We recently published a list of 15 AI Stocks That Are On Sale. In this article, we are going to take a look at where Cirrus Logic, Inc. (NASDAQ:CRUS) stands against the other AI stocks that are on sale.
Big Tech: The Best Performing Sector of Q2?
Big tech, specifically artificial intelligence, is the sector that many are starting to consider as the best-performing sector of the market in the second quarter of 2024. The concentration of the major players in this space has been in the large-cap companies since your ability to fully develop AI and benefit from its profitability really depends on the scale of your business. Basically, the bigger a company is, the better it will be positioned within the AI-led market this year. Because of this phenomenon, big tech companies, with all the money in the world to invest in AI development, are ensuring that this revolutionary tech drives the overall tech sector to record highs in 2024.
According to Alex Kantrowitz, Founder of Big Technology, these trends can be expected to lift up other sectors in the market that have a strong relationship with AI. One such sector is energy, which, according to Kantrowitz, is going to be seeing a lot more demand from customers that are developing AI and creating and training Large Language Models. While many players in the AI space today are also working on finding ways to use energy for AI development more efficiently, the general consensus seems to be that there’s a need to tap into more existing sources of energy until such methods are found. Because of this, the markets may see demand for nuclear energy rise to unprecedented levels as well.
AI in Digital Advertising
Another sector that might catch the AI draft and be propelled higher is digital advertising. With the rise of AI-powered marketing clouds, many advertisement-focused businesses are beginning to see immense increases in their return on investment. According to David Steinberg, the CEO of Zeta Global, AI is leading to immense growth within the advertising ecosystem, with Steinberg expecting growth in low double-digits this year. He noted that the launch of ChatGPT was the “big renaissance moment” for AI, which changed our perception of this technology from being a figment of science fiction to something serious enough to be discussed in company board rooms. Because of this, Steinberg believes that every company out there in advertisement and retail is pivoting its business to incorporate high-quality enterprise AI usages in its operations.
Part of the reason why AI is taking over the market in this manner is the promise it makes – efficiency coupled with revenue growth. By focusing on AI development and integration, businesses across the globe can increase their efficiency while also generating higher profits for themselves and their shareholders. Considering this, and the fact that AI stocks have been performing exceptionally well in the second quarter, we have compiled a list of some AI stocks on sale that investors may wish to consider for their portfolios this year.
Our Methodology
We first compiled a list of 40 AI stocks by sifting through ETFs and online rankings, including our own rankings. We then selected the 15 stocks with P/E ratios lower than the S&P 500’s P/E of 24.1 as of September 27 (according to data from WSJ) and with expected EPS growth for this year. The stocks are ranked based on their P/E ratios, from the highest to the lowest. We also mentioned the number of hedge funds holding stakes in each stock, as of the second quarter.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A technician in a lab coat inspecting a semiconductor processor on a microscope.
Cirrus Logic, Inc. (NASDAQ:CRUS)
Number of Hedge Fund Holders: 24
Expected Earnings Growth: 3%
P/E Ratio: 17.9
Cirrus Logic, Inc. (NASDAQ:CRUS) is a semiconductor company that develops low-power, high-precision, mixed-signal processing solutions internationally. It is based in Austin, Texas.
A major plus point for Cirrus Logic, Inc. (NASDAQ:CRUS) is its close collaboration with Apple since this company is a key chip supplier to the iPhone maker. With analyst expectations for the iPhone 16 improving in light of the launch of Apple Intelligence, some analysts like Keybanc’s John Vinh expect Cirrus Logic, Inc. (NASDAQ:CRUS) to benefit from its continuing provision of the iPhone’s audio chips.
There is also the possibility for greater collaboration between the two companies since Vinh noted that there is a possibility that Cirrus Logic, Inc. (NASDAQ:CRUS) will also be providing the haptics driver for the iPhone 16’s new camera button. Additionally, increasing demand for AI is expected to aid Cirrus Logic, Inc. (NASDAQ:CRUS) indirectly. Since Apple Intelligence is only available on the newest iPhone models, there’s a general expectation that more people will upgrade their models in the coming months, meaning Cirrus Logic, Inc. (NASDAQ:CRUS) will reap the profits from higher sales of the new models as well.
Since Cirrus Logic, Inc. (NASDAQ:CRUS) generated about 87% of its revenue from its relationship with Apple in 2023, many expect the current developments to be in favor of this chip maker. However, some also consider this heavy reliance on the big tech giant to be a red flag for Cirrus Logic, Inc. (NASDAQ:CRUS). Despite these concerns, as long as the AI boom continues, the current pricing of Cirrus Logic, Inc. (NASDAQ:CRUS) makes the stock seem like a steal.
In total, 24 hedge funds were long Cirrus Logic, Inc. (NASDAQ:CRUS) in the second quarter, with a total stake value of $290.7 million.
Overall CRUS ranks 9th on our list of AI stocks that are on sale. While CRUS is an exceptional investment, we believe that AI stocks hold promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CRUS and which trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.