In this article, we discuss the 10 most promising future stocks according to analysts.
Rising Market Volatility
Volatility in the equity markets is poised to hit levels not seen for the better part of the year as investors battle a string of developments. The uncertainty around the upcoming US elections and the soaring geopolitical tensions in the Middle East are the latest headwinds sending shockwaves in the market.
A report by MarketWatch indicates that October could turn out to be a spooky month for equities as valuations appear overstretched, with major indices at all-time highs. Analysts are no longer ruling out the prospects of a market crash given that recession fears are rising even though inflation levels have dropped significantly, prompting the Federal Reserve to cut interest rates.
READ ALSO: 10 Most Promising Growth Stocks According to Hedge Funds and David Einhorn Stock Portfolio: Top 10 Stocks to Buy.
While expectation is high that the US economy will achieve a soft landing on higher interest rates, leading to lower inflation without causing a major hit to the economy, Michael Darda, chief economist and macro strategist at Roth Capital Partners, is sounding warning bells.
The economist maintains we are marching on ice that’s a bit thinner, depicted by rising unemployment and elevated earnings expectations that triggered market routes in August and September.
“It’s not unprecedented to have a slowdown period that looks like a soft landing, and then a recession ends up taking shape,” he said. “That’s sort of unexpected now because many have been lulled into this idea that the soft landing is going to be a permanent state of affairs for the business cycle. Equity market valuations reflected that coming into the summer.”
“But there’s been some cracks in the business cycle,” he cautioned, noting expectations for the economy, corporates, and the stock market have remained at “super high” levels.
A slowdown in the US economy amid the high interest rate environment comes amid a highly charged election that threatens to rattle the stock market. While indices are at all-time highs at the back of one of the longest bull runs, the prospects of a deep pullback are growing as investors become more cautious ahead of the election.
While the US stocks have often rallied following a major US election, Former Goldman Sachs partner Abby Joseph Cohen believes things could turn around this time around.
“Historically when you go back many cycles you see that the US stock market does pretty well after a major election. There is a sigh of relief and also most people feel that their candidate has won. This year aim not convinced it is going to be a sigh of relief rally. In fact if anything I am quite concerned about what happens if there is agitation of any sort following the election because of uncertainty about results,” Cohen said.
Although there is a good chance that the US stock market will crash this time, many analysts are also saying that things might improve following a very bad September that also saw premium stocks like the S&P 500 plummet and hit all-time lows.
AI-related firms continue to drive market gains, with the S&P 500 up 21% year-to-date. Howard Chan, CEO of Kurv Investment Management, highlighted the importance of monetizing AI initiatives, noting Meta’s share price surge due to strong sales growth.
Analysts are increasingly focusing on promising future stocks, particularly those in advanced technologies, which are expected to withstand short-term pressures and deliver long-term value. Investing in industry leaders with a competitive edge and a strong track record of revenue and earnings growth, combined with low interest rates, is seen as a strategy likely to yield significant returns. Despite market volatility, certain stocks continue to offer substantial opportunities and the potential to generate significant long term value.
Source: Pexels
Our Methodology
To make our list of the most promising future stocks to buy according to analysts, we made a list of 40 stocks with market capitalization greater than $10 billion, significant average analyst share price percentage upside, and an average rating of Buy or better. They were then ranked in ascending order based on analyst’s upside potential, and the most promising future stocks are as follows.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Most Promising Future Stocks According to Analysts
10. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 156
Analyst Upside as of October 10, 2024: 11.29%
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a contract chipmaker that boasts of some of the most advanced manufacturing capabilities that remain in high demand amid the artificial intelligence race. The company has been ramping up its 2nm technology development.
As the world’s biggest maker of semiconductor contracts, TSM has greatly benefited from expanding artificial intelligence (AI) infrastructure as its clients rush to develop more sophisticated AI chips to meet the growing demand.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) seems to have a long runway of growth ahead of it as big tech companies continue to increase their capital expenditures (cape) related to AI. As AI models develop, they require more and more graphics processing units (GPUs) and other chips like CPUs (central processing units).
With the launch of a new AI-powered iPhone, Apple remains TSM’s biggest client. Revenue in its most recent quarter ended September, totaled $23.62 billion, up 36.5% year over year, affirming strong demand for its products.
Over the next five years, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s revenue growth is expected to be robust and consistent. Management anticipates that by 2028, AI-related chips will account for about the low teens of its total revenue, growing at a 50% compound annual growth rate (CAGR). That is a robust growth rate, and its 2 nanometer (nm) chip design will drive a large portion of future expansion.
Consequently, according to analysts, TSM remains one of the most promising future stocks, going by the average buy rating and a price target of $205.00, implying an 11.29% change from the last price of $184.20. Overall, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was held by 156 hedge funds at the close of Q2 2024, with total stakes amounting to $21.28 billion. As of June 30, Fisher Asset Management was the largest shareholder, with a position worth $4.94 billion.
Diamond Hill Capital stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q2 2024 investor letter:
“On an individual holdings’ basis, top contributors to return in Q2 included our long positions in Alphabet, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and Microsoft. Semiconductor manufacturer Taiwan Semiconductor’s (TSMC) fundamentals remain solid as demand for its chips continues growing — particularly as the machine learning and cloud computing trends gain more traction.”
9. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders as of Q2: 179
Analyst Upside as of October 10, 2024: 15.32%
NVIDIA Corporation (NASDAQ:NVDA) is arguably one of the most promising future stocks, according to analysts, given the role it is playing in artificial intelligence, which is only starting. With so many companies relying on its chips to power next-generation technologies and software, its growth metrics and long-term prospects remain intact.
Given that artificial intelligence adoption is still in the early stages, it affirms Nvidia’s long-term prospects as a leading player in the supply of much-needed chips for AI. Given that graphic processing units are preferred for their flexibility and adaptability in the evolving AI applications, it also affirms the company’s growth metrics.
NVIDIA Corporation (NASDAQ:NVDA) financial statements show the company’s explosive growth in recent years. Its net income over the last four reported quarters has exceeded $53 billion. That’s almost twice as much as the $26.9 billion it made in fiscal 2022, which concluded on January 30, 2022, before all the AI hoopla started. It made $9.8 billion in profit during that fiscal year.
The enormous demand for Nvidia’s data center graphics processing units (GPUs), which aid in the execution and training of AI algorithms, caused the company’s second-quarter revenue to soar 122% year over year to $30 billion.
The company’s bottom line is likewise strong, with operating income rising 174% yearly to $18.6 million. In 2025 and beyond, management anticipates introducing new AI hardware products built on the quicker and more effective Blackwell architecture will boost customer demand.
NVIDIA Corporation (NASDAQ:NVDA)’s revenue base is poised to receive a significant boost later in the year with the launch of the Blackwell cap line. Given that the chipset is already eliciting sand demand, according to Coo Jensen Huang, it underscores why Nvidia is a top growth stock.
Thanks to robust revenue and earnings growth, the stock is currently trading at a price-to-earnings multiple of 31, which is not high for a stock that has rallied by more than 26,000%. Analysts on Wall Street rate the stock as a buy with an average price target of $152.44, implying a 15.32% change from the last price of $132.19.
According to our Insider Monkey database, at the close of Q2 2024, 179 investors were bullish on NVIDIA Corporation (NASDAQ:NVDA), with total stakes amounting to $53.7 billion.
Ithaka Group’s Ithaka US Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) is the market leader in visual computing through the production of high-performance graphics processing units (GPUs). The company targets four large and growing markets: Gaming, Professional Visualization, Data Center, and Automotive. NVIDIA’s products have the potential to lead and disrupt some of the most exciting areas of computing, including: data center acceleration, artifi cial intelligence (AI), machine learning, and autonomous driving. The reason for the stock’s appreciation in the quarter was twofold: First, the stock benefi ted from tremendous excitement surrounding the further development of generative AI and the likelihood this would necessitate the purchase of a large number of Nvidia’s products far into the future; Second, Nvidia posted another strong beat[1]and-raise quarter, where the company upped its F2Q25 revenue guidance above Street estimates, showcasing its dominant position in the buildout of today’s accelerated computing infrastructure.”
8. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders as of Q2: 308
Analyst Upside as of October 10, 2024: 20.45%
Amazon.com Inc (NASDAQ:AMZN) is a market leader in cloud computing and e-commerce retail, affirming its long-term growth prospects. The company generates a significant chunk of its revenues from e-commerce, with a market share of 37.6%.
Cloud computing is increasingly becoming an essential piece of the puzzle amid artificial intelligence, as the company has a market share of 31% in the multibillion-dollar industry. The segment posted an 18.8% revenue increase in Q2 and has reported 30% plus operating margins consistently for the past five quarters.
Likewise, Amazon.com Inc (NASDAQ:AMZN) is diversifying its operations into the fiercely competitive streaming service ad-supported market. As the US tech giant intensifies its push into ad-funded streaming services, it plans to introduce more ads across its popular TV series and films on Prime Video in the upcoming year.
By the end of the year, Amazon is expected to have $127.4 billion in cash and short-term investments, which will be three times its 2018 total. It is also expected to have nearly $400 billion in cash by 2027, far exceeding its competitors in the Big Tech sector.
This is an incredible transformation for a business known for operating on thin margins, reinvesting most of its profits, and having comparatively little cash compared to its peers.
Record profits from cloud computing, advertising, and increased efficiency, including cost reduction, are the main drivers of Amazon.com Inc (NASDAQ:AMZN) ‘s cash increase. S&P Global Market Intelligence estimates that the company’s free cash flow will almost double from $36.8 billion last year to $70.8 billion in 2025.
After other tech companies like Alphabet and Meta began giving back more of their cash to shareholders earlier this year, there was a surge in hopes for an Amazon.com Inc (NASDAQ:AMZN) dividend or at least more share buybacks in recent quarters. Likewise, analysts on Wall Street rate the stock as a Buy with an average price target of $222.95, implying 20.45% upside potential from current levels. According to our Insider Monkey database, AMZN was held by 308 hedge funds at the close of Q2 2024 with total stakes amounting to $65.85 billion.
Meridian Hedged Equity Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is a global technology company that operates e-commerce, cloud computing, digital advertising, and other businesses. We own Amazon because we believe it is well-positioned to benefit from several strong secular trends, including the shift to online shopping, the growth of cloud computing, and the increasing importance of digital advertising. The company exceeded expectations in the first quarter, with cloud-computing revenue growth accelerating, driven by easing cost optimization pressures and the ramp of generative AI workloads. The North American retail segment drove record operating margins, highlighting the success of Amazon’s efforts to improve efficiency and lower its cost to serve. International retail also showed promise, as emerging markets steadily progressed towards profitability. Given the strength across these key segments, we continue to hold the position in the company.”
7. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders as of Q2: 279
Analyst Upside as of October 10, 2024: 21.71%%
Microsoft Edge is one of the most promising future stocks, according to analysts, as it is the biggest software provider. Additionally, the company is a leading player with a 25% market share in cloud computing while flexing its muscle in the multi-billion gaming industry with Activation’s Blizzard and Xbox.
With the aid of new generative artificial intelligence (AI) assistants, Microsoft Corporation (NASDAQ:MSFT) is well-positioned to increase its market share in those software categories. During the June quarter, the number of users of Microsoft 365 Copilot grew by more than 60%.
Regarding revenue from cloud infrastructure and platform services, Microsoft Azure lags behind Amazon Web Services; however, over the past year, Azure has gained a percentage point of market share thanks to its strengths in machine learning and artificial intelligence and according to CEO Satyr Nacelle, Azure AI’s customer base increased by almost 60% during that time.
The vast majority of Microsoft’s planned capital expenditure increases will go toward expanding its AI infrastructure and cloud business. In its fiscal year 2024, it spent $55.7 billion, of which $19 billion was spent in the fourth quarter.
Because of its strengths in cloud computing and enterprise software, Microsoft Corporation (NASDAQ:MSFT) is one of the businesses most positioned to profit from generative AI in the future. In fact, Wall Street predicts that over the next three years, the company’s earnings will increase by 13% per year.
Even though Microsoft Corporation (NASDAQ:MSFT) trades at a premium with a price-to-earnings multiple of 31, It is one of the most promising stocks given its record in returning shareholder value. The company already pays a 0.80% dividend yield. Additionally, the stock is rated as a strong buy based on 30 Wall Street analysts with an average price target of $504.73, implying a 21.71% change from the last price of $414.71.
In the second quarter, 279 hedge funds held positions in Microsoft (NASDAQ:MSFT), and their stakes amounted to $89.068 billion.
Baron Opportunity Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q2 2024 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) is the world’s largest software and cloud computing company. Microsoft was traditionally known for its Windows and Office products, but over the last five years it has built a $135 billion run-rate cloud business, including its Azure cloud infrastructure service and its Office 365 and Dynamics 365 cloud-delivered applications. The stock contributed to performance because of continued strong operating results and investor enthusiasm regarding Microsoft’s leadership across the secular megatrends of AI and cloud computing. Recent business momentum continued to show evidence of the strength and attractiveness of Microsoft’s product portfolio among its customer set: (1) Azure OpenAI – its suite of AI services – is now used by 65% of the Fortune 100 and contributed 7% of Azure revenue (an annualized run rate of $5.2 billion); (2) GitHub Copilot – its AI code writing service – is bending the productivity curve for developers (reports of 40%- plus improvements in developer efficiency) and now has 1.8 million paid subscribers, with growth accelerating to over 35% quarter-over-quarter; and (3) Copilot Studio – its AI application service that makes it easier for anyone to build an application, automate a workflow, or create a Copilot using natural language. 30,000 organizations across every industry have used Copilot Studio to customize Copilot for Microsoft 365 or build their own, up 175% quarter-over-quarter. In the March quarter, Microsoft again reported better-than-expected financial results, highlighted by Microsoft Cloud growing 23% year-over-year, with the fastest commercial bookings in six quarters, and Azure accelerating to 31% constant currency growth, up from 28% in the previous quarter. June quarter guidance came in-line with consensus, but the company provided higher guidance for the most important segment, Intelligent Cloud, on the back of continued strong trends across Azure and Azure OpenAI. We remain confident that Microsoft is one of the best-positioned companies across the overlapping software, cloud computing, and AI landscapes.”
6. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders as of Q2: 216
Analyst Upside as of October 10, 2024: 26%
Alphabet Inc. (NASDAQ:GOOGL)’s wide range of internet-related services and goods allows it to maintain its dominance in the digital market. One of the main factors contributing to Alphabet’s success has been the incorporation of AI throughout its product line.
Artificial intelligence (AI) technologies are improving user engagement and advertising efficiency, from YouTube content recommendations to search algorithms. Despite competition from new chatbot technologies, Alphabet has maintained its market leadership in search thanks to this technological advantage, with reports showing an increase in market share.
Alphabet Inc. (NASDAQ:GOOGL)’s 2024 second-quarter results were outstanding, exceeding revenue and earnings per share (EPS) forecasts. AI-driven advancements that improved ad performance and marketer return on ad spend (ROAS) drove the company’s core search business to show strong growth. Due to the increased demand for AI-related services, Google Cloud Platform (GCP) also demonstrated accelerated growth, surpassing the expansion of the entire cloud segment.
With a substantial revenue of $328.28 billion over the past 12 months, Alphabet Inc. (NASDAQ:GOOGL) has demonstrated an impressive 13.38% growth in revenue. The analyst’s assessment that search growth projections may have been underestimated is supported by this growth trajectory.
Because it is expanding, the digital advertising market is a desirable area to invest in. Digital advertising spending is anticipated to rise by 12% annually in 2024 and maintain double-digit growth through at least 2026.
Consequently, Google’s ad revenue increased from $42.6 billion in 2023 to $48.5 billion in the second quarter. Almost 60% of Alphabet’s $84.7 billion in Q2 sales came from this. Alphabet gets its ad revenue from sources other than Google. YouTube, the world’s second-largest website after Google, is also owned by the conglomerate. In Q2, YouTube’s ad sales brought in $8.7 billion for Alphabet, up from $7.7 billion the year before.
The robust revenue and earnings growth due to AI integration to enhance advertising is one reason the company is rated as a buy with an average price target of $206.60, implying a 26.87% change from the last price of $162.84.
Overall, 216 investors held stakes worth $35.31 billion in Alphabet Inc. (NASDAQ:GOOGL). According to the Insider Monkey database, Fisher Asset Management was the highest stakeholder, with a position of $8.86 billion.
5. Novo Nordisk A/S (NYSE:NVO)
Number of Hedge Fund Holders as of Q2: 67
Analyst Upside as of October 10, 2024: 33.93%
Novo Nordisk A/S (NYSE:NVO) is a healthcare company that has etched its name on developing and selling some of the most sought-after weight loss therapies. The company has already reaped tremendous rewards with the success of Ozempic amid solid demand for weight loss medicine.
Likewise, it is one of the most promising future stocks according to analysts, going by its significant investments towards enhancing manufacturing and pipeline. Novo Nordisk A/S (NYSE:NVO)’s competitive edge in the lucrative weight loss market segments is backed by its molecule semaglutide, which it sells under the trade names Ozempic, Segovia, and Rybelsus.
All three are indicated to treat obesity and also aid in eight losses. While the market for weight loss is projected to reach $130 billion by 2030, Novo Nordisk should be one of the beneficiaries, given the strong demand for its medications backed by a robust pipeline.
The company’s revenue has significantly increased over the past three years, with the introduction and sale of these drugs playing a major role. This growth has been particularly notable, with the trailing 12-month revenue jumping by 64% during this period, reaching a recent high of $35.5 billion.
While there are prospects of other new drugs coming into the market, Novo Nordisk A/S (NYSE:NVO) is already looking to safeguard its interest. The company already has three programs in phase 3 clinical trials: two in phase 2 and three in phase 1. One of the drugs in Phase 3, CagriSema, is already touted to have a market potential of about $80 billion
It’s also integrating AI to enhance drug discovery and development processes. The company plans to expand its AI capabilities and strengthen collaborations with international research institutions.
While Novo Nordisk A/S (NYSE:NVO) appears to be trading at a premium with a price-to-earnings multiple of 29, analysts on Wall Street maintain a strong buy with an average price target of $155.25, signaling a 33.93% upside potential. According to Insider Monkey’s data for Q2 2024, the number of hedge funds investing in Novo Nordisk A/S (NYSE:NVO) rose to 67, up from 60 in the previous quarter.
4. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders as of Q2: 69
Analyst Upside as of October 10, 2024: 36.46%
Snowflake Inc (NYSE:SNOW) stands out as one of the most promising future stocks, according to analysts, as it provides a cloud-based data platform to various organizations worldwide. Its platform offers Data Cloud, enabling customers to consolidate data into a single source of truth, build data-driven applications, and share data and products.
To fulfill customer demand for new product features, Snowflake Inc (NYSE:SNOW) has been renting GPUs, indicating that AI offerings are gaining traction. With the help of large language models (LLMs), Snowflake’s clients can create AI applications and implement them in the safe setting of its data cloud platform.
While the stock has been under pressure in recent months, Snowflake Inc (NYSE:SNOW) has continued to fire on all fronts, depicting an average growth rate of 70% backed by its cloud data warehousing business. The underlying growth figures appear to be sound:
Snowflake’s customer base increased by 21% from the previous quarter, and the company continues to boast a 127% revenue retention rate among current clients. Revenue growth doesn’t appear to be slowing down all that much from where it is now. The long-term potential is enormous in the meantime. By the end of 2028, management predicts its addressable market will have grown from $153 billion last year to $342 billion.
Snowflake Inc (NYSE:SNOW) has enough potential for investors to consider the stock at a valuation that finally gives it a chance to shine because of its strong revenue retention and enormous market opportunity. Consequently, analysts rate the stock as a buy with an average price target of $169.25, implying a 36.46% upside potential.
Baron Funds, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:
“Snowflake Inc. (NYSE:SNOW) is a leading cloud data platform that is predominantly used for data analytics. The stock declined 16.4% as investors evaluated the impact of a recently announced CEO transition, an investment cycle driven by spend on AI, a cybersecurity incident, and a rapidly changing competitive environment. With GenAI capturing a larger portion of the public discourse, Snowflake’s positioning in the future data stack is under scrutiny by both investors and customers. We believe Sridhar Ramaswamy, the newly appointed CEO, can help the business more efficiently transition toward an AI-first world. While Databricks and other key competitors are presenting strong results, we believe Snowflake’s brand, existing customer base, and accelerating product innovation should allow it to continue to capture share in a relatively large and strategic market. Management continues to describe strong demand trends for its core data analytics, which is also demonstrated by the relatively healthy expansion rates among existing customers while new go-to-market initiatives can help grow the customer base further. Longer term, we remain excited about the Snowflake’s strategic opportunity as the data platform for its customers.”
3. ASML Holding N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders as of Q2: 81
Analyst Upside as of October 10, 2024: 37.07%
ASML Holding N.V. (NASDAQ:ASML) is one of the most promising future stocks, according to analysts going by its growing prospects amid the artificial intelligence revolution. The company’s competitive edge stems from making the most sought-after lithography equipment used to manufacture semiconductors.
The company’s long-term prospects and growth metrics remain intact, according to analysts, as it makes the most advanced versions of the equipment that are in high demand for developing the most advanced component-dense chips.
Some of ASML Holding N.V. (NASDAQ:ASML)’s biggest customers include Taiwan Semiconductor Manufacturing, Intel, and Samsung, affirming a solid revenue base. With the company looking for ways to ramp up the production of advanced AI-powered chips, most are turning to ASML to supply the extreme ultraviolet lithography (EUV) machinery.
However, the company’s revenue growth isn’t dependent on selling more machines annually. It continues to make money by selling replacement parts and maintaining already-used machinery. As more machines are installed in the chipmakers’ foundries, the recurring revenue from servicing should increase.
Over the past 15 years, as foundries have increased their use of ASML Holding N.V. (NASDAQ:ASML)’s equipment while maintaining and modernizing their older equipment, the company’s installed base revenue has increased substantially faster than its system sales. Additionally, ASML’s machines have a 25–30-year lifespan, making them a reliable and expanding source of high-margin income.
ASML anticipates 2025 to be a significant year, with revenue expected to range between $33.17 billion and $44.2 billion, representing a 27% increase. The predicted growth should come even on the stock trading at a discount with a price-to-earnings multiple of 26 while rewarding investors with a 0.79% dividend yield.
Likewise, analysts on Wall Street rate the stock as a Buy with an average price target of $1,1523, implying 37.07% upside potential from current levels. 81 hedge funds were long on ASML Holding N.V. (NASDAQ:ASML) at the end of Q2 2024. Of those, Fisher Asset Management was the largest shareholder with a position worth $3.23 billion.
Baird Chautauqua International and Global Growth Fund stated the following regarding ASML Holding N.V. (NASDAQ:ASML) in its Q3 2024 investor letter:
“ASML Holding N.V. (NASDAQ:ASML): After a 35% price appreciation in 1H24 and a beat in 2Q24 numbers, investors are apprehensive about Intel capex cuts, potential memory weakness, and a less clear cyclical recovery pace in 3Q24 and potentially 2025. We remain positive on long-term demand for ASML’s products due to industry supply/demand factors for computing power.”
2. Micron Technology Inc (NASDAQ:MU)
Number of Hedge Fund Holders as of Q2: 120
Analyst Upside as of October 10, 2024: 45%
Micron Technology Inc (NASDAQ:MU) is a promising stock because it focuses on future technologies, including artificial intelligence. Its memory and storage solution is critical for advancements in AI, machine learning, and data centres, affirming why it is one of the most promising future stocks, according to analysts.
The leading provider of DRAM and NAND memory plays a crucial role in the operation of semiconductor-driven devices and guarantees the seamless operation of software programs. The rationale behind investing in Micron Technology Inc (NASDAQ:MU) has shifted due to advancements in cloud computing and artificial intelligence (AI). These innovations have resulted in a continuous rise in the need for digital memory solutions.
Strong demand for memory solutions amid the AI race has enabled the firm to start fiscal 2025 with the “highest competitive standing in history. Unsurprisingly, this robust demand comes from the company’s data centre sector.
Additionally, the latest quarterly results affirmed strong demand for the company’s solutions as revenues increased 62% from the previous fiscal year to $25 billion. This growth has resulted in a gross margin of 22%, significantly better than the -9% gross margins seen in the previous fiscal year.
Furthermore, the leadership team managed to control the rise in operating costs, enabling the company to report a net profit of $778 million for the fiscal year 2024. This represents a remarkable turnaround from the $5.8 billion loss reported in the fiscal year before.
Micron Technology Inc (NASDAQ:MU) remains one of the most promising future stocks, having predicted revenue growth of 84% between $8.5 billion and $8.9 billion for its fiscal first quarter. For this reason, analysts rate the stock as a buy with an average price target of $148.68, implying a 45% upside potential. In addition to the significant price swing, Micron rewards investors with a 0.45% dividend yield.
Parnassus Value Equity Fund stated the following regarding Micron Technology, Inc. (NASDAQ:MU) in its Q2 2024 investor letter:
“Micron Technology, Inc. (NASDAQ:MU) posted fiscal-third-quarter results that met expectations. Micron’s DRAM (dynamic random access memory) and NAND (non-volatile storage technology) segments grew revenue strongly, continuing the company’s recovery from a cyclical downturn last year. We believe Micron is well positioned to capitalize on AI-driven demand for greater memory.”
1. Coinbase Global, Inc. (NASDAQ:COIN)
Number of Hedge Fund Holders as of Q2: 45
Analyst Upside as of October 10, 2024: 53.59%
Coinbase Global, Inc. (NASDAQ:COIN) is a promising stock, given its focus on future technologies and innovations in the cryptocurrency space. Operating as a financial services company, it provides crucial infrastructure and technology for the crypto economy. It also provides technology and services that enable developers to build crypto products and securely accept crypto assets as payment.
Coinbase Global, Inc. (NASDAQ:COIN)’s core business is closely tied to the overall condition of the cryptocurrency market. Therefore, when the market is experiencing widespread growth, Coinbase is likely to follow suit and generate significant value.
Over the years, Coinbase Global, Inc. (NASDAQ:COIN) has generated a significant chunk of its revenues from transaction fees. Consequently, the company’s earnings take a hit whenever there is a downturn in the sector. Fast forward, Coinbase has diversified its revenue base by reducing its reliance on transaction fees.
A key element in this shift has been Coinbase’s growth in its Subscription and Services division, which includes stablecoin interest, fees for holding assets, and rewards for holding digital assets. Although transaction revenue was down 27% in Q2 from last quarter, subscription and services revenue was found to be at an all-time high, growing 17% quarter-over-quarter to $599 million.
The future prospects for Coinbase Global, Inc. (NASDAQ:COIN) are rooted in the growing acceptance of digital currencies by both individual and institutional investors. In the past, individual investors have been the main force behind the movement of cryptocurrency and Coinbase.
Yet, as the cryptocurrency market evolves, institutional investors are beginning to participate, bringing along substantial financial resources. Coinbase’s approach to serving these two groups is clear in its continuous work to improve individual investors’ experience and establish itself as a reliable ally for institutions.
Consequently, based on 15 Wall Street analysts, Coinbase Global, Inc. (NASDAQ:COIN) is a strong Buy with an average price target of $258.17, implying a 53.59% change from the last price of $168.09. As of Q2 2024, the stock was held by 45 hedge funds, while Citadel Investment Group was the most dominant shareholder.
While we acknowledge the potential of Coinbase Global, Inc. (NASDAQ:COIN) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than COIN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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