Only 14 times since Nasdaq stocks began trading, the index has had negative yearly returns. The index has lost at least 30% only three times in the last two decades. Investors may not recognize that the Nasdaq rallied for years after these sharp dips in 2002 and 2008.
After a rough 2022, the Nasdaq rose 43% last year. AI euphoria in the tech industry drove this. Investors may see more gains in 2024 after a strong start. The equities below enjoyed AI-driven momentum in 2023, but I think all of them are interesting given the long-term secular growth possibilities in AI for software developers.
1. Palantir Tech My first pick is a Cathie Wood ETF classic. Palantir Technologies (NYSE: PLTR) sells data analytics software to the U.S. government, Western allies, and the business sector.
Palantir debuted its fourth flagship product, the Palantir Artificial Intelligence Platform, in 2023, transforming the corporation. Since the market was crowded with competing products, management designed an innovative lead generating approach to promote AIP. Palantir started boot camps where prospective customers may showcase its tools and find an AI use case.
Palantir has held over 500 boot camps since AIP's April launch. For context, the company had 92 demo pilots in 2022. Demand for boot camps is impressive, but the conversion to paying customers is even better.
Palantir added 35% more customers in 2023. Palantir has increased margins and free cash flow due to quick customer acquisition. The corporation is profitable under GAAP and finished 2023 with $3.7 billion in cash with no debt.
Palantir's P/S ratio is 25.5, so it's not cheap. Given the company's strong fourth-quarter report, the stock has gained momentum in recent weeks. Given Palantir's AI breakthrough, Dan Ives of Wedbush Securities still sees further upside in the stock. I think Palantir stock's premium is justified. Palantir is quietly becoming an AI leader, so long-term investors may want to buy some shares.
2. ServiceNow IT data management company ServiceNow will follow. Making data-driven decisions efficiently is a basic competency for corporate executives. Large organizations struggle because they keep data on multiple systems. Unfortunately, these systems rarely communicate well, making decision-making challenging. Through seamless data integration across digital platforms, ServiceNow transforms enterprises.
Gartner predicts $6.5 trillion in IT services spending by 2027. Even better? This spend is estimated to be mostly on IT services and software. That bodes well for ServiceNow. The company is already doing well attracting new clients and extending its existing base, but AI's role in enterprise digital transformation may only be beginning.
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