Supporting Cast:  3 Stocks That Could Thrive in Apple’s New AI Era

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Unless you’ve been living under a rock, you’ve heard about Apple’s (NASDAQ:AAPL) “One More Thing”– an advanced implementation of artificial intelligence (AI) set to launch with iOS 18. This revolutionizes Apple as a company, and has skyrocketed investor confidence in the company, with AAPL stock being up 6.5% since the news broke. While taking this announcement on face value adds immense value to Apple stock, the logistics of fulfilling the new demand for this advent in AI will boost several other companies. 

These companies are going to be in the “back end” of the AI space serving supporting roles and taking home immense gains because of it. The three companies that fulfill this role, and are likely to provide investors with massive gains, are listed below.

Nvidia (NVDA)

Nvidia (NVDA) logo on a microchip

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Nvidia (NASDAQ:NVDA) is a semiconductor sector heavyweight. While it started as a gaming company, due to the power of its chips and their usage in tech/AI, NVDA quickly became the world’s most valuable semiconductor company and reached a market cap of $3.33 trillion. While it may seem like it has peaked, I believe that NVDA stock still has a ways to go.

NVDA stock is currently trading at $131.88 and is the most valuable company on the stock market. It has consistently beaten EPS estimates and is reporting high positive profit and operating margins. A quarterly earnings growth of 628.40% is nothing short of absurd and goes to show the prowess of this company.

Apple’s new AI depends on a collaboration with OpenAI, the creator of ChatGPT. OpenAI is reported to be run on NVDA chips. As the strain on OpenAI’s servers grows, the demand for new chips will too. It isn’t hard to see how NVDA could make a significant profit off of the new demand for AI chips. Thus, this tech stock is a buy, especially given this new circumstance.

Constellation Energy (CEG)

Environmental protection, renewable, sustainable energy sources. Plant growing in the bulb concept. renewable energy stocks to buy

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Constellation Energy (NASDAQ:CEG) operates through the generation and sale of electricity in the U.S. and also has five international segments. CEG has a varied product base, selling energy made from natural gas, energy-related products and sustainable solutions. Combined, these sources generate upwards of  33,000 megawatts of generating capacity. 

CEG stock is currently trading at $214.90 with a market cap of $67.7 billion, It has seen fairly good profit and operating margins, 10.25% and 13.24%, respectively. The year-over-year (YOY) quarterly earnings growth rate is a whopping 819.80%, which is due to strong operational performance and favorable market conditions. It has also beaten EPS predictions in the past quarter.

Apple focuses a lot on its sustainability initiatives. With this new AI model, more energy would be required to make it work and CEG might provide clean energy to Apple for their AI initiatives, generating revenue for the company. Plus, news of major technological advancements from a leading company like Apple often generates overall positive market sentiment, further making it a tech stock to buy.

Emerson Electric (EMR)

An office building with an Emerson Electric sign on it.

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Emerson Electric (NYSE:EMR) is a global technology and software as a service (SaaS) company that offers a wide range of solutions in both the business-to-business and business-to-consumer market. It has diversified itself into six distinct segments, including final control, control systems & software, measurement & analytical, AspenTech, discrete automation, and safety & productivity.

EMR stock has seen great profit and operating margins, at 64.97% and 22.58% respectively. It has seen YOY quarterly revenue growth of 16.50%. Analysts have set an average price target of $130.89, indicating a growth potential of 22.94%. It has also consistently beaten EPS predictions in the past two quarters.

As mentioned before, positive news about Apple’s AI developments can enhance overall investor confidence in tech and industrial automation stocks, potentially boosting EMR’s stock value. Also, Emerson’s expertise in integrating advanced technologies could position it as a key supplier or partner in Apple’s AI-driven projects.

On the date of publication, Achintya Pasricha did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Achintya Pasricha is a self-taught investor who has recently started to publish articles on a freelance basis.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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