Why Snap Inc. (SNAP) is one of the best AI stocks to buy according to Reddit?
We recently published a list of 10 Best AI Stocks to Buy According to Reddit. In this article, we will look at where Snap Inc. (NYSE:SNAP) ranks against other best AI stocks to buy according to Reddit.
On December 4, Jay Jacobs, US Head of Thematics and Active Equity ETFs at BlackRock, appeared on CNBC and discussed the significant growth potential for ETFs as we approach 2025, especially in the context of the accelerating AI infrastructure phase. He noted that while AI adoption is still in its early stages, significant investments from major technology companies worth about $250 billion per year are being made to improve data centers and develop advanced chips. This investment is crucial to better integrate AI into daily life and business applications.
Jacobs emphasized that the opportunities in AI extend beyond just mega-cap tech stocks; it encompasses a broader value chain that includes semiconductor and software companies. He mentioned specific ETFs like ARTY (an index-based artificial intelligence fund) and BAI (an actively managed fund) that aim to capture this growth. Additionally, he highlighted the increasing importance of cybersecurity as data becomes more valuable, suggesting that companies will invest more in protecting their data assets. This trend is reflected in ETFs like IHAK, which focus on cybersecurity companies benefiting from this increased demand.
Dave Nadig, an ETF expert and financial futurist, added insights on how AI will shape ETF investing by pointing out the infrastructure needs arising from increased energy consumption driven by AI technologies and electric vehicles. He noted that power generation and utility companies are becoming increasingly relevant as they adapt to rising electricity demand. Both experts agreed on the critical role of physical infrastructure in supporting technological progress, emphasizing that real-world resources such as energy and materials are essential for the continued development of AI technologies.
Dan Ives, Global Head of Technology Research at Wedbush Securities, also believes the technology market is poised for significant growth, driven by advances in AI. He expects AI software companies to play a key role in this expansion, as he said in a Nov. 25 CNBC interview. We discussed this in our article about the 12 Best Artificial Intelligence Stocks to Invest in Under $10here's an excerpt from it:
“…Ives believes that the consumption model in enterprise AI, driven by the advances of major chip makers, will lead to underestimated growth rates of 15% to 20% for these software companies.
We first scoured Reddit threads to compile a list of the best AI stocks. We then selected the ten stocks that were most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of the third quarter of 2024. The hedge fund data comes from Insider Monkey's database, which tracks the moves of more than 900 elite money managers.
Why are we interested in the stocks that hedge funds invest in? The reason is simple: our research shows that we can outperform the market by imitating the best stock picks from the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating the benchmark by 150 percentage points (Ssee more details here).
Why Snap Inc. (SNAP) is the best AI stock to buy according to Reddit?
A young adult family using a camera to capture moments from their everyday lives.
Number of hedge fund holders: 34
Snap Inc. (NYSE:SNAP) is a technology company known for popular products such as Snapchat, Spectacles and Bitmoji. Snapchat in particular uses AI to improve user experiences.
The company is also investing in GenAI to enable developers to create more advanced AR experiences. For example, the introduction of AI-powered tools in Lens Studio allows developers to easily generate full 3D characters and animations. Additionally, the AI-powered chatbot, My AI, provides personalized responses and assistance to users, leading to greater user engagement, evidenced by the tripling of Snaps sent to My AI in the third quarter.
The company had strong financial results in the third quarter of 2024, with revenue improving 15.28% year over year to $1.37 billion. This growth was primarily driven by a 16% increase in direct response ad revenue, which also includes the use of AI for ad targeting and optimization. Snap Inc. (NYSE:SNAP) improves user experience and unlocks new advertising and monetization opportunities through AI.
RiverPark Large Growth Fund stated the following about Snap Inc. (NYSE:SNAP) in the first quarter of 2024 letter from an investor:
“Snap Inc. (NYSE:SNAP): SNAP was our biggest detractor in the quarter, despite fourth-quarter results generally being in line with or beating expectations. Revenue growth of 5% was roughly in line with investor expectations and at the high end of expectations, and EBITDA of $159 million beat estimates by $49 million. The number of daily active users (DAUs) also exceeded investor expectations, ending the quarter at 414 million (about 2 million better), driven by continued innovation in Snap's offering. Revenue expectations for Q1 24 were also roughly in line with investor expectations, but EBITDA expectations of negative $55-95 million were well below expectations. The company pointed to higher infrastructure costs and a US-focused marketing campaign for the lower-than-expected margin guidance.
In short, SNAP is in 3rd place on our list of the best AI stocks to buy according to Reddit. Recognizing the growth potential of SNAP, our conviction lies in the belief that AI stocks hold the promise of delivering high returns in a shorter time frame. If you're looking for an AI stock that's more promising than SNAP but trades at less than five times earnings, check out our report on the cheapest AI stock.
READ NEXT:8 Best Wide Moat Stocks to Buy Now And The 30 most important AI stocks according to BlackRock
Disclosure: None. This article was originally published on Insider monkey.
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