Because the strong stock market rally we’ve seen this year has been driven by technology, we’ve almost forgotten how different things looked at the start of 2023. Judging from the bear market in 2022, Wedbush Analyst Daniel Ives Reminds investors that feelings are around technology stock It was “extremely negative with a cloudy macro, Fed burden, hard landing fears, and waning consumer/institutional demand all creating a dark cloud over the tech sector.”
But against such headwinds, quite the opposite occurred in the first half of the year. Driven by the game-changing opportunities presented by developments in artificial intelligence and led by mega-corporations, the tech sector has surged forward. To wit, the high-tech Nasdaq has gained 30% so far in 2023.
But has the rally taken its course now? says Au contire Ives. “Going into the second half of 2023, we see a much broader technology rebound ahead as investors digest the ramifications of the $800 billion AI spending wave on the horizon and what this means for software, chips, hardware and the technology ecosystem over the next year.”
As far as Ives is concerned, the green light to own technology is on, and with that in mind, he’s pointing investors toward tech stocks he believes have room to go in the second half of ’23. We ran two of their recent recommendations through TipRanks database To find out what other experts think of these choices. Here’s the lowdown.
C3.ai (Amnesty International)
If we’re talking about the impact of AI, the natural place to start is with one of the main beneficiaries of this year’s AI boom.
C3.ai is a leading enterprise Artificial Intelligence (AI) software company specializing in providing scalable and innovative solutions to companies across various industries. Since its founding in 2009, the company has established itself as a trusted provider of AI-powered software applications. C3.ai offers a comprehensive and modular AI platform that enables organizations to harness the power of big data, advanced analytics, and machine learning algorithms to drive digital transformation and achieve operational excellence.
It’s a value proposition tailored for these times, and the company put it to good use in its most recent reported quarter, fiscal fourth quarter (April) of 2023.
While $72.41 million in revenue came in about the same period last year, the number still beat consensus by $1.07 million. In addition, EPS of — $0.13 was better than last year’s — $0.21 and — $0.17 expected on the Street.
However, the company’s full-year revenue guidance failed to impress as it came in at the midpoint of $307.5 million, which fell short of the $317.1 million Wall Street had expected.
Shares fell in the aftermath, but that didn’t stop the stock from being one of the year’s best performers, gaining 200% year-to-date.
However, Ives believes there is more upside in the cards. Combined with an Outperform (i.e. Buy) rating, its $50 price target lends itself to an additional 49% gain in the coming year. (To watch Ives’ track record, click here)
Explaining his position, Ives wrote, “Although it will be a bumpy road, we believe C3 has turned the corner and is now poised to capitalize on the $800 billion AI transformation opportunity over the next decade with increasing use cases across the board and the company is uniquely positioned.” To help lead expenditures and monetize that forward-looking over the next 12 to 18 months.”
“With the move to a consumption-based pricing model, this is proving to be a good long-term strategic move by continuing to monetize the generative AI pool as the demand and use cases in this area continue to expand day by day across segments,” the analyst added5 stars.
Unlike Ives, most people on the street seem to think that stocks are skyrocketing nowadays. Moving to the average target of $26.16, a year from now the stock will change hands at a 22% discount. Finally, the stock has a consensus rating of Hold, based on 5 Holds, 3 Sells, and 2 Buys. (be seen AI stock forecast)
on fire (small)
Now let’s look at Alight, a technology company that operates in a niche called BPaaS (Business Process as a Service). This refers to the outsourcing of various business processes to a cloud-based service provider and allows organizations to streamline their operations and benefit from specialized expertise.
Alight offers a wide range of HR and Finance solutions that can be delivered through a cloud-based platform with its services catering to various industries, with a strong focus on Wealth, HR and Health. These solutions include benefit management, payroll processing, talent management, and more. All of this is provided by the company’s flagship Worklife platform, which uses data analytics and artificial intelligence.
The company achieved a major milestone in its most recent read, Q1 ’23, by passing $1.5 billion in cumulative bookings for BPaaS, nine months earlier than it expected.
For the quarter, Alight saw net profit of $831 million, up 14.6% year-over-year and beating analyst expectations by $27.35 million. On the bottom line, the EPS of $0.13 before the street call increased by $0.01. Looking ahead, for the full year, the company is guidance for revenue of $3.47 billion to $3.51 billion (11% to 12% growth), halfway, better than consensus of $3.48 billion.
While shares of ALIT have gained 9% year-to-date, that’s actually a poor return compared to the NASDAQ’s 30% increase. Still, Ives believes the stock is poised to take advantage of the company’s recent moves.
“Following the launch of its 2023 product roadmap and the launch of Alight Worklife, the company is excellently positioned to take advantage of current market opportunities while continuously investing in its go-to-market strategy and future product developments to expand its global presence and complete its transformation,” Ives said.
“With a $73 billion TAM and the opportunity to grow 2x revenue in its install base as all customers are now on one platform as the company continues to see strong demand for its leading Worklife offerings, we believe the company is in a great position to continue to capture market share and be one of the top players in the ERP landscape,” added the senior analyst.
These comments support an Ives Outperform (any Buy) rating on ALIT, which is supported by a $14 price target. This indicates that the stock will generate returns of 54% over the next 12 months.
4 other analysts recently participated in ALIT reviews and they all agree with Ives that this is a stock to own, making the consensus view here a Strong Buy. The forecast calls for a one-year gain of 47%, factoring in an average hours target of $13.38. (be seen ALIT stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.