Nvidia, the venerated semiconductor behemoth, has clinched the lead in the artificial intelligence domain, enticing a fervent following from both discerning investors and astute analysts. Its stock has sky-rocketed by 131.9% this year, overshadowing the lackluster 10.4% gain in the S&P 500 Index.
While Nvidia’s meteoric rise may leave some feeling like they missed the boat on the AI gravy train, the AI frontier is far from conquered. There are hidden jewels in this realm, waiting to be unearthed. Let’s shine a spotlight on two AI contenders that could rise to dizzying heights this year.
The Fortinet Phenomenon
Fortinet (FTNT) emerges as a stalwart in the cybersecurity domain, renowned for its impregnable network security solutions. In a world where cyber threats loom ominously, Fortinet’s fortifications offer a haven for investors seeking enduring value.
Valued at a whopping $45.4 billion, FTNT stock has edged up by a modest 2% this year, outpacing the broader market.
Fortinet’s product arsenal spans cloud, end-point, application, email, web, and industrial control system security. This diverse portfolio, coupled with a penchant for innovation, cements Fortinet’s status as a trusted ally for enterprises safeguarding their digital treasures.
In its latest quarterly report, revenue ascended by 7% year-over-year to a lofty $1.35 billion, buoyed by a stellar 24% surge in services revenue. However, product revenue witnessed a dip of 18.3%.
The company’s guidance for the year hints at billings ranging between $6.4 billion to $6.6 billion, with revenue poised to land between $5.74 billion to $5.84 billion. Additionally, adjusted EPS could range from $1.73 to $1.79 for the fiscal year.
Market analysts foresee a 9.3% year-over-year uptick in revenue to $5.8 billion, and an 8.7% boost in earnings in 2024. Projections for 2025 paint a rosy picture, with revenue and earnings set to climb by 13.1% and 10.8%, respectively.
Amidst a sea of analyst ratings, FTNT stock is deemed a “moderate buy” with an average target price of $70.25, implying a tantalizing upside potential of 17.6% in the coming year. With a high target estimate of $87, the prospect of a 45.6% gain looms large.
Though Fortinet stock may seem steeply priced at 31 times forward projected earnings for 2025, the cybersecurity realm is projected to burgeon at a robust 9.4% compound annual growth rate, soaring to a staggering $298.5 billion by 2028. With Fortinet’s coveted stature in the cybersecurity sphere, intrepid investors braving industry volatility may unearth a treasure trove in this long-term investment.
Sailing the Soundhound Seas
Soundhound AI (SOUN), commanding a valuation of $1.6 billion, has honed a formidable suite of voice AI technologies permeating diverse sectors such as automotive, consumer electronics, hospitality, and telecommunications. This year, SOUN stock has surged by an impressive 121%, aligning with Nvidia’s meteoric trajectory.
Amidst a cutthroat landscape dominated by tech titans like Google, Amazon, and Apple, Soundhound faces an uphill battle in the voice AI assistant arena. The formidable competition boasts vast resources and entrenched ecosystems, posing a formidable challenge to Soundhound’s ascension.
Despite the steep competition, Soundhound has demonstrated promising financial prowess, fueled by the robust adoption of the Houndify platform and an expanding clientele base.
