3 AI Stocks (Not Nvidia) Worth a Closer Look

If stocks received awards, then Nvidia (NASDAQ:NVDA) would easily be crowned the ‘Stock of the Month’ for the month of May. Shares are up about 45% in May, extending the year-to-date rally to more than 170%.

Nvidia became just the ninth stock to join the $1 trillion club after the company offered a “cosmological” forecast for the ongoing quarter as artificial intelligence (AI) sales start to kick in. So far, mega-cap stocks like Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), and Nvidia are clear winners in the AI race.

Other chip makers like Marvell (NASDAQ:MRVL) and Broadcom (NASDAQ:AVGO) have also staged rallies given the increasing demand for high-end chips.

Here, we take a look at three other stocks that are benefiting from the AI frenzy.

Palantir

Palantir Technologies Inc (NYSE:PLTR) shares rose as much as 90% in May after the big data analytics company said earlier in the month that demand for its new artificial intelligence (AI) product has been “without precedent.”

Palantir reported the second consecutive quarter of positive GAAP income while revenue topped analyst estimates for the first quarter.

“We were profitable again this quarter... And we now anticipate that we will remain profitable each quarter through the end of the year,” Alexander C. Karp, co-founder and chief executive officer of Palantir Technologies Inc., wrote in a letter to shareholders.

The company reported adjusted operating profit of $125.1 million and adjusted Ebitda of $131.1 million. Revenue for the quarter came in at $525 million, easily ahead of the expected $506 million.

Investors were pleased to hear that Palantir has made progress on the AI front, although the underlying metrics continue to paint a mixed picture. Shares were also boosted by the raised guidance as Palantir now sees revenue in the range of $2.19-2.24 billion, up from the prior forecast of $2.18-2.23 billion.

The adjusted operating profit is seen at $531 million (at the midpoint of the range), an upgrade compared to the previously expected $506 million.

For this quarter, Palantir sees adjusted operating profit of $120 million on revenue of $530 million.

While shares were initially boosted by the outlook boost and AI commentary, the stock added 55% in the past 2 weeks amid an AI-fueled surge in stocks like Nvidia, Microsoft, and Alphabet.

C3.ai

C3.ai Inc (NYSE:AI) is another clear beneficiary of the AI bandwagon. The stock is up almost 150% in May as investors continue to rapidly increase exposure to AI-linked businesses.

Two weeks ago, the AI software company reported preliminary revenue for the fourth fiscal quarter that beat the average analyst estimate. C3 said it expects revenue to come in between $72.1 million and $72.4 million, ahead of the expected $71.1 million. The preliminary adjusted operating loss is expected at $23.8 million.

“Overall business environment for enterprise AI is more active than we have seen since the company’s inception and seems to be accelerating. Interest in applying predictive analytics to business processes has never been greater. This manifested in significantly increased business activity at C3 AI,” the company said in a press release.

Given stronger-than-expected FQ4 results, the AI company boosted its full-year forecast. It now expects 52-week sales to be between $266.5 million and $266.8 million, up from the prior guidance of $264-266 million.

During the FQ4, C3.ai closed 43 deals, including 19 pilot deals.

Shares in the AI software company fell sharply at the beginning of April after short-seller Kerrisdale Capital alleged “serious accounting and disclosure issues” at the enterprise software developer.

A few weeks later, C3.ai responded by saying that its board audit committee completed an independent investigation, which “found that none of the allegations or insinuations of wrongdoing” were “supported by the facts.”

The company announced late last year that it will undergo a business transformation and switch to new, consumption-based pricing.

Workday

Although it didn’t post gains as large as Palantir, C3.ai, and Nvidia, Workday (NASDAQ:WDAY) is an under-the-radar stock that also offers exposure to artificial intelligence. Shares are up 12.3% in May, still outperforming the market.

Workday’s core products are powered by AI and machine learning (ML). The company develops enterprise cloud applications for finance and human resources.

“This week we met with Workday at the company’s annual Innovation Summit and I walked away very impressed. Not only is Workday clear-eyed and definitive about its AI product strategy, but the company is also entering one of its strongest product cycles in years,” Josh Bersin, the founder of Bersin & Associates, wrote in a blog post.

Last week, Workday shares rose after the cloud software business delivered profit and revenue figures that came ahead of Wall Street expectations. Sales rose 17.4% on a year-over-year basis to $1.68 billion while subscription revenue jumped 20% to $1.53 billion.

As a result, Workday raised the low end of its subscription revenue guidance. It now expects subscription revenue of around $1.61 billion, up 18% from a year ago.

“We've been delivering AI and ML capabilities for nearly a decade and approach its application with a heavy emphasis on being human-centric, using these capabilities to augment people and organizations to make them more productive, better informed, and to help them reduce business risk. We remain committed to innovation and infusing AI and ML across our entire product portfolio,” said Aneel Bhusri, co-founder, co-CEO, and chair of Workday.

Summary

A tech-led rally has continued in stocks after Nvidia and Marvell said they are seeing unprecedented demand for AI products. Shares in other AI-focused companies, like Palantir and C3.ai, also staged sharp rallies, prompting Wall Street analysts to discuss the “AI bubble.”

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Disclaimer: Shane Neagle is the EIC of The Tokenist. Check out The Tokenist’s free newsletter, Five Minute Finance, for weekly analysis of the biggest trends in finance and technology.