We recently published a list of 15 AI Stocks That Are On Sale. In this article, we are going to take a look at where HP Inc. (NYSE:HPQ) stands against the other AI stocks that are on sale.
Big Tech: The Best Performing Sector of Q2?
Big tech, specifically artificial intelligence, is the sector that many are starting to consider as the best-performing sector of the market in the second quarter of 2024. The concentration of the major players in this space has been in the large-cap companies since your ability to fully develop AI and benefit from its profitability really depends on the scale of your business. Basically, the bigger a company is, the better it will be positioned within the AI-led market this year. Because of this phenomenon, big tech companies, with all the money in the world to invest in AI development, are ensuring that this revolutionary tech drives the overall tech sector to record highs in 2024.
According to Alex Kantrowitz, Founder of Big Technology, these trends can be expected to lift up other sectors in the market that have a strong relationship with AI. One such sector is energy, which, according to Kantrowitz, is going to be seeing a lot more demand from customers that are developing AI and creating and training Large Language Models. While many players in the AI space today are also working on finding ways to use energy for AI development more efficiently, the general consensus seems to be that there’s a need to tap into more existing sources of energy until such methods are found. Because of this, the markets may see demand for nuclear energy rise to unprecedented levels as well.
AI in Digital Advertising
Another sector that might catch the AI draft and be propelled higher is digital advertising. With the rise of AI-powered marketing clouds, many advertisement-focused businesses are beginning to see immense increases in their return on investment. According to David Steinberg, the CEO of Zeta Global, AI is leading to immense growth within the advertising ecosystem, with Steinberg expecting growth in low double-digits this year. He noted that the launch of ChatGPT was the “big renaissance moment” for AI, which changed our perception of this technology from being a figment of science fiction to something serious enough to be discussed in company board rooms. Because of this, Steinberg believes that every company out there in advertisement and retail is pivoting its business to incorporate high-quality enterprise AI usages in its operations.
Part of the reason why AI is taking over the market in this manner is the promise it makes – efficiency coupled with revenue growth. By focusing on AI development and integration, businesses across the globe can increase their efficiency while also generating higher profits for themselves and their shareholders. Considering this, and the fact that AI stocks have been performing exceptionally well in the second quarter, we have compiled a list of some AI stocks on sale that investors may wish to consider for their portfolios this year.
Our Methodology
We first compiled a list of 40 AI stocks by sifting through ETFs and online rankings, including our own rankings. We then selected the 15 stocks with P/E ratios lower than the S&P 500’s P/E of 24.1 as of September 27 (according to data from WSJ) and with expected EPS growth for this year. The stocks are ranked based on their P/E ratios, from the highest to the lowest. We also mentioned the number of hedge funds holding stakes in each stock, as of the second quarter.
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 laptop, showing off the companys sleek notebook computers and workstations.
HP Inc. (NYSE:HPQ)
Number of Hedge Fund Holders: 41
Expected Earnings Growth: 3%
P/E Ratio: 10.4
HP Inc. (NYSE:HPQ) is a tech hardware and storage company based in Palo Alto, California. It provides personal computing and other digital access devices.
In the third quarter, HP Inc. (NYSE:HPQ) reported revenue growth for the first time in nine quarters, with revenue rising by 2% year-over-year. While this seems to be a nominal figure, many loyal investors expect the company to only go further up from here. This is especially the case considering the fact that HP Inc. (NYSE:HPQ) is currently charging ahead in the AI PC category, with its next-generation AI PCs becoming more popular among knowledge workers and data scientists.
HP Inc. (NYSE:HPQ) seems to be doubling down on the mobility and AI optimization of its newer PC models. In July, the company introduced its new premium model, powered by the latest AMD processor, which has since been heralded as the most powerful AI PC in the industry. In the third quarter, HP Inc. (NYSE:HPQ) took its AI operations even further by becoming the first tech player to build generative AI into its workstation solution.
The company expects personal systems revenue for the fourth quarter to increase sequentially, with the commercial segment also exhibiting continued strength. While the printers segment seems to be lagging for HP Inc. (NYSE:HPQ) this year, many investors are more focused on the potential of HP AI PCs and what they mean for the company’s profitability in the long term instead.
A total of 41 hedge funds were long HP Inc. (NYSE:HPQ) in the second quarter, with a total stake value of $654.9 million.
Greenlight Capital mentioned HP Inc. (NYSE:HPQ) in its second-quarter 2024 investor letter:
“In addition to gold, we had four material winners in our long portfolio this quarter. HP Inc. (NYSE:HPQ) jumped from $30.22 to $35.02. After seven quarters of declines, PC sales turned marginally positive during the quarter. The industry appears to be in the early stages of an upcycle, perhaps to be enhanced by recently launched AI-enabled PCs that are expected to ramp up over the next several quarters.”
Overall HPQ ranks 2nd on our list of AI stocks that are on sale. While HPQ is an exceptional investment, we believe that AI stocks hold promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than HPQ and which 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.
