There's no doubt about that. Some artificial intelligence (AI) stocks are too expensive to buy right now. However, many are still fairly priced and look like prime candidates to load up in March.
My list of the best AI stocks to buy in March includes: alphabet (GOOG 1.19%) (Google 1.16%), UiPath (path 0.82%)and adobe (ADBE -0.39%). All three are reasonably priced and still have plenty of upside.
alphabet
Alphabet's AI progress was completely overshadowed by that failure. Alphabet has made one mistake after another during its rollout, but given the company's vast engineering resources and knowledge, it won't last long.
What's more, the company's main business, advertising, is starting to flourish again after a tough few quarters due to recession concerns. Advertising revenue in the fourth quarter increased by 11% in all categories. Other segments, such as the Google Cloud division, increased significantly, with overall revenue growth reaching 13%.
Despite this, Alphabet's stock is trading at a discount from a market and historical perspective.
with S&P500 Alphabet stock trades at 21.4 times forward earnings, which puts it in line with the broader market. But Alphabet is growing at an above-average pace, coupled with the stock price and the AI ​​catalyst that has yet to take root with the company, leaving Alphabet poised for even more upside if it finally starts performing at a high level. I am. time.
UiPath
AI has become a hot topic for many executives. They need to develop AI applications that show investors and customers that they are keeping up with the times. One way to do this is by implementing UiPath's robotic process automation (RPA) software.
RPA allows users to automate repetitive tasks to increase efficiency and free up work that requires independent thinking. When AI is added to RPA software, the range of tasks that can be automated increases dramatically. UiPath offers products that integrate both technologies, making it a great choice in the AI ​​space.
UiPath recently ended its fiscal year 2024 (ending January 31) with a strong fourth quarter, with annual recurring revenue (ARR) increasing 22% to $1.46 billion. Additionally, the company expects ARR to be approximately $1.73 billion in fiscal 2025, representing approximately 19% growth.
However, after the release of this report, the market wanted more and sold the stock. As a result, you can get it at an attractive 10x sales. The RPA market opportunity is expected to grow at a compound annual growth rate of 40% from 2023 to 2030, so UiPath is the perfect company to take advantage of while the market offers discounted prices.
adobe
Adobe is another company working on integrating AI into its products. His Firefly AI model harnesses the power of large-scale language models (LLMs) to generate high-quality images. The model has been a hit and became a major focus for Adobe's fiscal first quarter of 2024 (ending March 1).
Firefly has won new customers and delivered great results for existing customers. For example, IBM created 200 marketing campaign images and his 1,000 variations instantly instead of months, and the material helped him drive 26x more engagement than the benchmark. These results will keep Adobe at the top of the digital production space and make it the biggest investment.
Adobe also had a strong first quarter, with revenue of $5.18 billion, up 11% year over year. The company's earnings per share (EPS) was supposed to rise from $2.72 to $3.58 (up 32%), but Adobe had to pay a $1 billion breakup fee for closing the Figma acquisition. . However, Adobe's second-quarter revenue was expected to be between $5.25 billion and $5.3 billion, compared to the $5.31 billion expected by analysts, and the stock price fell about 13% the day after the results. did.
Adobe stock is currently trading at about 29 times 2024 estimates, making this a great opportunity to pick up Adobe stock cheap. Given that Adobe typically trades at around 50 times earnings, there could be significant upside potential if the stock hits those expectations.
Adobe is a long-term winner in this space, and investors should feel confident about the business moving forward, even if Wall Street isn't happy with the slight deviation in its earnings outlook.
Alphabet executive Suzanne Frye is a member of The Motley Fool's board of directors. Keithen Drury has held positions at Adobe, Alphabet, and UiPath. The Motley Fool has positions in and recommends Adobe, Alphabet, and UiPath. The Motley Fool has a disclosure policy.