With stock markets on the retreat again, thanks in part to technology names giving some gains back, dip buyers may have an opportunity to get AI exposure at a lower price of admission. The Wall Street community isn’t ready to give up on tech stocks, especially the ones with AI upside potential, such as WIX, AMZN, and NOW.
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Undoubtedly, AI was the most talked about trend in the first half of the year, thanks to the impressive launch of ChatGPT. Though August has seen many of the AI winners come down a bit, I think it’s quite a stretch to conclude that this is the beginning of the end of an AI bubble. There’s no question that certain AI plays have gotten overvalued, perhaps insanely overvalued.
That said, throwing in the towel on the broader basket of AI stocks just doesn’t seem wise, especially as under-the-radar AI innovators incorporate generative AI technologies into their products to help drive sales growth and cut down on overhead expenses.
Therefore, in this piece, we’ll take a look at TipRanks’ Comparison Tool to check out three AI-savvy tech stocks that may be worth another look as they retreat as part of a broader tech-concentrated pullback going into fall.
Wix (NASDAQ:WIX)
Wix is an Israeli software company that makes it easy for non-coders to build their websites. Undoubtedly, web development services, like drag-and-drop site builders, can be pretty commoditized these days, with numerous domain hosts and e-commerce firms also offering such services. Still, Wix is a company that stands out above the pack, thanks to its rich set of tools that can really help clients create a customized site that looks as though it were developed by a professional web developer.
Not only do Wix sites look better than others in the pack, in my opinion, but they’re also intuitive to use. As new generative AI features work their way into the platform, expect Wix to become more capable and even easier to use.
After the nasty collapse in the share price in 2021, I view Wix as one of the forgotten innovators to which investors should give another chance, partially due to unrecognized AI upside, but also because the stock has fallen too heavily out of favor in recent years. Personally, I couldn’t be more bullish as Wix sails into the AI age.
The company recently pulled the curtain on AI Site Generator and AI Assistant for Business. I expect such generative AI technologies could help Wix climb out of its historic funk.
At writing, WIX stock is down around 75% from its all-time high of over $360 per share. The stock has come back quite a bit over the past year (up 21%), thanks in part to strong first- and second-quarter results, which both handsomely topped expectations. Following the company’s most recent (Q2) beat ($1.26 EPS vs. $0.59 consensus), management hiked its full-year sales forecast, now expecting $1.54-1.56 billion in revenue, up from $1.52-1.54 billion.
At 3.5 times price-to-sales, well below the infrastructure software industry average of 8.4 times, WIX stock stands out as a potential AI bargain. Many analysts agree.
What is the Price Target on Wix Stock?
Wix stock is a Strong Buy on TipRanks, with 16 Buys and five Holds. The average WIX stock price target sits at $115.00, entailing 31.8% upside potential.
Amazon (NASDAQ:AMZN)
Amazon is the e-commerce and cloud behemoth that has a lot of room to run as consumer spending climbs higher while Amazon Web Services (AWS) demand heats up again. Though the potential of Amazon’s generative AI service Bedrock (a service that helps build generative AI apps) is likely partially priced in here, I don’t think investors are giving the e-commerce giant enough credit for its sound footing in the AI race.
With AI built on top of AWS, I view Amazon as every bit as competitive as a company like Microsoft (NASDAQ:MSFT). Though Amazon stock has blasted off 56% year-to-date, I’m not ready to give up on the stock and am staying bullish as shares look to hit new highs again. It’s probably just a matter of time before Amazon returns to its pre-crash heights of around $188 per share, even with the latest slip in markets.
The company is going into the second half with the wind at its back. AWS experienced growth that was better than expected, potentially signaling that the cloud-cutting and efficiency days may be nearing an end. AWS with AI could mark the next stage as businesses look to unlock the full power of their data to bolster growth rates.
CEO Andy Jassy seems to think “cost optimizations” are “moderating and maybe behind us” when it comes to larger firms. As AWS pushes further into the AI age, it certainly seems like growth re-acceleration is the name of the game over the next year.
What is the Price Target on Amazon Stock?
Amazon is a Strong Buy, with 40 Buys and one Hold assigned by analysts in the past three months. The average AMZN stock price target of $174.13 entails 30.5% upside potential.
ServiceNow (NASDAQ:NOW)
ServiceNow is a software-as-a-service company that’s more than halfway recovered from its 51% peak-to-trough fall. Shares are up over 60% from their lows following the latest slump off 52-week highs. I view the dip as unwarranted, given the monetization potential of new generative AI offerings and the latest impressive quarterly beat.
Though NOW stock is on the pricier side at 79.1 times trailing price-to-earnings (well above the 30.9 times of the application software industry average), I’m staying bullish as ServiceNow doubles down on AI as the technology enters what CEO Bill McDermott views as “the biggest inflection in the history of information technology.”
ServiceNow isn’t just well-equipped for the inflection point; it already has a front-row seat with the right AI partners, like Nvidia (NASDAQ:NVDA) and Accenture (NYSE:ACN), and innovations in place.
What is the Price Target on ServiceNow Stock?
ServiceNow is a Strong Buy on TipRanks, with 26 Buys and one Hold. The average NOW stock price target of $638.69 implies 17.5% upside potential.
Conclusion
As tech falters, AI plays may be worth checking out on the way down. Of the three stocks mentioned in this piece, analysts see the most gains coming from AMZN and WIX shares, at over 30% upside potential each.
