiting immensely from the ongoing generative AI wave. The company’s advanced GPUs (graphics processing units) are in huge demand, as they are required to power AI models.
In Q1 FY25, revenue surged 262% year-over-year to $26 billion, with Data Center segment revenue jumping 427% to $22.6 billion. Also, the company’s adjusted EPS increased significantly to $6.12 from $1.09 in Q1 FY24, thanks to higher sales and gross margin expansion.
Following Nvidia’s recent 10-for-1 stock split, Argus analyst Jim Kelleher raised the price target for the stock to $150 from $110 and reaffirmed a Buy rating. The analyst believes that the company is well-positioned for continued growth in FY25.
Trade Desk (NASDAQ:TTD)
Trade Desk’s software helps advertisers optimize their campaigns by helping them reach more relevant customers across various channels and devices, including video, audio, display, and connected TV (CTV). The company is leveraging AI to enhance the effectiveness of its technology. Trade Desk reported better-than-anticipated results for the first quarter of 2024, backed by continued growth in ads on connected TV.
Morgan Stanley analyst Matthew Cost reaffirmed a Buy rating on Trade Desk stock with a price target of $100. The analyst’s bullish stance is based on TTD’s strategic position within the connected TV ad market, which is increasingly adopting programmatic advertising (the use of AI and machine learning to buy ad space).
Shares of Meta Platforms, Nvidia, and Trade Desk have outperformed the S&P 500 Index (SPX) so far this year. Analysts are bullish on the prospects of all the three companies discussed above and expect solid growth in the years ahead, driven by AI-related tailwinds. Currently, analysts’ average price target indicates that Trade Desk stock has higher upside potential than the other two larger AI stocks.
