We recently published a list of 10 AI Stocks on Wall Street’s Radar After DeepSeek Breakthrough. In this article, we are going to take a look at where Palo Alto Networks, Inc. (NASDAQ:PANW) stands against other AI stocks on Wall Street’s radar after DeepSeek breakthrough.
AI investors are desperately trying to find clues on the real impact of DeepSeek on chip demand in the future and gauge how the breakthrough in China would impact US companies. Tae Kim, senior technology writer at Barron’s, said in a latest program on CNBC that DeepSeek has been able to significantly reduce the AI costs but that would increase more use cases of the technology:
“Over time, computing history has shown when you get more computing power and put that into the hands of developers, they figure out new applications, new workloads to use it. I mean, there’s that saying, “Oh, you only need 640k of memory,” and then obviously that proved false. So over time, like researchers, I mean, we have healthcare, drug discovery, trillions of proteins that need to be simulated, robotics. There are these three mega trends that are happening this year right now: multimodal, where you analyze audio and video, there’s AI agents, all these things are happening that are going to require more computing power.”
The question, however, everyone would be focusing on in the coming days is what if a hardware breakthrough happens in China and the country comes up with its own AI chips performing at par with its US counterparts.
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For this article, we picked 10 AI stocks currently trending on the latest news. With each stock, we have mentioned the number of hedge fund investors. 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).
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Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Investors: 64
Morgan Stanley said in a recent note that the latest dip in Palo Alto Networks, Inc. (NASDAQ:PANW) shares is a buying opportunity.
“We see an increasingly attractive entry point in PANW and believe the stock could double in 4-5 years, driven by larger platform deals and market share gains across various security categories,” Morgan Stanley analysts, led by Hamza Fodderwala, said in a note to investors.
“As Palo Alto Networks, Inc. (NASDAQ:PANW) approaches becoming the first pure-play security company to hit $10B in annualized revenue, the key investor concern is whether the company can sustain organic growth above the overall market at a much larger revenue scale,” Fodderwala added. “We remain optimistic and see a strong growth trajectory, with share gains driving 15%+ revenue growth, resulting in a doubling of revenue, free cash flow, and stock price by FY30.”
Morgan Stanley has maintained its Overweight rating on Palo Alto Networks (NASDAQ:PANW) and slightly raised its price target to $230 from $223.
Parnassus Growth Equity Fund stated the following regarding Palo Alto Networks, Inc. (NASDAQ:PANW) in its Q2 2024 investor letter:
“Palo Alto Networks, Inc. (NASDAQ:PANW) has been a profitable position for the portfolio. Given its elevated valuation, we decided to sell it to fund the purchase of Workday, where we see greater opportunity and a clearer story of margin expansion potential.”
Overall, PANW ranks 9th on our list of AI stocks on Wall Street’s radar after DeepSeek breakthrough. While we acknowledge the potential of PANW, our conviction lies in the belief that under the radar 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 PANW 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.
