3 Top-Ranked Stocks to Buy for Artificial Intelligence (AI) Exposure


Artificial intelligence (AI) is Wall Street’s new obsession, with companies discussing the technology in a snowballing fashion and helping to keep sentiment positive.

The robust quarterly results we’ve received from NVIDIA NVDA over the last year have added further fuel to the fire, with NVIDIA flexing the scorching-hot demand it’s been witnessing regarding its AI chips.

Still, outside of NVIDIA, there are several other stocks investors can tap into for AI exposure, including Vertiv VRT, Arista Networks ANET, and IBM IBM. For those interested in exposure to the technology slated to change the world, let’s take a closer look at each.

Arista Networks

Arista Networks shares have benefited nicely from the AI frenzy, up nearly 120% just over the last year. The company is an industry leader in data-driven, client-to-cloud networking for large data centers, campus, and routing environments.

Analysts have taken their current fiscal year expectations well higher over the last year, with the $6.55 Zacks Consensus EPS Estimate up 25% over the last year and suggesting 43% year-over-year growth.

Image Source: Zacks Investment Research

Keep an eye out for the company’s upcoming quarterly release expected on February 12th, with consensus expectations reflecting 21% earnings growth on 20% higher sales. The company posted strong quarterly results in its latest release, driven by continued customer momentum in enterprise, cloud, and AI sectors.

The company has enjoyed considerable top line expansion over the last several years, posting double-digit percentage year-over-year revenue growth rates in ten consecutive quarters.

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Image Source: Zacks Investment Research

Vertiv

Vertiv is a global leader in designing, building, and servicing critical infrastructure that enables vital applications for data centers. The company is the only pure-play data center infrastructure provider able to deliver across the entire spectrum of thermal and power technologies.

Analysts have taken their expectations higher across the board, pushing the stock into a Zacks Rank #1 (Strong Buy).

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Image Source: Zacks Investment Research

The company posted notably strong results in its latest release thanks to healthy end markets and momentum, raising its FY23 guidance across all metrics. Vertiv CEO Giordano Albertazzi said, “We are still in the early stages, but the industry is gearing up to deploy the data center infrastructure needed to meet the compute capacity that AI is demanding,”

The recent string of robust quarterly results has had shares notably hot, moving higher following each of its last three releases.

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Image Source: Zacks Investment Research

Vertiv’s hot demand is reflected by consensus expectations, currently alluding to 230% earnings growth on 20% higher sales in FY23. The stock sports a Style Score of ‘A’ for Growth.

IBM

IBM’s latest set of quarterly results excited the market, with shares moving well higher post-earnings and continuing a recent trend of post-earnings bullishness. IBM posted a 2.4% beat relative to the Zacks Consensus EPS Estimate and reported sales modestly above expectations.

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Image Source: Zacks Investment Research

The company touted its AI demand, saying, ‘In the fourth quarter, we grew revenue in all of our segments, driven by continued adoption of our hybrid cloud and AI offerings. Client demand for AI is accelerating and our book of business for watsonx and generative AI roughly doubled from the third to the fourth quarter.’

In addition to AI exposure, IBM shares also pay a healthy dividend, yielding a sizable 3.8% annually. Dividend growth is also there, with the company carrying an 0.8% five-year annualized dividend growth rate.  

The company is a member of the elite Dividend Aristocrats group.

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Image Source: Zacks Investment Research

Bottom Line

The AI frenzy continues to dominate market headlines, with companies continuing to speak on the technology in a snowballing fashion.

It isn’t just beloved NVIDIA NVDA enjoying the tailwinds, as Vertiv VRT, Arista Networks ANET, and IBM IBM have also seen the same.

On top of AI exposure, all three stocks above sport a favorable Zacks Rank, reflecting the optimism among analysts surrounding the technology.

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International Business Machines Corporation (IBM) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

Arista Networks, Inc. (ANET) : Free Stock Analysis Report

Vertiv Holdings Co. (VRT) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



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