Most companies are gearing up to announce their Q3 2024 earnings reports, which are likely to influence investor interest in their respective stocks, with an artificial intelligence (AI) tool offering insights on entities likely to stand out.
Indeed, recent quarters have seen companies that ventured into the AI space dominate the market and remain among the highly watched ahead of the earnings season.
To this end, Finbold consulted OpenAI’s o1 tool to pick two AI stocks investors should consider buying amid the earnings reports.
Picks for you
Palantir (NYSE: PLTR)
First on the list is American software giant Palantir (NYSE: PLTR), which has had a remarkable year, culminating in the stock trading at a high of $40 as of press time.
The AI model highlighted Palantir as a strong buy due to its leadership in AI-driven analytics and consistent government contracts fueling revenue growth. For instance, in Q3, Palantir secured a $99.2 million deal with the U.S. Army for machine learning support.
OpenAI o1 added that the company is well-positioned to benefit from the AI boom, with its tools used in industries like defense, healthcare, and finance, signaling potential profitability growth.
Palantir expects Q3 revenue between $697 million and $701 million, above analysts’ estimate of $679.1 million, as it seeks to reduce reliance on government contracts, which made up 54% of Q2 sales.
Meanwhile, with Palantir rallying significantly in 2024, there are concerns that the stock might be expensive and not match the company’s actual valuation. As reported by Finbold, stock analyst Jake Ruth warned that the stock might crash, stating that no company can sustain such an upward trajectory for long.
“PLTR is looking VERY expensive at $40 a share.<…> Valuations matter. Maybe this is a fair price and they will keep killing it, just be careful out there. Multiple expansion can’t continue forever,” he warned.
On the other hand, analysts at Bank of America (NYSE: BAC) have maintained that the equity still has some bullish potential, setting a price target of $50. The bullish outlook is supported by other fundamentals, such as Palantir’s recent addition to the S&P 500 index, which exposes it to institutional capital.
Advanced Micro Devices (NASDAQ: AMD)
For Advanced Micro Devices (NASDAQ: AMD), the AI model stated that investors should consider the company due to its expansion in the AI chip production space, which is competing with Nvidia (NASDAQ: NVDA). The model cited the MI300 series accelerators, designed for AI workloads, as a critical factor to take on Nvidia. At the same time, OpenAI’s o1 stated that the company’s key partnerships, AI leadership strategy, and reasonable valuation offer room for more upside potential.
AMD estimates its third-quarter revenue will be $6.7 billion, plus or minus $300 million. This is higher than analysts’ average estimate of $6.61 billion.
If the earnings align with analyst estimates, it will add more bullish momentum to the equity, building on other strong fundamentals. In this regard, one of the key bullish factors to look out for is the upcoming AMD AI event on October 10, which will showcase the next-generation AMD Instinct accelerators and 5th-generation AMD EPYC server processors.
Analysts like Vivek Arya from Bank of America maintain that the stock remains a ‘buy’ with a price target of $180, citing that the AI event “could reinvigorate AMD stock.”
Looking at AMD’s price trajectory, the equity has been soaring. As of the latest market close, it was trading at $170, gaining almost 5% on the daily chart.
Notably, analysis by TrendSpider suggested that AMD is exhibiting strong signs of a potential bullish rally. After nearly 12 months, the weekly Moving Average Convergence Divergence (MACD) crossed to the positive side, signaling a possible change in momentum. This is the first time since early 2023 that the stock has shown such a positive technical indicator on the weekly timeframe, making it a promising setup for bulls.
Moreover, AMD’s price has recently broken out of a downward channel, further reinforcing the bullish sentiment.
In conclusion, as the Q3 2024 earnings season unfolds, AI-driven insights suggest that Palantir and AMD are two stocks investors should closely watch. While both companies face certain challenges, such as valuation concerns for Palantir and competition with Nvidia for AMD, their underlying fundamentals and market positioning make them attractive options for investors seeking exposure to the AI sector
