Nvidia, Meta Lead Evercore's Top AI Stock Picks for 2024

Key Takeaway

• Evercore ISI identifies Nvidia (NVDA), Alphabet (GOOGL), Meta Platforms (META), Uber Technologies (UBER), and TripAdvisor (TRIP) as key AI investment opportunities.
• Nvidia leads with 446 AI mentions, a 20.3% EPS revision, and a 0.8 PEG ratio; its stock surged over 140% in 2024.
• Meta Platforms' stock rose over 40% in 2024 with a projected $35-$40 billion increase in AI-related capital expenditures.

AI Revolutionaries Identified

Evercore ISI has identified a group of stocks that are leading the artificial intelligence (AI) revolution and are recommended for long-term investment. The excitement around AI has notably propelled Nvidia to a record high, achieving a $3 trillion valuation. Julian Emanuel, Evercore's senior managing director, described Nvidia as a "generational opportunity." Nvidia is not alone; Evercore's list of "AI revolutionaries" includes companies that are either enablers of AI or are leveraging AI to strengthen their competitive positions.

Evercore's list was compiled by scanning the Russell 1000 for companies whose executives frequently mentioned AI in 2023 earnings call transcripts. The firm also considered companies with upward revisions in 2024 earnings per share (EPS) estimates and a price-to-earnings growth (PEG) ratio for the next 12 months that is discounted compared to the Russell 1000. Emanuel noted, "These companies are set to outperform long term."

The list includes:

• Nvidia (Ticker: NVDA): 446 AI mentions, 20.3% EPS revision, 0.8 PEG ratio.
• Alphabet (Ticker: GOOGL): 169 AI mentions, 2.2% EPS revision, 1.4 PEG ratio.
• Meta Platforms (Ticker: META): 88 AI mentions, 14% EPS revision, 1.1 PEG ratio.
• Uber Technologies (Ticker: UBER): 17 AI mentions, 0.2% EPS revision, 1 PEG ratio.
• TripAdvisor (Ticker: TRIP): 27 AI mentions, 1.5% EPS revision, 0.6 PEG ratio.

Nvidia's AI Leadership

Nvidia stands out with 446 AI mentions in 2023, the highest among the companies on Evercore's list. The company's earnings estimates have been revised upward by over 20% this year. Emanuel highlighted Nvidia's recent 10-for-1 stock split as a potential growth catalyst, stating, "As with the history of tech stock splits before it, weakness is a buying opportunity. Generationally so." Nvidia's stock has surged more than 140% in 2024, driven by the announcement of its latest AI chips, dubbed "Rubin."

Meta Platforms' AI Focus

Meta Platforms also made Evercore's list, with its stock climbing over 40% in 2024 and earnings estimates up by 14%. The company had 88 AI mentions last year. Despite issuing a lower-than-expected revenue forecast, Meta is doubling down on AI, with capital expenditures projected to increase to between $35 billion and $40 billion. CEO Mark Zuckerberg assured investors in April, "On the upside, once our new AI services reach scale, we have a strong track record of monetizing them effectively."

Alphabet's AI Initiatives

Alphabet, the parent company of Google, recorded 169 AI mentions last year and has seen its stock rise by more than 25% in 2024. The company posted strong first-quarter results, beating both top and bottom-line estimates, and authorized its first dividend payment. Alphabet's AI products include the large language model Gemini and Vertex AI, which targets enterprise companies. CEO Sundar Pichai stated, "We are well under way with our Gemini era and there’s great momentum across the company. Our leadership in AI research and infrastructure, and our global product footprint, position us well for the next wave of AI innovation."

Management Quotes

• Mark Zuckerberg, CEO of Meta Platforms:

  "On the upside, once our new AI services reach scale, we have a strong track record of monetizing them effectively."

• Sundar Pichai, CEO of Alphabet:

  "We are well under way with our Gemini era and there’s great momentum across the company. Our leadership in AI research and infrastructure, and our global product footprint, position us well for the next wave of AI innovation."