### Summary
Alphabet is generating substantial revenue and cash flow, which makes the case for the company to begin paying a dividend. Its strong operating history and opportunities in the field of artificial intelligence (AI) provide the foundation for this move.
### Facts
- Alphabet recorded revenue of nearly $75 billion in the second quarter, resulting in net income of more than $18 billion.
- The company generated nearly $29 billion in operating cash and $22 billion in free cash flow during the quarter.
- Alphabet has a total cash and marketable securities on its balance sheet of over $118 billion.
- The company is well positioned to benefit from advancements in generative AI and is making efforts to make it available via its Google Cloud platform.
- Alphabet has added new AI tools to its product portfolio, including the Bard chatbot.
- Paying a dividend is a way for companies to return capital to shareholders when the amount of cash is more than it can use to generate additional growth.
- Apple's example shows that paying a dividend does not mean stalling growth, as it has increased its payouts by 154% while its stock increased by 729%.
- Alphabet could potentially pay a dividend by using a portion of its profits, such as 16% or 25%, resulting in a yield of about 0.5% or 1% respectively.
- Alphabet has not paid a dividend to date, but management has not ruled out the possibility in the future.
Broadcom, a significant player in the semiconductor industry, is a promising investment option due to its strong performance, focus on artificial intelligence (AI), consistent growth, and attractive valuation. The stock's technical analysis suggests a bullish trend and potential buying opportunities, although there are risks associated with competition, market volatility, supply chain disruptions, and economic uncertainties. However, investors may consider buying the stock during price dips or a surge beyond its record high to capitalize on Broadcom's growth and industry relevance.
Wall Street is expected to continue its recent gains, fueled by optimism around Nvidia's upcoming earnings and the potential long-term boost in earnings per share from the adoption of artificial intelligence (AI). According to Goldman Sachs, companies with high exposure to AI adoption and larger size are likely to see increased valuation multiples as the adoption timeline becomes clearer.
Artificial intelligence (AI) stocks have cooled off since July, but there are three AI stocks worth buying right now: Alphabet, CrowdStrike, and Taiwan Semiconductor Manufacturing. Alphabet is a dominant player in search, advertising, and cloud computing with strong growth potential, while CrowdStrike offers AI-first security solutions and is transitioning into profitability. Meanwhile, Taiwan Semiconductor Manufacturing is a leading chip manufacturer with long-term potential and strong consumer demand.
Summary: Bitcoin is projected to have a compound annual growth rate (CAGR) of 27% through 2030, while the artificial intelligence market is expected to have a CAGR of 36%, making stocks in the AI sector potentially more lucrative than cryptocurrencies like Bitcoin. Three AI stocks worth considering are Advanced Micro Devices, Amazon, and Apple.
Ark Invest founder Cathie Wood believes that investing in AI stocks is still a good opportunity, as any company with proprietary data and AI expertise can leverage AI to become more competitive and transform industries.
Verizon, Medtronic, Hasbro, Dell, and Walmart are highlighted as attractive dividend stocks by Wall Street analysts, offering investors potential income and long-term returns.
Stock investors should focus on long-term beneficiaries of artificial intelligence, as near-term beneficiaries have already experienced significant share price increases, according to Goldman Sachs. Companies across various sectors, such as communication services, consumer discretionary, financials, and information technology, are expected to see a boost in their earnings per share from AI adoption.
Alphabet and Taiwan Semiconductor Manufacturing are recommended AI stocks to buy and hold for the long term due to their potential for significant growth in the generative AI market and the booming demand for AI chips, respectively.
Despite a recent slip, semiconductor firm Broadcom's stock is still considered a strong buy due to its growing software business, stake in the artificial intelligence game, and positive insider buying activity, along with expectations of continued robust demand for semiconductors and AI advancements.
Summary: Morgan Stanley recommends investors turn to dividend-paying stocks, as they have historically outperformed non-dividend stocks during market downturns. They have identified 26 dividend stocks that could see shares rise up to 85% in the coming months.
American Tower, a dividend-paying stock, is well positioned to benefit from the AI revolution and the increasing demand for data transmission, making it a smart long-term investment.
Artificial intelligence (AI) stocks like Recursion Pharmaceuticals and C3.ai have experienced gains but may not be good long-term investments due to volatility, lack of revenue, and underwhelming growth, making them risky for investors.
Summary: Nvidia and Broadcom are seen as the top chip stocks to benefit from the generative AI boom, while Intel is seen as lagging behind due to competition and weaker demand. Wall Street analysts are bullish on both Nvidia and Broadcom, with Nvidia expected to have the highest upside potential.
Verizon Communications, Cisco Systems, and AbbVie are three cheap stocks that pay dividends, making them attractive options for investors looking to maximize potential returns. Verizon's robust telecom business and projected growth, Cisco's profitability and recent acquisition, and AbbVie's undervalued position and promising assets make them potentially lucrative investments.
Investors may be overlooking the potential of dividend stocks due to the current high yields on cash and bonds, but long-term investors have an opportunity to benefit from growth and income with quality dividend stocks that have the potential to raise their dividend payouts over time.
C3.ai's stock remains expensive and is likely to decline further based on fundamentals, but there is potential for growth acceleration in the coming quarters, particularly in the field of generative AI applications. The company's business model transition is leading to more customer wins, especially in government and defense sectors, but questions remain about C3.ai's ability to retain customers and expand. The stock is currently overvalued and lacks a strong value proposition for potential customers.
