I used Bard AI to help recommend blue-chip stocks for July. Right off the bat, it’s clear that Bard isn’t considering recent events in recommending the shares it has. Most of the rationale it offers in picking the shares centers on long-term factors.
That’s fine, given that long-term investing produces better average returns. But it also suggests that short-term traders will have very little use for AI as it is currently. AI also has a penchant for AI. All of the shares below are intricately connected to the growth of artificial intelligence.
Me: Hi Bard, I am writing an article titled “7 Blue-Chip Stocks That AI is Loving in July” Do you have any recommendations?
AI-Recommended Blue-Chip Stocks: Microsoft (MSFT)
Bard: “Microsoft is a leading provider of cloud computing and productivity software, and it is also investing heavily in AI. The company’s AI capabilities are used in a variety of products and services, including its Azure cloud platform, its Office 365 productivity suite, and its Bing search engine.”
It’s difficult to disagree with Bard in regard to Microsoft’s (NASDAQ:MSFT) stock. The company is a leader in cloud and productivity. Azure and Microsoft Office are great technologies that have unlocked incredible value across the economy on a global scale. Further, the company has invested substantially in AI and in the integration of AI across its product suite.
All of that leads to a reasonable conclusion that Microsoft remains a buy in July. However, it’s also reasonable to suggest that now isn’t the best time to buy MSFT stock. Based on the consensus target stock price, shares are currently oversold by $8.
AI-fueled growth is the best reason to believe that Microsoft can continue to rise even though it is oversold. Intelligent cloud revenue increased by 16% during the first three months of 2023, reaching $22.1 billion. But Microsoft hasn’t given reason to believe that AI will immediately spike sales soon. Further, Microsoft may give up on the proposed Activision deal. This is why I believe it is among the best AI-recommended blue-chip stocks.
Bard: “Amazon is another major cloud computing provider, and it is also using AI to power its e-commerce business, its logistics network, and its advertising platform. The company’s AI capabilities are helping it to improve its efficiency, its customer service, and its product recommendations.”
Unlike MSFT, Amazon (NASDAQ:AMZN) stock still has room to grow, according to Wall Street. Amazon hasn’t garnered a lot of attention for any particular AI integration or release. As Bard notes, the company is using AI to enhance its core businesses. It has been doing so for quite some time.
In fact, Amazon has been receiving media attention for its AI integration for at least the last five years. Articles dating back to 2018 explain that Amazon has used AI for product recommendations for a long time. The company was touting updated generative AI ability even back then as its recommendation algorithm evolved.
More recently, Amazon talked about the positive effects on retail that generative AI promises. The company is clearly enthusiastic about the possibility it offers for the company in better-recommending products to customers. Large Language Models (LLMs) help train AI to better pick up on nuance, which is kind of like having a salesperson who listens very, very well.
AI-Recommended Blue-Chip Stocks: Nvidia (NVDA)
Bard: “Nvidia is a leading manufacturer of graphics processing units (GPUs), which are used in a variety of applications, including gaming, artificial intelligence, and data science. The company’s GPUs are essential for many AI applications, and its AI capabilities are helping it to expand into new markets, such as self-driving cars and healthcare.”
The strength of Nvidia’s (NASDAQ:NVDA) stock has long been attributed to its expertise in GPUs. Those GPUs have again come to the fore due to the fact that they are essential to the most recent AI boom.
Bard notes that Nvidia’s AI capabilities are incredibly important right now because it makes the most powerful AI chips. Those chips will be used to drive new efficiencies in new markets like autonomous vehicles and healthcare.
Back in late May, Nividia shares spiked when it released earnings that included a Q2 revenue forecast of $11 billion due to AI advances. Prior to that shocker number, Wall Street had been anticipating $7.15 billion in Q2 sales.
Share prices rocketed to $390 on that news. They’ve since risen again and are holding steady at around $430. Chip bans in China aren’t affecting prices, nor is much else. Investors are scared at the same time, though. Nvidia’s rapid rise and high volatility mean prices could drop dramatically, even if it continues to dominate AI for years to come.
Bard: “C3.ai is a software company that specializes in AI-powered enterprise applications. The company’s platform helps businesses to build and deploy AI solutions that can improve their operations, their customer service, and their decision-making.”
Bard is exactly right in asserting that C3.ai (NYSE:AI) stock does all of those things listed immediately above. It is focused on the enterprise side of the AI spectrum. In time, C3.ai promises to become the leader in Ai enterprise deployments.
However, I wouldn’t expect AI stock to move much in July. Instead, it should remain fairly stable. It has mostly missed the hype train that Nvidia has ridden much higher. That isn’t to say it hasn’t been justified in Nvidia’s case: It clearly has based on Q2 forecasts. But C3.ai hasn’t provided any similar projections. Instead, it is telegraphing growth in the 15% range.
Is there anything wrong with that? No, it’s a very respectable number. However, it is inevitably being compared to Nvidia’s growth and therefore being judged as lackluster. In short, it’s going to take time for AI stock to grow. Shareholders who purchased in late 2022 have been rewarded handsomely. It should be flat through July since nothing is really happening. Bard and I disagree here.
Alphabet (GOOG, GOOGL)
Bard: “Alphabet is the parent company of Google, which is one of the leading AI companies in the world. Google’s AI capabilities are used in a variety of products and services, including its search engine, its maps, and its translation tools.”
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) is certainly what Bard bills it to be. It utilizes AI in all of the offerings listed above. I’m not so sure that I agree with Bard in recommending Alphabet shares at the moment, though.
The reason is that Alphabet/Google’s ad business is facing a lot of scrutiny at the moment. That’s absolutely nothing new, as the company has been labeled a monopoly for a long time, especially in relation to its ad platform. EU regulators recently found ‘abuse’ of that platform that has advantaged Google since at least 2014.
Google collects user data, sells space for advertising to those users through its website, and brokers the publishing of ads based on all of that info. It certainly has power over the entire ad. European regulators recommend Google’s ad business be broken up. That probably won’t happen so, especially given that tech stocks are holding the market up currently. A U.S. push is therefore unlikely soon. However, renewed scrutiny should hold prices steady, if not move them downward.
AI-Recommended Blue-Chip Stocks: Micron Technology (MU)
Bard: “Micron Technology is a leading manufacturer of memory chips, which are used in a variety of devices, including computers, smartphones, and servers. The company’s memory chips are essential for many AI applications, and its AI capabilities are helping it to develop new products and services.”
Everything Bard says about Micron Technology (NASDAQ:MU) stock is true in terms of its positioning in the chip market and potential in the AI market.
However, it’s definitely a contrarian pick for July. The firm recently released fiscal Q3 earnings that weren’t inspiring. Revenues grew from $3.69 billion to $3.75 billion on a sequential basis. Let’s call that flat. Micron posted $8.64 billion in revenues during its fiscal Q3 a year ago, and $3.75 billion a year later is a drastic decline even if it’s above the midpoint of company guidance.
The company anticipates slight top-line growth this quarter at $3.90 billion. Micron ramped up production during the pandemic, but so too did others. The race to supply memory chips led to a glut of supply in aggregate. Prices fell as a result, and Micron’s top line has suffered consequently. The reason to buy Micron now is that it is simply priced too low, not because there is any evidence that share prices should move upward soon. But that still makes it a great pick among AI-recommended blue-chip stocks.
Bard: “Tesla is a leading electric vehicle manufacturer, and it is also investing heavily in AI. The company’s AI capabilities are used in its self-driving cars, its battery management system, and its manufacturing processes.”
It’s always difficult to bet against Tesla (NASDAQ:TSLA) and its stock. The company seems to be forever a step ahead. Its move to lower prices and fight for greater volumes globally seems to have been a smart decision. When the company announced the move, it was immediately derided for having done so. The rationale was that Tesla’s lower margins would negatively affect it too strongly. Judging by share prices, that certainly hasn’t been the case.
Further, the company is improving its operations as delivery and production numbers exceeded forecasts for the period ending June 30.
Tesla delivered more than 446,000 vehicles as it was expected to deliver just under 446,000. The discount strategy then is also working in incentivizing demand for Tesla vehicles. That’s a strong positive for Tesla as it fights against EV brands vying for a share of the market in an increasingly competitive landscape, especially in China, where domestic brands offer real competition. That’s why it is one of my top picks regarding AI-recommended blue-chip stocks.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.