The buzz around generative artificial intelligence (AI) has grabbed investors’ attention, with many tech stocks rallying significantly over the past year. Generative AI is expected to drive major changes across various industries through automation, improved efficiency, and cost reduction. Keeping this backdrop in mind, we used TipRanks’ Stock Comparison Tool to place Meta Platforms (NASDAQ:META), Nvidia (NASDAQ:NVDA), and Trade Desk (NASDAQ:TTD) against each other to find the AI stock with the highest upside potential, according to analysts.
Meta Platforms (NASDAQ:META)
Social media giant Meta Platforms delivered upbeat results for the first quarter of 2024, thanks to the recovery in the online advertising market and efficiency initiatives. The company’s earnings per share (EPS) surged 114% to $4.71, driven by a 27% rise in revenue to $36.5 billion and margin expansion.
However, investors are concerned about Meta Platform’s aggressive planned capital expenditure of $35 billion to $40 billion in 2024, which would mainly go towards its AI ambitions. The company is confident about its AI roadmap, with CEO Mark Zuckerberg optimistic about Meta’s ability to “be the leading AI company in the world.”
The integration of AI into Meta’s key apps is already improving user engagement and delivering more value for advertisers. Interestingly, almost 30% of the posts on Facebook feed are currently delivered by Meta’s AI recommendation system and more than 50% of the content seen on Instagram is now recommended by AI.
Is META a Good Stock to Buy?
Aside from concerns related to Meta’s rising capex, the near-term upside in the stock could be limited by regulatory pressures and the significant losses related to the Reality Labs division.
Nonetheless, most analysts are bullish about Meta Platform’s long-term growth story. Earlier this month, Raymond James analyst Josh Beck boosted META stock’s price target to $550 from $525 and reiterated a Buy rating, calling the company a generative AI leader.
Beck contended that the Street is under-appreciating the company’s dominant position within foundational GenAI and highlighted strengths like a vast computing infrastructure and a massive user base that can be capitalized for training AI models.
With 37 Buys, three Holds, and two Sell recommendations, Meta Platforms stock is assigned a Strong Buy consensus rating on TipRanks. The average META stock price target of $523.61 implies about 4% upside from current levels. Shares have rallied more than 42% year-to-date.
Nvidia (NASDAQ:NVDA)
Semiconductor giant Nvidia is benefiting immensely from the ongoing generative AI wave. The company’s advanced GPUs (graphics processing units) are in huge demand, as they are required to power AI models.
The company’s Q1 FY25 results reported in May proved that the demand for NVDA’s products remains robust. Companies across industries are investing billions of dollars in NVDA’s GPUs, which are used in developing AI applications. In Q1 FY25, revenue surged 262% year-over-year to $26 billion, with Data Center segment revenue jumping 427% to $22.6 billion.
Also, the company’s adjusted EPS increased significantly to $6.12 from $1.09 in Q1 FY24, thanks to higher sales and gross margin expansion.
Looking ahead, Nvidia is bullish about sustaining momentum in its business, fueled by innovative offerings like the Blackwell platform.
Is NVDA Stock a Buy Right Now?
Following Nvidia’s recent 10-for-1 stock split, Argus analyst Jim Kelleher raised the price target for the stock to $150 from $110 and reaffirmed a Buy rating. The analyst believes that the company is well-positioned for continued growth in FY25. He thinks that NVDA stock has further upside potential, given the semiconductor giant’s “positioning within transformational AI technology.”
The analyst suggests investors buy Nvidia stock or increase their positions to gain exposure to the lucrative AI market.
Nvidia stock scores a Strong Buy consensus rating based on 37 Buys and three Holds. The average NVDA stock price target of $126.32 implies 4.2% downside potential. Shares have skyrocketed 166.3% so far this year.
The Trade Desk (NASDAQ:TTD)
Trade Desk’s software helps advertisers optimize their campaigns by helping them reach more relevant customers across various channels and devices, including video, audio, display, and connected TV (CTV). The company is leveraging AI to enhance the effectiveness of its technology. For instance, the company’s Kokai platform has advanced features that are powered by AI.
Trade Desk reported better-than-anticipated results for the first quarter of 2024, backed by continued growth in ads on connected TV. The company boasts the largest CTV inventory marketplace in the industry, which helps advertisers gain access to premium content across major networks and ad-supported streaming services.
The popularity of Trade Desk’s technology reflected in its strong customer retention rate of more than 95% in Q1 2024. The company’s first-quarter revenue grew 28% to $491 million. Moreover, adjusted EPS increased 13% to $0.26.
Is TTD Stock a Buy Right Now?
On June 11, Morgan Stanley analyst Matthew Cost reaffirmed a Buy rating on Trade Desk stock with a price target of $100. The analyst’s bullish stance is based on TTD’s strategic position within the connected TV ad market, which is increasingly adopting programmatic advertising (the use of AI and machine learning to buy ad space).
The analyst expects every 5% shift to programmatic advertising to drive an 8% rise in Trade Desk’s billings by 2025.
On TipRanks, Trade Desk stock has a Strong Buy consensus rating based on 16 Buys and one Hold. The average TTD stock price target of $106.21 implies 11% upside potential. Shares have risen about 33% year-to-date.
Conclusion
Shares of Meta Platforms, Nvidia, and Trade Desk have outperformed the S&P 500 Index (SPX) so far this year. Analysts are bullish on the prospects of all the three companies discussed above and expect solid growth in the years ahead, driven by AI-related tailwinds.
Currently, analysts’ average price target indicates that Trade Desk stock has higher upside potential than the other two larger AI stocks.
