FSLR - AI's Hidden Winners: 3 Affordable Downstream Plays to Invest In Now
2024-07-12 06:34:00 ET
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The apparent winners of the artificial intelligence ( AI ) boom have been smoking hot of late. While some of the names may be overdue for a correction over the next year, I view many of them as reasonably priced, given the magnitude of growth-powering tailwinds.
In any case, those seeking to get more bang for their buck should probably check out the names that are not at the front of the AI race. Some of the so-called downstream AI stocks may still be slightly off Wall Street’s radar, but likely not for long, as they look to post solid numbers, thanks primarily to the AI boom.
Check out three “hidden winners” from AI that you may not have considered yet. Though it could take a while before they turn into obvious AI plays like the Magnificent Seven, the potential gains may be worth the wait!
Walmart (WMT)
Walmart (NYSE: WMT ) has pretty much shed its reputation as a tech-shy big-box retailer just waiting to get disrupted. Whether it’s the rise of e-commerce or the continued surge in AI technologies, Walmart has done a fantastic job of keeping up with the advanced times.
Though it’s quite a stretch to refer to Walmart as a tech company, I think it’s a mistake to discount the company’s efforts to monetize new technologies, like AI, whether to save money, improve customers’ shopping experiences, or bolster sales. Walmart isn’t just using AI for the positive press; it’s leveraging the technology to unlock monetizable benefits.
The company is tapping into AI at some of its refrigerated warehouses . These smart AI-equipped warehouses can prevent waste and trim operating costs over the long haul.
Indeed, WMT stock isn’t cheap anymore at 30.3 times trailing price-to-earnings (P/E), but if you believe in Walmart’s innovation story, the multiple is still too low.
Palo Alto Networks (PANW)
Palo Alto Networks (NASDAQ: PANW ) is a $110 billion heavyweight in the cybersecurity industry. Cybersecurity solutions have proven rather resilient even amid cutbacks in enterprise IT spending. Like insurance, cutting too deeply into cybersecurity solutions could entail an unfathomable amount of risk. Indeed, cyber breaches are one of those low-probability events that can have a catastrophic impact.
As generative AI improves at an accelerating pace, AI-powered hackers pose a growing threat to large enterprises. With Precision AI touted in a marketing campaign featuring Keanu Reeves, Palo Alto has a system that effectively leverages machine learning and automation to help clients play chess as hackers play checkers.
Palo Alto is one of those AI stocks that should be as obvious as Nvidia (NASDAQ: NVDA ). In time, I think the cybersecurity titan will be more synonymous with AI.
Finally, once IT spending booms again, PANW stock could be right back to making higher highs.
First Solar (FSLR)
First Solar (NASDAQ: FSLR ) stock has been under pressure since mid-June, now down around 24% from its recent all-time highs. Indeed, the $24.5 billion solar cell innovator took one straight to the chin following the Trump-Biden debate. Political risks aside, First Solar seems like a first pick for investors seeking premier growth in solar power.
The AI boom, which seems to be getting started, will entail a potentially massive uptick in energy consumption. Utility firms will need to catch up with (hopefully) new renewable projects to be ready for the new AI data centers that will pop up across the globe.
As First Solar improves its manufacturing efficiency and capacity, FSLR stock seems primed to spike as the number of AI interactions swells over the coming years. If anything, the recent post-debate slump appears like a fantastic opportunity to buy as tech companies open their wallets to power their data centers in the greenest way possible.
On the date of publication, Joey Frenette did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines .
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.
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