These 4 AI Stocks, Excluding Magnificent 7, Are Already Outperforming in 2024 – Arista Networks (NYSE:ANET), Broadcom (NASDAQ:AVGO)

Nvidia Inc. NVDA AND Meta Platform Inc HALFtop artificial intelligence (AI) games, and elite members of the Magnificent 7 club, top the S&P 500 this year.

These two stocks were among the best performers of 2023 – indeed, Nvidia was the year’s clear winner with a 239% gain – and they also led the powerful fourth-quarter surge that picked up in the first few weeks of 2024.

Much of this momentum is based on the prediction that AI will become a significant revenue stream, despite it not yet having a material impact on either company’s earnings.

Some fear that these expectations about AI have been exaggerated and that the risk of disappointment could burst this AI “baby bubble,” as analysts at Bank of America call it.

Read also: Is Tesla still a great stock 7? Berkshire Hathaway, Broadcom and Eli Lilly line up as contenders

Artificial intelligence plays out of the magnificent 7

If, however, investors believe that AI will come to dominate tech growth, there are a number of stocks outside the Magnificent 7 that are also right there in the S&P 500, but at less lofty valuations.

Among arguably the most important use cases for AI will be cybersecurity. As cybercriminals become more sophisticated, those safeguarding corporate networks and data are expected to implement artificial intelligence models to maintain an edge in security measures.

Palo Alto Networks PANW says, “AI is a critical part of our story of solutions that prevent successful cyberattacks.”

“Cortex is Palo Alto Network’s AI-powered continuous security platform, continually evolving to help
the security operations center blocks the most sophisticated threats.”

Palo Alto shares are up 28% so far in 2024, after gaining 111% in 2023.

The company’s latest quarterly earnings report was impressive, reporting earnings of $1.36 per share, comfortably beating consensus expectations of $1.16.

Fortinet FTNT interprets a similar theme. The company says: “Our experts develop and use cutting-edge machine learning (ML) and artificial intelligence technologies to provide timely, consistent world-class protection and actionable threat intelligence.”

Its shares are up 20% so far in 2024 and have gained 20% in 2023, despite a sharp decline in August 2023.

However, its fourth-quarter earnings report late Wednesday beat market and analyst expectations as the stock did, with Goldman Sachs raising its price target to $85 on Thursday. The shares currently trade at $70.44.

Juniper nets JNPR It calls itself a leader in artificial intelligence and cloud networking. The company says of its product: “[Our] Highly performant and adaptive network infrastructures are optimized for the connectivity, data volume and speed requirements of mission-critical AI workloads.”

Year to date, Juniper’s stock is up 26%, following a 6% loss in 2023. However, shares are up about 20% alone on Jan. 8 after it was reported that Hewlett Packard HPE was in advanced talks to take over the company.

Arista Networks Aneta has also developed AI network systems and says, “Arista’s open, interoperable solutions and emphasis on operational efficiency, automation and streamlined management workflows help reduce operational costs and total cost of ownership overall for AI network implementations.”

Arista shares have gained 20% so far in 2024, after rising 94% from 2023.

The company will report fourth-quarter earnings on Thursday and is expected to post earnings per share of $1.70, up from $1.41 in the same quarter a year ago.

Now read: AI Titans Meta, Microsoft and Nvidia join Biden security initiative

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