In 2024, excitement around artificial intelligence (AI) stocks surged, as many anticipate this technology will transform businesses by saving time and money while leading to significant innovations.
Recently, however, these stocks faced challenges due to worries about a potential economic downturn. Fortunately, some of that uncertainty is easing, hinting at a brighter future for AI investments.
Against this backdrop, companies like Nvidia (NVDA), Apple (AAPL), and Amazon (AMZN) are expected to thrive in the latter half of the year. Here’s a closer look at each.
- Nvidia
Nvidia, a leader in AI chips, recently saw its stock drop nearly 30% from the start of the year until early April, largely due to President Trump’s proposed tariffs on imports. While electronics were briefly exempt, the prospect of future tariffs loomed large.
However, Nvidia is bouncing back as optimism grows that tariffs may not be as severe as feared. The company reported a remarkable 69% increase in revenue, reaching $44 billion, with strong demand from customers indicating their budgets remain robust. This positions Nvidia well for continued growth.
Additionally, Nvidia is investing in U.S. manufacturing to mitigate potential tariff impacts and is committed to annual chip upgrades, keeping it competitive. Currently, Nvidia’s stock trades at 33 times forward earnings estimates, down from about 50, suggesting significant upside potential in the coming months.
- Apple
Among major tech stocks, Apple has arguably faced the most turbulence from tariff discussions. Trump’s frustration over Apple’s offshore iPhone production led to threats of a 25% tariff on imports. In response, Apple is diversifying its manufacturing, moving a significant portion from China to India.
While uncertainty persists regarding U.S. production and its potential to increase smartphone prices, Apple’s stock is down about 20% this year. Yet, the company has built a highly profitable smartphone empire, which should support long-term growth. Investing in Apple now could yield short-term gains and position investors for future success.
- Amazon
Amazon has experienced a sluggish performance, with a 3% decline this year, mainly due to concerns that tariffs could impact its e-commerce and cloud computing division, Amazon Web Services (AWS).
Fortunately, the worst-case scenarios regarding tariffs seem to be fading, and the U.S. is making strides in trade agreements. Importantly, Amazon has overhauled its cost structure in recent years to combat rising inflation, enabling a return to growth within a year. This strategic shift positions Amazon well for future challenges, including any tariff implications.
With events like Prime Day on the horizon, revenue could see a boost. Furthermore, AWS is experiencing robust growth from its AI initiatives, reaching a $117 billion annual revenue run rate. As the AI landscape continues to evolve, AWS—being the leading cloud provider—should see sustained growth.
Currently, Amazon shares trade at 34 times forward earnings estimates, a reasonable level that may attract investors and drive the stock higher in the second half of the year.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Censational Market.
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