The stock market will have a great year in 2023. S&P500 Including dividends, the index jumped 26.3%. It is about to hit its highest price for the first time in two years. It only needs to rise another 2.2% to get there, which would be the official start of a new bull market.
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Artificial intelligence (AI) is the hottest theme in the stock market in 2023. Nvidia We have gained an overwhelming share of the AI data center chip market. The company’s stock price has increased a whopping 239% over the year.
But investors also scooped up stocks in smaller AI powerhouses, including: palo alto networks (PANW -0.13%) and Duolingo (Duol -0.75%). In 2023, they posted impressive gains of 114% and 219%, respectively.
With another bull market potentially on the horizon, here’s why it could be the best place to put your money again in 2024.
1. Palo Alto Networks is a leader in AI-powered cybersecurity
Successful cyberattacks can cause significant financial harm to businesses of all sizes, but they can also cause reputational damage, especially if customers’ personal data is stolen. Thanks to cloud computing, businesses are storing more and more valuable information online, exposing it to malicious attackers who can attack it from anywhere in the world at any time.
Palo Alto Networks estimates that 93% of security operations centers within organizations still rely on manual, human-driven processes. Unfortunately, the burden on security administrators is so high that 23% of security alerts go uninvestigated, creating critical vulnerabilities.
In late 2022, Palo Alto launched a new platform called Cortex XSIAM. It is a security operations solution focused on accelerating incident response with automation and AI.As of Palo Alto’s first quarter of his 2024 fiscal year (ending October 31, 2023), Cortex XSIAM reservations reached $1 billion, and the figure is doubled Just 3 months ago. One customer uses this platform to protect her 300,000 computers and devices (endpoints) used by her employees.
Palo Alto announced that as of mid-2023, it will have 35 AI-powered products across three major segments: cloud security, network security, and security operations. That number has quadrupled since 2019 and continues to rise. The company has installed sensors at his 48,000 customers, collecting 4.8 petabytes of cybersecurity data every day and training its AI models to be as accurate as possible.
Palo Alto expects to generate record revenue of $8.2 billion during fiscal year 2024, an 18% increase from the previous year. The company also expects non-GAAP earnings per share to increase 23% to $5.47.
The stock has soared 114% in 2023 and currently trades at $283. Based on earnings forecasts for fiscal 2024, the company’s expected price-to-earnings ratio (PER) is 51.7 times.is expensive compared to Nasdaq 100 With a current P/E of 30.1, Palo Alto is a world leader in cybersecurity. Having more customers than competing providers means it collects more data, which could give it a big advantage in an increasingly AI-driven industry.
Additionally, there could be an estimated $1.8 trillion difference between how much the business sector should currently be spending on cybersecurity and what it actually spends. As the cost of cyberattacks continues to rise, we believe the gap will narrow over time, benefiting providers like Palo Alto Networks. It may help accelerate the company’s growth in the future.
2. Duolingo is using AI to transform language education
Duolingo is the world’s largest language education platform. It takes a digital and mobile-first approach, delivering interactive and engaging learning experiences in the pockets of its 83.1 million monthly active users. Despite economic headwinds such as rising inflation and rising interest rates in 2023, Duolingo consistently beat its own financial forecasts, driving its stock price up 219%.
The Duolingo mobile application is free to use, but paid subscriptions are available for learners who want to accelerate their progress. In the third quarter of 2023 (ending September 30th), a record 5.8 million of his users paid. This represents a staggering 60% increase over the previous year.
Last year, Duolingo introduced a new, more expensive subscription tier called Max. This will give users access to his two powerful new AI features. One is “Roleplay,” a chatbot designed to help users practice their conversation skills in a foreign language, and the other is “Explain My Answer,” which provides personalized messages to users based on their mistakes in each lesson. provide feedback and facilitate learning. .
The company has been working on its own AI models since 2013. With users completing 10 billion lessons each week, the company has more data to train his AI than any other education provider in the world. Duolingo also partnered with ChatGPT developer His OpenAI in 2021 to further strengthen their efforts. Now, the company is using AI not only to improve the learning experience, but also to quickly create new lesson content and give employees free time to develop new features in return.
In addition to new music education services, Duolingo is currently integrating its math education platform into its flagship language app. The company hopes this will increase engagement and lead to new monetization opportunities.
On that note, Duolingo generated $137.6 million in revenue in the third quarter, a 43% year-over-year increase and blowing away expectations of $131 million. As a result, the company raised its full-year revenue forecast for the third time to $526.5 million. Official results for 2023 are expected to be announced in February.
Duolingo still has a long way to go. The company estimates that more than 2 billion people worldwide are learning foreign languages, so based on its current monthly active user base, the opportunity is just scratching the surface. . Investors have a lot to look forward to in 2024 as Mathematics and Music further expands its addressable market.