Nvidia (NASDAQ:NVDA) The stock is up 270% over the past year as enthusiasm for all things related to artificial intelligence (AI) has sent investors into a frenzy. But some on Wall Street believe the chipmaker’s record run may be coming to an end, at least for the time being. In fact, some analysts see it as follows. microsoft (NASDAQ: MSFT) and Docebo (NASDAQ:DCBO) AI stocks to buy right now.
Here are each company’s median 12-month price target and implied upside or downside compared to the current stock price.
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NVIDIA: $860.50 per share (2% down)
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Microsoft: $465 per share (up 15%)
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Docebo: $65 per share (up 25%)
These price targets do not mean Nvidia is a bad investment. These numbers are just educated guesses about what will happen next year. Even if Nvidia underperforms during that period, the stock could still outperform over the next five years.
However, investors should not become fixated on a single AI stock. The smartest strategy is to spread your money across a group of AI stocks. With this in mind, Microsoft and Docebo should do some further thinking.
1.Microsoft
Microsoft has two major growth engines: enterprise software and cloud computing, and it controls large portions of both markets. Specifically, Microsoft accounts for approximately 16% of Software-as-a-Service (SaaS) revenue, the most Twice as much as its closest competitors.
Additionally, Microsoft Azure accounts for approximately 24% of cloud infrastructure and platform services revenue, trailing the market leader by 7 points. Amazon Web Services, but with a 13 point lead alphabetGoogle Cloud. Its success is the result of expertise in hybrid computing solutions, developer capabilities, and artificial intelligence (AI) services.
Microsoft reported better-than-expected financial results for its fiscal second quarter of 2024 (ending December 31). Strong momentum in cloud computing and modest growth in enterprise software helped drive revenue up 18% year over year to his $62 billion. Meanwhile, disciplined expense management resulted in non-GAAP (generally accepted accounting principles) net income of $2.93 per diluted share, an increase of 26% from the prior year period.
Microsoft is focused on generative AI across its software and cloud businesses. The company announced a natural language assistant for Microsoft 365 that lets you draft text in Word and create content in PowerPoint. We also launched a generative AI assistant for Dynamics 365 that can automate sales, customer service, and finance workflows.
Similarly, Microsoft has entered into an exclusive partnership with OpenAI. According to the agreement, Azure will be OpenAI’s exclusive cloud provider, meaning its infrastructure will power applications such as ChatGPT. Additionally, Azure customers can integrate their own data into large-scale language models such as his GPT-4 to build custom generative AI applications. JP Morgan “Microsoft’s OpenAI investment, which began several years ago, could be some of the best money ever committed,” analysts said.
Going forward, the SaaS and cloud computing market is expected to grow at a rate of 14% annually until 2030. This puts Microsoft on track for double-digit revenue growth through the end of the decade, especially if its AI ambitions come to fruition. As such, the current valuation of 13.3x sales seems acceptable, although quite expensive compared to the average sales of 11.5x over the past three years.
Investors can take small positions today with the understanding that other AI stocks may offer more upside over the long term, as Microsoft is already a $3 trillion company. You should consider buying it.
2. Docebo
Docebo sells learning management software. Its platform helps companies create, curate, and distribute learning materials and measure their impact across internal audiences such as employees as well as external audiences such as customers. Two applications are particularly innovative. Docebo Shape uses generative AI to transform source material such as documents and presentations into training content, and Docebo Flow embeds training content into other software.
Product innovation has given Docebo a strong presence in the market.To quote morgan stanley “Docebo is not only disrupting the internal learning management system (LMS) market and taking share from traditional vendors, but also leading the market in greenfield off-campus learning opportunities,” said analyst Josh Baer. ” states. He also believes Docebo is one of the software companies best positioned to benefit from generative AI.
Docebo reported fourth quarter financial results, with both sales and bottom line exceeding expectations. The number of customers increased by 11% year-on-year, the average contract amount increased by 12%, and the amount spent by existing customers increased by 4%. As a result, revenue increased 27% year over year to $46 million, and net income increased 101% to $3.2 million. Management also said that partnerships with system integrators have helped Docebo acquire large enterprise customers, including top-five technology companies and top-four banks.
For Docebo, generative AI remains a strategic priority. This year, the company plans to add new features to Docebo Shape, including CoPilot, which allows for greater automation, and virtual role-play, which provides real-time feedback. CEO Claudio Erba said, “Shape will fundamentally change the way training materials are created and consumed.”
The learning management system market is expected to grow 20% annually through 2030, and Wall Street expects Docebo to increase its share. Consensus forecasts are for annual sales growth of 25% over the next five years, making the current valuation of $9.8 per sales look reasonable. Investors should feel comfortable buying a small position in this stock today.
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Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Motley Fool’s Ascent. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Trevor Jennewine has positions at Amazon and his Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Docebo, JPMorgan Chase, Microsoft, and Nvidia. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
Forget Nvidia: 2 artificial intelligence (AI) stocks to buy right now have more upside, according to Wall Street The article was originally published by The Motley Fool
