Artificial intelligence (AI) companies AMD (NASDAQ:AMD), C3.ai (NYSE:AI), Super Micro (NASDAQ:SMCI), Palantir (NYSE:PLTR), and Arm Holdings (NASDAQ:ARM), have gained 6.3%, 6.6%, 15%, 6.4%, and 10%, respectively, in the pre-market trading session today. The upside is attributed to Nvidia’s (NASDAQ:NVDA) spectacular fiscal fourth-quarter results, which boosted investors’ confidence in the broader AI sector.
Interestingly, the expectations for continued strong demand for AI-related products and services are likely to sustain the upward momentum in AI stocks.
NVDA’s Q4 Indicates Promising Future
It is worth highlighting that Nvidia reported Q4 revenue of $22.1 billion, representing a more than threefold increase year-over-year. At the same time, the company’s earnings increased by 765% to $12.3 billion in the quarter.
The primary driver behind Nvidia’s impressive Q4 results was its strength in the Data Center business. This segment, which caters to the surging demand for cloud and AI services, witnessed a 409% jump in revenue from the year-ago quarter.
Additionally, the company’s near-term guidance showed no signs of a slowdown. NVDA expects revenues to reach $24 billion in Q1, ahead of the consensus estimates of $22 billion.
Management expects the demand for NVDA’s graphics processing units (GPUs) to continue to remain high, driven by a broader industry-wide shift from traditional central processing units (CPUs) toward specialized accelerators that Nvidia manufactures. Also, NVDA plans to launch new products that are expected to generate further demand.
What Are the Best AI Stocks to Buy Now?
Among the above-mentioned AI stocks, both AMD and NVDA have a Strong Buy consensus rating, ARM and SMCI have a Moderate Buy, while C3.ai and Palantir stocks have a Hold rating.
Interestingly, Wall Street analysts are expecting more than 15% upside potential for both AMD and NVDA stocks, even after the recent surge in their share prices.
