The adoption of artificial intelligence (AI) is continuing to spread across the economy. Statista projects the AI market to explode to $826 billion by 2030.
Consistent with that estimate, the growth from the following companies shows that the demand for AI hardware and software is not slowing. This could be a great time to buy these AI stocks that are currently trading almost 40% below their 52-week high.
1. Dell Technologies
Dell (NYSE: DELL) is more than a PC brand. It is also a leading supplier of servers and storage systems, and this is fueling solid growth for Dell, as companies are buying AI-optimized servers like there's no tomorrow.
Revenue from Dell's infrastructure group totals almost half of the business and grew 38% year over year last quarter. Management is seeing more organizations buying AI products every quarter, which signals a strong upward trajectory in the infrastructure business that isn't slowing down anytime soon.
Most importantly, Dell is not just selling a server. It offers a complete package of networking and storage services to go with its cutting-edge liquid cooled servers. Dell tunes all these systems to deliver optimal performance for the customer, which reflects a business that offers excellent customer support. This is why more customers are turning to Dell amid a competitive server market -- a market the company estimates at $174 billion when including additional services it offers.
The negative for Dell is the PC business. Revenue from the client solutions group was down 4% year over year, which is offsetting a lot of the growth Dell is seeing in infrastructure. But the PC business could pick up in the next few years, as there are a lot of older PCs that will need to upgrade to handle processor-hungry AI applications.
Wall Street analysts expect Dell's adjusted earnings per share to grow at an annualized rate of 12% over the next several years. Against those estimates, the stock's forward price-to-earnings (P/E) ratio of 14 is a bargain and raises the chance that the stock will rebound and trade at a higher valuation by this time next year.
2. C3.ai
C3.ai (NYSE: AI) is a leader in providing AI applications that help organizations save a lot of time in managing supply chains and gaining important insights from their data to make better decisions.
Revenue growth has accelerated to 20% year-over-year in the most recent quarter. Businesses across several industries are showing interest in C3.ai's generative AI applications. Prospective customers across 15 industries piloted the company's product over the past year, which is opening up new markets for the company.
C3.ai has valuable sales channels through the major cloud service providers, such as Microsoft Azure and Amazon Web Services. Its 12-month qualified pipeline through these partners grew 63% year over year last quarter, which shows that C3.ai's strong growth won't be slowing down anytime soon.
Management expects revenue to continue accelerating through the end of fiscal 2025 (which ends in April). Wall Street is currently expecting revenue to increase from $383 million this year to $546 million by fiscal 2027.
The negative is that the business is not profitable yet. However, because C3.ai generates more than 90% of its revenue from subscriptions, it should post a healthy margin over the long term. In fact, the company's free cash flow was $18 million last quarter and increased significantly over the last year.
The stock is down 19% this year, which could set up a great buying opportunity. C3.ai's guidance is pointing to more momentum in signing deals. As the company reports more solid top-line growth with improving free cash flow, the stock will likely be trading higher by this time next year.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Microsoft. The Motley Fool recommends C3.ai and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy .
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