Looking ahead to next week’s earnings list, some artificial intelligence (AI – free report) focused companies will release their quarterly results.
As ChatGPT has garnered investor and consumer interest over the past few months, the AI boom continues to gain momentum following this week’s incredible surge in Nvidia (NVDA) shares. After beating first-quarter sales and earnings expectations on Wednesday, Nvidia stock staged an extended rally, with the company raising its second-quarter sales guidance on strong demand for its AI chips.
This is causing many investors to look to other stocks that offer a gateway into the future of the AI space. With that in mind, here are two such stocks that investors should keep an eye on as earnings approach.
Dell Technologies (DELL)
Investors will definitely want to pay attention to Dell Technologies’ first quarter report on Thursday, June 1st. The iconic technology solutions company is making rapid inroads into artificial intelligence. In fact, Dell is collaborating with Nvidia on its generative AI project, Project Helix.
Project Helix will help companies use AI models to provide better customer service, market intelligence, and business research, among other things. In this context, Dell has created a portfolio of validated designs for AI to simplify IT infrastructure and deliver faster and deeper insights. In addition to AI, Dell has recently launched new services and solutions to strengthen its cybersecurity portfolio.
Q1 Preview: Despite the interesting AI developments, Dell faces a tougher operating environment, mainly due to weaker demand for PCs and servers.
Earnings per share for the first quarter are forecast at $0.86, down -53% from earnings per share of $1.84 in a difficult comparable quarter last year. Bottom line, Q1 revenue is expected to be $20.20 billion, down -22% year over year.
Still, Dell has beaten earnings expectations for four straight quarters and beat revenue estimates in its last two earnings reports.
Dell’s full year 2024 earnings are now forecast to fall -30% to $5.28 per share after the company enjoyed a strong year in fiscal 23 with earnings per share of $7.61 dollars recorded. However, earnings are expected to rebound in fiscal 2025, rising 16% to $6.14 per share. Revenue is expected to fall -16% in FY24 but rebound and grow 5% in FY25 to $90.53 billion.
Dell stock is up +20% this year, ahead of the +9% of the S&P 500 and the +7% of the IT services market, while trailing slightly behind the +24% of the Nasdaq.
C3.ai (AI)
As an enterprise artificial intelligence software company, Wall Street will be monitoring C3.ai’s growth and prospects in its fourth-quarter financial report on Wednesday, May 31.
Founded in 2009, C3 focuses on accelerating digital transformation. The company develops and operates large-scale AI, predictive analytics and IoT applications. C3 launched its IPO in 2020 and seems to be slowly but surely on its way to breaking even as the AI revolution gathers momentum.
Fourth Quarter Preview: The Zacks consensus for C3’s Q4 earnings is -$0.17 per share versus an adjusted EPS loss of -$0.21 in 4Q22. Revenue fourth quarter is expected to be flat year over year at $72.32 million.
More interestingly, C3 has beaten earnings expectations for eight straight quarters and beat revenue estimates in its last two earnings reports.
C3’s full-year earnings are now forecast at -$0.46 per share, which would be a significant increase from an adjusted loss of -$0.73 per share in 2022. For fiscal 2024, earnings are expected to continue moving closer to the black at -$0.33 per share. Even better, revenue is expected to grow 5% this year and another 19% in FY24 to $317.18 million.
Amid the optimism surrounding the artificial intelligence market, C3 stock has soared +192% year-to-date, even outperforming Nvidia’s +166% when joined by Dell and the broader indices.
bottom line
When we go into their earnings reports next week, shares of Dell and C3 both reach a Zacks rank #3 (Hold). Their quarterly estimates aren’t overwhelming, but beating expectations and providing upbeat guidance could see DELL and C3 shares rally.
With market sentiment high towards artificial intelligence, it is worth holding onto shares of Dell and C3 for the time being as both companies have become very attractive longer-term investments.
5 shares will double
Each of these stocks was handpicked by a Zacks expert and voted the #1 most popular stock to gain +100% or more in 2021. Previous recommendations increased by +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report fly under Wall Street’s radar, which presents a great opportunity to start from the ground up.
Check out these 5 potential home runs today >>
