China’s recent trade data shows exports supported by strong demand for AI related technology. That keeps the spotlight on companies building the chips, cloud platforms and software behind tools like ChatGPT. Investors watching this AI stocks screener may not want to sit on the sidelines while AI spending shapes global trade. This article highlights three stocks from the screener that stand out on business quality and AI exposure.
The three stocks covered next are just a sample from this theme, and the full screen surfaced 24 more companies with equally compelling AI narratives that are not covered here. To go beyond this short list, analyze and identify your own high conviction ideas directly inside the Artificial Intelligence/ AI Stocks screener.
Netweb Technologies India (NSEI:NETWEB)
Netweb Technologies India is a Faridabad based high end computing specialist that designs and builds supercomputers, AI systems, private cloud and data centre hardware, then layers on services like cloud migration and managed Kubernetes. Virtually all of its ₹27,020 million revenue comes from manufacturing and selling computer servers, tying the business closely to growing AI and high performance computing demand. The stock’s market value of about ₹281.2b places it firmly in the large cap bracket on Indian exchanges.
Investors looking at AI infrastructure should pay attention to Netweb Technologies India. The company sits at the heart of India’s push into AI hardware and high performance computing, with in house R&D, appliance style solutions and a strong order pipeline supporting both margins and earnings quality. Recent results show very strong earnings momentum, yet the stock trades on a rich P/E multiple and relies heavily on large government and defence projects, which can make cash flows lumpy. There is also planned fundraising that could bring fresh capital but may dilute existing holders. How you weigh that growth story against these risks is where the investment case gets interesting.
Netweb Technologies India’s rapid AI build out and rich P/E suggest the headline story might be only half of it. For the full context, see the 2 key rewards and 1 important warning sign
Build your own AI infrastructure shortlist
Netweb Technologies India and the other two stocks in this article all came from applying a few focused filters in a single screener. Use our flexible Screener to mix metrics like valuation, growth, balance sheet strength and risks for yourself, or jump straight into any of our curated Investing Ideas.
KPIT Technologies (NSEI:KPITTECH)
KPIT Technologies builds the embedded software, artificial intelligence and digital platforms that run modern cars, from autonomous driving and ADAS to vehicle operating systems and cloud connected services. It serves global automakers across the Americas, UK and Europe, and the rest of the world, and is headquartered in Pune, India. The stock has a market value of about ₹171.5b, which puts KPIT in the mid to large cap bracket on Indian exchanges.
KPIT Technologies sits at the intersection of AI and automotive software, in a sector where code and electronics are taking a larger share of every vehicle’s cost. The stock has fallen sharply from its peak after an earnings miss and a year of weaker results. Yet the company continues to post solid EBITDA margins, win large multi year software defined vehicle deals and carry net cash on the balance sheet. Forecast earnings growth, lower employee attrition than many Indian IT peers and recent expansion into Vietnam and automotive cybersecurity all add to the appeal. At the same time, investors need to weigh slower revenue forecasts, contracting net margins and reliance on global car makers’ technology budgets.
KPIT Technologies has a software story that still looks out of sync with its recent share price slide. Get the analyst forecasts for KPIT Technologies and see what the forecasts are hinting at but not fully pricing in yet.
Tata Elxsi (BSE:500408)
Tata Elxsi builds AI heavy software and product engineering platforms for sectors like automotive, media, telecom and healthcare, with flagship offerings such as autonomous driving systems, OTT and IPTV platforms, telco network automation and AI based medical software. Almost all of its revenue, about ₹37.8b, comes from Software Development and Services, with System Integration and Support Services contributing roughly ₹1.0b. As a result, investors are mainly getting a pure play software and services business. The stock’s market value of roughly ₹235.5b places Tata Elxsi in the large cap bracket on Indian exchanges.
Investors looking at AI in real world products may consider Tata Elxsi. The company is tying together long term deals in automotive and media, partnerships in healthcare AI and new platforms like AnaTel and ViTel, while still delivering high net margins around 16.7% and ROE of 21.5%. At the same time, earnings fell 12.2% last year, revenue growth is forecast to trail the broader Indian market and several valuation checks suggest the stock screens as expensive. The mix of cash generation, dividend income and deep AI exposure against slower growth and richer pricing is where the investment debate becomes more detailed.
Tata Elxsi’s rich pricing and 16.7% net margins look out of sync with last year’s 12.2% earnings decline. Get the analyst forecasts for Tata Elxsi and see whether forecast trends explain that gap or hint at something else waiting beneath the surface.
Seeking Fresh Alternatives Beyond These AI Stocks
Some of the next breakout stories are still under the radar for now. Use that information gap before the crowd catches on and while it matters. Get in early.
- Spot income ideas that aim to balance yield and resilience by scanning our curated list of 440 dividend fortresses before momentum pulls these payouts into the spotlight.
- Hunt for future enablers of electrification and infrastructure upgrades by screening the curated 8 top copper producer stocks while these producers are still flying below many portfolios.
- Track early movers in automation and factory upgrades by running through the hand picked 36 robotics and automation stocks before capital flows push these stocks out of easy reach.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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