With artificial intelligence stocks leaving the rest of the market behind after Nvidia’s blockbuster earnings report, it’s no surprise that three AI stocks topped the watch list this weekend. data center equipment supplier Arista Networks (ANET), leader in autonomous driving technologies mobileye (MBLY) and chipmaker Monolithic power systems (MPWR) all jumped close to buying points last week. ANET, MBLY and MPWR are joined by a drug wholesaler McKesson (MCK) and smart sheet (SMAR), whose work management software facilitates workplace collaboration.
Both Mobileye and Smartsheet are on the IBD 50 flagship list of top growth stocks. Monolithic Power is on the IBD Long Term Leaders Watch List.
On Thursday, Wells Fargo began hedging MBLY shares with an overweight rating and a price target of 50. Analyst Aaron Rakers sees Mobileye becoming a “platform enabler” for autonomous vehicles. SuperVision’s revenue is expected to reach $3.2 billion over the next five years, but could reach $7 billion in a bullish scenario.
On May 9, Porsche, which is part of Volkswagen, announced that it would offer automated driving assistance using SuperVision. Mobileye said in its April 27 first-quarter earnings report that a U.S.-based global automaker is expected to adopt SuperVision in the second half of 2023.
MBLY stock has rebounded over the past week, jumping 10.6% to 45.14, recovering from a slump in first-quarter earnings. Mobileye has an official buy point of 48.21 on a 14-week consolidation, according to analysis by MarketSmith. A move to 47.04, which is not quite considered a double bottom buy point, could offer early entry. If MBLY consolidates here over the coming week, 46.58 – 10 cents above Friday’s intraday high – could provide an earlier entry.
Like Mobileye, ANET stock has surged in recent days after a selloff in first-quarter earnings. Bank of America Global Research added Arista to its “US 1 list” of best investment ideas on Wednesday. But the actions really took off with other AI games on the blowout boards of Nvidia (NVDA) Wednesday night.
Rosenblatt analyst Michael Genovese wrote in a May 2 note that the earnings sell-off partly reflected overoptimism about when Arista Switching revenue would be driven by cloud-related spending on artificial intelligence clusters. But Rosenblatt thinks revenues will rise in 2024, making the consensus forecast too pessimistic.
Arista, which has Meta Platforms and Microsoft as its main customers, was Friday’s IBD stock of the day.
ANET shares jumped 9.1% to 170.35 on Friday, after rising 10.6% on Thursday. Arista has a buy point of 171.54 from a nine-week consolidation.
Monolithic power systems
Monolithic Power’s chips provide power solutions for industrial applications, telecommunications infrastructure, cloud computing, automotive and consumer applications. MPWR stocks, like AI shares Mobileye and Arista, also slipped on first-quarter earnings and second-quarter outlook amid weak corporate data sales as customers work on inventory or delay IPOs. of products.
However, Monolithic has gained traction by providing graphics processing units for AI use cases. During the May 4 call, CFO Bernie Blegen noted Monolithic’s “very high market share position” in the GPU space for artificial intelligence. Although the market is still in its infancy, he said the company is in a good position to capitalize on its next-gen GPU and “strengthen our position.”
MPWR stock jumped 20.6% to 520.92 over the past week. That leaves MPWR just below a buy point of 530.75 from a long handle cup base. As with Arista and Mobileye, a break for Monolithic Power would be constructive.
While AI stocks stand out with strong growth despite a potential recession on the horizon, wholesale drug stocks are also seen as recession-proof, albeit with growth prospects. modest.
This thesis received a boost as McKesson recently raised its long-term growth target for its pharmaceuticals division to 5%-7% from 4%. Rival AmerisourceBergen also recently raised its forecast due to strong improvements in usage and pricing.
McKesson was featured as IBD Stock Of The Day on Wednesday.
MCK shares slid 1.9% to 387.95 on Friday. Still, MCK stock is within 3% of a handle buy point of 401.63 from a 29-week consolidation.
Smartsheet competes in the work management software market with Asana and Monday.com. Smartsheet’s goal is to help white-collar workers automate processes to free up time for creative and collaborative work.
Analysts cite Smartsheet’s scale, complexity of deployments and positive cash flow as differentiators, according to Thursday’s IBD Stock Of The Day feature.
Smartsheet stock broke above its 50-day line on May 16, following strong quarterly results from its peers monday.com (MNDY).
SMAR stock rose 3.7% to 47.86 on Friday, closing in on a buy point of 49.09.
Asana (ASAN), which is also in the process of setting itself up, publishes its first quarter results on June 1. SMAR results are expected on June 7.
Investors may want to be cautious ahead of the earnings report. A strategy around income would be to use call options.
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