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2 AI Stocks to Kick Off 2024!

Andrew Button
·4 min read
Businessman holding AI cloud
Image source: Getty Images

Written by Andrew Button at The Motley Fool Canada

Artificial intelligence (AI) stocks are the biggest thing in the markets in 2024. Between NVIDIA’s massive rally in the stock market and OpenAI’s success with ChatGPT, there has been a lot to keep up with. Interestingly enough, that fact has not caused interest in all AI stocks to rise. Rather, the spike in interest (and buying) has mainly affected a small handful of “AI winner stocks.” As a result, you can find stocks that are growing just as rapidly as the likes of NVIDIA and Microsoft but with far better buying prices. In this article, I will explore two such stocks that look set to have a great year in 2024.

OpenText

OpenText (TSX:OTEX) is an underrated Canadian AI stock that is nowhere near as expensive as the big players in AI. At today’s prices, the stock trades at just 10.05 times earnings and 2.7 times book value. For a tech stock, that’s a rock-bottom valuation.

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So, what does OpenText do?

It’s primarily in the information management business. It sells enterprise software products that have the following features:

  • Content management

  • Data analysis

  • Text editing

  • Text analytics

It’s in text analytics that OpenText is using AI. You may have heard about “large language models” and how they can create essays that meet, or even surpass, human standards. OpenText has a lot of that tech under the hood in its products. For example, Cloud Editions allows users to create content and have AI fill in sentences for them, so that they can write documents more quickly. That’s just one among many great AI use cases that OpenText’s users enjoy in Cloud Editions and other products.

OTEX stock has had a great run over the years. Its stock has risen 418% in the markets; today, it has a dividend with a 2.45% yield. Also, the dividend has been raised 25 consecutive years, which makes OTEX a true Dividend King.

Adobe

Adobe (NASDAQ:ADBE) is easily one of the most underrated tech stocks in the world. It sells the Adobe Creative Cloud suite of products:

  • Adobe Photoshop

  • Illustrator (for drawing)

  • Premiere Pro (for video editing)

  • InDesign (for page layouts)

  • Adobe Express (for templates)

  • Adobe Firefly (for AI-based image generation)

  • Adobe Lightroom (for artificial photo lighting)

With Adobe Creative Cloud, you get all of these great applications plus 20 gigabytes of Cloud hosting for just $38 per month plus tax. I personally am a Creative Cloud user and I love the benefits I get with the service. I’ve always been a big fan of Creative Cloud’s core apps, now with Adobe Firefly, I can create AI images on the fly and also have my own images filled in with quick edits as well.

Over the years, ADBE has done a lot of growing. In the last 10 years, it has grown its revenue by 17%, its net income by 34%, and its earnings per share by 36% per year. It’s been a great showing. And, with Adobe only just recently having launched its AI products, there’s potential for even more growth in the future.

Foolish takeaway

What a few years it has been. Ever since ChatGPT launched in November of 2022, AI has taken the world by storm, transforming companies and empowering people to work faster and smarter. Who knows what tomorrow brings? One thing that’s certain is that OpenText and Adobe will be a part of it.

The post 2 AI Stocks to Kick Off 2024! appeared first on The Motley Fool Canada.

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Fool contributor Andrew Button has no position in any of the stocks mentioned. The Motley Fool recommends Adobe, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.

2024