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Today, artificial intelligence has expanded its use across various industries ranging from healthcare to finance. With the advancement of AI technology, companies have seen significant growth that attracts investors. Several AI stocks are creating waves in the stock market with their performance and innovative technologies. Here, we will explore the top AI stocks to watch this week:
TCS, India’s largest software exporter, has made significant strides in the AI sector with the launch of TCS Studio, aimed at facilitating data-driven business decisions, transformation, and innovation. TCS has also trained over 100,000 employees in AI-related technology, showcasing its commitment to integrating AI into its operations.
Stock Performance: The stock is currently above its short-, medium-, and long-term moving averages and is near its 52-week high. Brokerages have upgraded the stock in the past three months. TCS has no debt and has seen increasing investments from Foreign Portfolio Investors (FPIs). However, there is pressure on its profit margins.
Infosys, the second-largest software exporter in India, is making strategic moves to capture the AI market with initiatives like Topaz, its AI solution suite. Although the company has not shared specific AI revenue projections, its focus on AI is evident.
Stock Performance: Infosys’s stock is above its short-, medium-, and long-term moving averages and is near its 52-week high. The stock has shown a positive breakout above its first resistance level and has earned upgrades from brokerages.
Wipro has trained over 210,000 employees in AI-based skills. CEO Thierry Delaporte emphasized that every business line is working to launch new AI offerings. For instance, the FullStride Cloud business leverages generative AI to improve digital workplace services.
Stock Performance: Wipro’s stock is above its short-, medium-, and long-term moving averages and has seen increasing interest from FPIs. The company has zero promoter pledge and low debt, although its margins have been under pressure.
HCL Technologies offers AI Labs as part of its Cloud Native Labs, focusing on building strategic partnerships for AI enablement. The company has collaborated with Amazon Web Services to accelerate generative AI adoption globally.
Stock Performance: HCL Technologies has very low debt, and its stock is near its 52-week high, above its short-, medium-, and long-term moving averages. The book value per share has been improving for the past two years, and the stock has shown a positive breakout above its first resistance level with upgrades from brokerages.
Tata Elxsi, another Tata group company, is a leader in AI with offerings like AI-based video analytics, AI DMS, customer experience management services, conversational AI, and smart annotation services.
Stock Performance: Despite the stock being under pressure and showing a negative breakdown from the third support level, it has received some upgrades from brokerages. The company has seen an improvement in return on equity over the last two years, has zero promoter pledge, and no debt.
Tech Mahindra has launched several AI platforms and solutions, such as Sayint (speech analytics), Populii (annotation and workflow tool), and GAiA (end-to-end CX for building AI ecosystems).
Stock Performance: The stock has low debt and no promoter pledge. It is above its short-, medium-, and long-term moving averages, near its 52-week high, and has shown a positive breakout above its first resistance level, with upgrades from brokerages.
Kellton Tech Solutions focuses on generative and conversational AI-based solutions. It has launched the Kverse Customer Experience Center and Innovation Lab in Gurgaon, emphasizing AI.
Stock Performance: The company has low debt and has seen increasing FPI investment. The stock recently witnessed the highest recovery from a 52-week low. A low PE ratio makes it attractive, although the increased promoter share pledge is a concern.
Saksoft offers AI-based end-to-end services, including AI consulting, data mining, ML development, computer vision, and NLP-powered sentiment analysis.
Stock Performance: The stock is under pressure, with its moving average convergence/divergence indicator below the signal line. However, it has seen the highest recovery from a 52-week low, zero promoter pledge, and no debt on its books.
Subex focuses on AI solutions for telecom companies, helping forecast network growth and detect fraud with advanced machine learning and deep learning algorithms.
Stock Performance: The stock has a low PE ratio, indicating potential value. The company has no debt and rising interest from FPIs. However, falling ROE and RoCE over the last two years and pressure on financials are red flags.
Happiest Minds Technologies offers solutions combining augmented intelligence with natural language processing, image analytics, video analytics, and emerging technologies like AR and VR.
Stock Performance: The stock has been under pressure due to increased promoter pledge and a fall in mutual fund holding. It is below its short-, medium-, and long-term averages. However, the company’s strong financials are a positive factor.
Carefully analyze the company’s balance sheet and cash flow statement. AI requires substantial investment, and companies with deep pockets will be better positioned to sustain and grow their AI initiatives.
Ensure the company has a diverse client base willing to invest in AI solutions. This can help the company build a robust AI workforce and maintain steady revenue streams.
Evaluate the company’s stock valuation and other technical indicators like moving averages, support, and resistance levels to make informed investment decisions.
Look for companies with strategic partnerships with established AI players or collaborations with research institutes and universities. Such partnerships can enhance the company’s AI capabilities and market reach.
Companies with ample funds to acquire smaller AI startups can gain a competitive edge by integrating innovative technologies and expanding their market presence.
Companies in this segment provide AI solutions for data analysis, predictive analytics, natural language processing, image recognition, and more, helping machines learn through deep learning algorithms.
NLP companies specialize in language-related AI applications such as chatbots, voice assistants, and language translation, enhancing human-computer interactions.
This segment includes companies that manufacture AI components like Graphics Processing Units (GPUs), Tensor Processing Units (TPUs), and AI-enhanced chips, essential for high-speed AI processing.
These companies offer software and platforms enabling businesses to build and deploy their own AI applications, providing the backbone for various AI solutions.
This segment involves developing and deploying AI-powered robots used in industries like manufacturing and healthcare to improve efficiency and productivity.
IoT companies focus on connected devices that collect and exchange data, with AI analyzing this data to provide insights for product and service improvements.
To be in a position to buy stocks in AI businesses, there are vast opportunities since the AI market is bound to grow. Nevertheless, one must consider several factors to estimate the firm’s potential, including its solvency, the number of clients, technical coefficients, partnerships, and merger and acquisition capabilities before investing. To ensure the continued leading position of the companies practicing AI, the key players should be constantly observed reveals the current AI shifts, including TCS, Infosys, Wipro, HCL Technologies, Tata Elxsi, Tech Mahindra, Kellton Tech Solutions, Saksoft, Subex, and Happiest Minds Technologies.
FAQs
The growth of AI stocks is driven by several factors. Firstly, the increasing adoption of AI across various industries is a major catalyst. AI is being used to optimize processes, enhance customer experiences, and drive innovation, leading to higher demand for AI solutions. Secondly, advancements in AI technologies, such as machine learning, natural language processing, and computer vision, are continually expanding the capabilities and applications of AI, making it more valuable. Thirdly, strategic partnerships and collaborations between AI companies and other tech firms, research institutions, and universities are accelerating AI development and deployment.
Several AI stocks have demonstrated significant recent performance, making them noteworthy for investors. Tata Consultancy Services (TCS) stands out, having launched TCS Studio and trained over 100,000 employees in AI-related technologies. Its stock is above short-, medium-, and long-term moving averages, and is near its 52-week high, reflecting strong market confidence. Infosys, with its AI solution suite Topaz, has also seen its stock rise above key moving averages and achieve a positive breakout, earning upgrades from brokerages. Wipro has made notable strides by training over 210,000 staff in AI skills and integrating AI into its business lines.
What are the risks associated with investing in AI stocks?
Investing in AI stocks carries several risks. One major risk is the high level of competition within the AI industry. With numerous companies investing heavily in AI technologies, the competitive landscape is intense, which could impact market share and profitability. Another risk is the rapid pace of technological change. AI technologies are evolving quickly, and companies must continually innovate to stay relevant. This requires significant investment in research and development, which can strain financial resources.
Partnerships and collaborations significantly influence the success of AI companies by providing access to new technologies, markets, and expertise. Strategic alliances with established tech giants, research institutions, and universities can enhance an AI company’s innovation capabilities and accelerate the development of advanced AI solutions. For instance, HCL Technologies’ collaboration with Amazon Web Services has facilitated the adoption of generative AI, expanding its market reach and enhancing its service offerings.
What makes the AI market attractive to foreign portfolio investors (FPIs)?
The AI market attracts foreign portfolio investors (FPIs) due to its high growth potential, technological innovation, and significant market opportunities. The AI sector is projected to grow rapidly as businesses across various industries increasingly adopt AI solutions to enhance efficiency, reduce costs, and drive innovation. This growth potential offers substantial returns on investment for FPIs. Technological advancements in AI, such as machine learning, natural language processing, and computer vision, continuously expand the scope and applications of AI, making the sector highly dynamic and attractive.
