Three AI Enablers with Long-Term Potential Amidst Volatility

The rise of generative artificial intelligence (AI) is opening doors to a smarter future, with potential long-term benefits for businesses. While volatility and uncertainty surround the near-term trajectories of AI companies, there are three AI enablers that stand out as longer-term winners.

Snowflake (SNOW), despite a recent downturn, holds promise as a later-stage beneficiary of the AI race. The stock has suffered a 46% decline from its 52-week highs, largely due to negative factors and misunderstandings. Recent data breaches affecting Snowflake’s customers have added to the downward pressure. However, many of the negative sentiments seem to be priced into the stock, potentially overshadowing positive recent developments. With new AI offerings like Arctic and Cortex, Snowflake has the potential to leverage the full power of AI technology. Patience may be required as the stock settles after the recent setbacks.

Adobe (ADBE) has also faced its share of challenges, including a controversy surrounding a recent update to its terms of service. Concerns have arisen regarding the use of user content to train Generation AI models. However, this may be a miscommunication on management’s part, and it is likely that Adobe has measures in place to address these concerns. With a strong performance and an optimistic guidance boost, Adobe’s underrated AI capabilities should not be overlooked. The stock has shown positive momentum, with after-hours trading reflecting a more than 16% increase.

ServiceNow (NOW) is another AI winner that may be underestimated in terms of long-term growth potential. While the stock has experienced significant fluctuations in recent months, it is currently attempting a comeback from a steep decline. ServiceNow has expressed its intentions to integrate AI across its platform, with CEO Bill McDermott emphasizing the transformative impact of AI on enterprises. This forward-looking approach could lead to positive surprises in future quarters. Although NOW stock carries a premium valuation at 53.4 times forward P/E, it may not fully reflect the extent of the company’s AI tailwind.