AI spending is set to explode. The analysts can’t agree on the final figures but agree on one thing: the numbers will be huge. One industry, the grocery industry, if you can believe it, is planning to increase spending by 600% over the next few years, and this is not an isolated phenomenon.
A survey of tech managers showed that spending on AI was now the #1 priority for most top CEOs. Analyst Dan Ives, outspoken and well-respected, predicts a tidal wave of spending worth more than $1 trillion will begin to show up in the Q2 earnings reports, which is why we’re here today. Some AI-related companies are in a position to see a massive uptick in spending in Q2 or for the 2nd half because, remember, the guidance will be just as important, if not more important, than the results.
Advanced Micro Devices: One Chip To Rule Them All?
NVIDIA (NASDAQ: NVDA) took the market by storm when it revealed its 2nd quarter guidance, but AMD (NASDAQ: AMD) may overshadow that news this quarter. Given its power relative to NVIDIA's offerings, AMD’s MI300x super chip should see substantial demand, which will be evident in the guidance. Amazon’s AWS segment is only 1 potential customer and perhaps the only customer AMD needs to woo. Amazon’s AWS represents over 30% of the cloud and would be a significant win for AMD’s chips.
The analysts have been upping their price targets ever since the MI300x was announced. Since the announcement, Marketbeat.com is tracking over a dozen revisions, including upward price target revisions. The consensus target is only about 8% above the current action, but it is trending higher and led by the most recent updates, which have the stock trading in the range of $150 to $170. That’s another 20% above the consensus figure at the low end of the range, and more revisions can be expected. AMD will report Q2 results in early August; the bar is low. The analysts expect revenue to remain flat from the prior quarter, which may be underestimating the impact of the new chipset.
Ambarella: Computer Vision Is More Useful Than Generative AI
Generative AI is all the rage, but not the end goal; that’s automation, which means computer vision. Ambarella (NASDAQ: AMBA) is a computer-vision-specific play focusing on automotive, IoT, and industrial applications that rely on a computer’s ability to see. Think warehouses that track their inventory, hamburger restaurants that can flip their burgers, and traffic control that operates intelligently. The company’s Q1 results were weak, and the guidance was not better, but there is an opportunity here. AI investment is on the rise and will include applications other than generative.
The question is whether or not AI will influence the 2nd quarter report. The market thinks it will and is setting up for a rally. The post-Q1-release action has the market forming a base above the short-term EMA that could become a continuation signal. A move up from these levels would be consistent with a bullish entry, but there is a risk. There is a chance for significant resistance at the $100 level that may be difficult to cross without a solid report or guidance.
Symbotic: Smart Robots Run Warehouses
Symbotic (NASDAQ: SYM) develops and markets a line of AI-powered smart warehouse technology. The company is focused on aiding retailers and wholesalers to manage and distribute inventory efficiently. The company is still small, but revenue topped the $1 billion mark (annuallized) for the first time this past quarter. Growth is expected to accelerate as warehouse operators begin leaning into new technology. The stock has been rocketing higher this year and will likely continue. The analysts' consensus figure is trailing the market but rising steadily to match. It is up 15% in the last month and nearly double since last year. The next catalyst is Q2 earnings which are expected to be flat compared to the prior quarter, a low estimate that it will probably beat.
