The rise of the artificial intelligence (AI) sector has catapulted numerous tech stocks to soaring heights in recent years. Among the notable leaders are industry giants such as Nvidia, the top AI accelerator chip supplier, and Microsoft, boasting a significant interest in OpenAI.

However, amidst these established names lie hidden treasures awaiting discovery. Introducing three compelling prospects: AMD, SentinelOne, and Innodata.

Image source: Getty Images.

AMD: Innovating in the Shadows of Giants

AMD, a key player in x86 CPUs and discrete GPUs, has quietly positioned itself in the AI chip market. By stepping up its production of Instinct GPUs for data centers, AMD has begun to challenge Nvidia with its latest MI300 Instinct chips, offering robust performance at a fraction of the cost.

The impressive growth in AMD’s data center chip sales, particularly in 2023 and the beginning of 2024, underscores its potential as a rising star in the AI infrastructure space.

Analysts project a significant revenue surge and earnings boost for AMD in the coming years, despite its current premium valuation. As its data center segment continues to expand, AMD’s stock may very well reach new heights on the market.

SentinelOne: Pioneering AI-Powered Cybersecurity

SentinelOne distinguishes itself in the cybersecurity realm by leveraging AI-driven algorithms on its Singularity XDR platform to minimize human intervention. As its revenue surged in the past years, the company faces a temporary growth slowdown attributed to economic challenges.

Despite recent setbacks, SentinelOne’s stock price dip presents a buying opportunity, trading significantly below its IPO and all-time high prices. With a solid growth outlook ahead, SentinelOne seems poised to capitalize on the expanding AI cybersecurity landscape.

Amidst competition, notable incidents such as a recent global IT outage incident involving a competitor, CrowdStrike, might even shift the tide in favor of SentinelOne as companies seek reliable AI cybersecurity solutions.

Innodata: The Phoenix Rising

Innodata, an IT services and enterprise software provider that went public in 1993, went through a transformative period recently. Boasting a resurgence in revenue growth and newfound partnerships with major tech firms, Innodata’s pivot towards generative AI services marks a significant turning point.

With positive signals in its financials, including the shift to positive EBITDA, Innodata has reemerged as a growth stock with substantial potential. Analysts foresee a bright future ahead, anticipating robust revenue growth and profitability in the years to come.

Advanced Micro Devices, long overshadowed in the tech sector, has experienced a resurgence over the past five years, presenting itself as a growth opportunity once again. Remarkably, the stock remains relatively attractively priced at just 5 times this year’s sales. This suggests that there may still be ample room for growth as the market for generative AI continues to expand.

Exploring the Investment Opportunity

Before diving into Advanced Micro Devices, investors should take note of a recent analysis by the Motley Fool Stock Advisor team. While Advanced Micro Devices did not make their list of the 10 best stocks to buy, it is essential to recognize that opportunities can arise outside these recommendations. Historical data reveals significant potential growth. Consider the case of Nvidia, which previously appeared on this list in April 2005. A $1,000 investment made at that time following the recommendation would have multiplied to an impressive $657,306*. This underscores that while recommendations are valuable, independent analysis and intuition often drive strong investment decisions.

The Stock Advisor service, famous for guiding investors with a robust roadmap to success, regularly updates subscribers with analyst insights and unveils two fresh stock picks each month. The service’s track record is equally impressive, surpassing the S&P 500 return by more than fourfold since its inception in 2002*. Thus, while Advanced Micro Devices may not be the face of this recent list, its potential for growth remains substantial.

For those seeking further details about potential stock opportunities, it may be worth exploring the 10 stocks recently highlighted by the Stock Advisor team. This could provide additional insights into promising investments within the market. Ultimately, diversifying knowledge sources and staying attentive to market trends play crucial roles in making informed investment decisions.

*Stock Advisor returns as of July 29, 2024