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Powered by insane AI, it’s been a year old technology stockSummer, however, proved to be the shakiest season yet. Since mid-July, the trend has declined, with the Nasdaq Technologies Index down nearly 5%.
This naturally raises the question: Should we be sounding alarm bells over this shift?
Not at all, says Wedbush’s Daniel Ives, a 5-star analyst ranked in the top 2% of stock professionals on the Street. Ives believes that the new bull market is taking a breather, and maintains that the downturn will be short-lived. There were many indications during this earnings season that the general trend is to the upside.
The chief analyst explained, “Last June’s earnings season for the technology sector revealed a number of dynamics now occurring between business and consumer spending globally, which we expect will eventually push technology stocks higher despite this downturn.” near term.” “We’re holding tight to our bullish call that 12%-15%+ in tech stocks will be in the cards heading into the year end as the new tech bull market in our view begins.”
Against this backdrop, Ives has identified an opportunity in a couple of AI-powered tech stocks that he believes are poised to make the most of this bull market, with one boasting a whopping 260% upside potential. We ran the pair through TipRanks database To see what other Street analysts have to say, too. Let’s check the results.
SoundHound AI (maintenance)
The AI revolution is one that fits our Ives-approved first name to a tee. SoundHound AI is a leader in voice and audio recognition, using advanced machine learning and natural language processing technologies to enable smooth, intuitive interactions with audio content. SoundHound AI is known for its exceptional music recognition capabilities, allowing users to identify songs simply by humming, singing, or even describing a few words.
In addition to its music recognition prowess, SoundHound AI extends its capabilities to voice assistants and smart devices, allowing users to interact with technology through voice commands and natural language. Its diverse applications range from voice search and command interpretation to enabling hands-free control of various devices in homes, cars, and other environments.
Over the years, the company has done deals with an impressive list of companies including Hyundai, Mercedes-Benz, Kia, Deutsche Telekom, Snap, and Vizio.
Turning to the financials, Wall Street seemed pleased enough with the company’s recent quarterly readings. In the second quarter, revenue rose 42% year-over-year to $8.8 million, which was above Street’s forecast of $8.1 million. Strong product revenue and strong exposure in the automotive segment saw book backlog increase 20% to $339.2 million.
Due to business expansion and data center efficiency improvements, the company achieved impressive gross margins of 79.1% while EPS cost savings of ($0.10) helped it beat the consensus estimate of ($0.12).
Looking ahead, SoundHound has reiterated its 2023 revenue forecast in the range of $43 to $50 million.
Ives says all of this points to future success in an AI-driven world. “With AI getting more eyes than ever before and an expanding TAM being built, SoundHound is well positioned to capitalize on the demand for intelligent chatbots while providing more use cases every day as it expands its voice-enabled ecosystem to accelerate growth,” he said. “Overall, we believe this was a major step in the right direction for the SOUN story as the company continues to build toward profitable growth with stable revenue pillars and strong monetization capabilities to drive demand from smaller players to larger companies as management across industries seek ways to improve efficiencies. “
Given all of the above, Ives has high hopes. Along with an Outperform (i.e. Buy) rating, SOUN has set a price target of $7. This prediction allows for a huge upside of 260% from the current share price of just $1.9. (To watch Ives’ track record, click here)
Two other analysts recently entered SOUN reviews, both of which are also positive, making the consensus view here a Strong Buy. The average price target isn’t quite as optimistic as Ives’ target, but at $4.60 it still means the stock will post an impressive 137% return in the next year. (be seen SOUN stock forecast)
Palantir Technologies (PLTR)
from one share to another. Palantir is a software company that is well known for its data analysis and integration platforms, which makes it a big data specialist. The company specializes in providing organizations with advanced tools to manage, analyze, and visualize large and complex data sets through its software platforms that incorporate AI and machine learning capabilities.
Its Gotham platform is widely used by government agencies, law enforcement, and intelligence organizations, while Palantir has in recent years expanded its offering outside of the government sector with products such as the Palantir Foundry, aimed at commercial enterprises looking to enhance their data management and analytics capabilities.
It also recently launched an Artificial Intelligence Platform (AIP) and based on noise from management on its second quarter earnings call, it’s seeing a level of demand the company hasn’t seen before.
Elsewhere in the quarter, revenue was up 12.8% year-over-year to $533.32 million, while adjusting. Earnings per share came in at $0.05, both of which met the Street’s expectations. Total customer numbers were up 38% over the same period last year, while the number of commercial customers in the US saw a 35% increase to 161, showing that Palantir’s efforts to gain traction in the segment are paying off.
Because of the growing demand, the company raised its guidance for fiscal year 23 from the previous range of $2.185 billion-$2.235 billion to $2.212 billion. The Street was looking for just $2.212 billion. The third quarter guide of $553.0M — $557.0M also came in, at the halfway point, above the consensus estimate of $553.1M.
Scanning the print, Ives believes it provides plenty of evidence that Palantir will continue to benefit from the adoption of AI.
“With increased FY23 guidance, a significant increase in customer numbers, strong performance, and the AI arms race well under way, we continue to believe Palantir is the gold standard in AI, and we are confident in the company’s efforts to expand in the business while maintaining Its massive government presence,” Ives said.
Accordingly, Ives rates PLTR stock as an outperformer (i.e. a Buy), buoyed by its $25 price target. Inclusion for investors? Potential upside of 62% from current levels.
However, not all people on the street are completely convinced. The stock claims a consensus hold rating, based on a combination of 3 Buys and 5 Holds and Sells, each. Of note, PLTR shares are up a solid 141% year-to-date. As such, the average target of $15.05 indicates that the shares are currently trading at less than their fair value. (be seen Palantir stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
