We recently compiled a list of the 10 Most Promising AI Stocks According to Analysts. In this article, we are going to take a look at where Bloom Energy Corporation (NYSE:BE) stands against the other promising AI stocks.
The General Outlook for Tech and AI is Positive
While 2024 has been a solid year for defensive stocks and utilities, the technology sector, on the other hand, experienced significant headwinds. However, the general outlook for technology and AI is starting to improve as we near the end of 2024. On October 9, Dominic Rizzo, T. Rowe Price portfolio manager, appeared in an interview on Yahoo Finance to discuss his thesis for the AI industry.
Most investors were disappointed after they failed to generate higher returns for their investments in AI during the second quarter of 2024. While Rizzo expects the theme to prevail for the next few quarters, he suggests that the technology and AI sector is on track to earn better returns, especially companies using artificial intelligence to improve their businesses.
As for the Magnificent Seven, while all companies have distinct business models and offerings, these companies have grown at a 50% to 100% faster rate than the rest of the market, making it reasonable to group them. Overall, Rizzo reiterates that while the group has been under immense pressure, it is well-positioned to leverage AI to its benefit.
Rizzo believes that AI is an innovation that is here to stay rather than a mere disruptive technology, meaning that companies using it to their benefit will most likely perform better than the ones that are not. Therefore, most if not companies have no other option but to direct investments in AI chips and GPUs. He expects the AI chip market to reach $400 billion by 2027.
Jamie Dimon is Not Worried about AI Taking Over Jobs
Technology has been altering the world since humans came into being. On October 8, Jamie Dimon, JPMorgan CEO appeared in an interview on Bloomberg Television where he discussed the role of artificial intelligence, initial public offerings, and the easing cycle by the Fed.
According to Dimon, technology was previously limited to certain regions and countries, but now we have tech centers in almost every part of the world including Berlin, Glasgow, and Edinburgh. According to Dimon, the acceleration in technology is great and he is glad that innovation is taking precedence, especially in Europe.
Speaking of AI, Dimon suggests that artificial intelligence is going to change a lot of things that are common elements of our world. As far as job losses go, technology has always been changing the job market and is mostly responsible for taking away jobs. However, he emphasizes the need to look at the bigger picture.
Overall, Dimon suggests that jobs will likely be more enhanced and researched-oriented. As for sectors like finance, people have been using it to detect fraud and minimize risk already. Similarly, AI has limited a lot of marketing jobs but at the same time, it has left a positive impact on productivity. Dimon shares he is not worried about AI changing the job landscape and that we should focus on re-training and re-educating workers losing their jobs as new technologies keep springing.
Now that we have studied the outlook of the AI industry, let’s take a look at the most promising AI stocks to buy according to analysts.
Our Methodology
To come up with the most promising AI stocks according to analysts, we sifted through multiple ETFs, our own rankings, and similar rankings on the internet. We then ranked the most promising AI stocks based on the Analyst upside as of October 9, 2024. We also included the hedge fund sentiment for each stock. It is to be noted, that we only considered stocks with a market capitalization of over $1 billion, as of October 9, 2024.
Why are we interested in 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).
A bird’s eye view of a power generation platform with a power plant in the background.
Bloom Energy Corporation (NYSE:BE)
Analyst Upside as of October 9, 2024: 56%
Number of Hedge Fund Holders: 29
Bloom Energy Corporation (NYSE:BE) ranks first on our list of the most promising AI stocks according to analysts. The green energy company designs, manufactures, and sells solid oxide fuel cells. These fuel cells are capable of running on different energy sources including natural gas and hydrogen. Bloom Energy also owns the Bloom Electrolyzer which produces hydrogen using electricity and helps companies reduce their emissions.
Bloom Energy is one of the most promising AI stocks and we say that because of its growing stakes in the industry. The company is crucial to the digital economy. Data centers account for nearly 2% of the global electricity use and could reach 9% by 2030. As of now, there are a multitude of challenges encompassing energy grids in the United States, part of which include wear and tear and obsolescence. To counter such, Bloom Energy Corporation (NYSE:BE) is creating a solution that would provide reliable power to AI data centers. The Bloom Energy server is not only capable of providing high power availability but it is also able to operate independently off the grid.
Bloom Energy’s (NYSE:BE) presence in AI is not limited to energy. In the past few months, the company has partnered with several AI startups and companies, taking up space in the domain. In July, the company partnered with CoreWeave to produce advanced AI data center power solutions. Bloom Energy will deploy its fuel cells to generate on-site power for CoreWeave at a data center in Illinois. The cells are set to be commissioned by Q3 2025. Aman Joshi, Bloom Energy’s Chief Commercial Officer, stated:
“Bloom Energy is thrilled to have been selected by CoreWeave. This validation from CoreWeave, a leader in AI, is a testament to our leading-edge technology and its importance to AI.”
Previously in May, the company joined hands with C3 AI, an enterprise AI application software company, to create AI-based solutions. These solutions will enhance the precision of Bloom’s product monitoring technology. Bloom will leverage C3 AI’s Reliability Suite to improve operational activity, enhance reliability, and increase energy. Here is what Thomas M. Siebel, Chairman and CEO of C3 AI, stated:
“A pioneer in the clean energy industry and a trusted expert on sustainability, KR is an important addition to the C3 AI Board of Directors. Climate and energy security are some of the greatest challenges of our time, and his unique experience and vision will strengthen our company as we support organizations across sectors on their sustainability journeys through use of enterprise AI.”
Overall, the company logged revenue worth $335.8 million in the second quarter of 2024, up by 11.5% year-over-year. Here is what the founder and CEO, KR Sridhar, of Bloom Energy Corporation (NYSE:BE) stated in the earnings call for Q2 2024:
“In my view, most of this load growth will be location specific. Let me highlight a few. To minimize latency, AI and other data centers need to be close to the customer, edge data centers will be the dominant users of power. They will be in economic nerve centers that are already power constrained.”
Overall BE ranks 1st on our list of the most promising AI stocks according to analysts. While we acknowledge the potential of BE 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 time frame. If you are looking for an AI stock that is more promising than BE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
