Traders on the lookout for methods to play the unreal intelligence frenzy might want to check out this little-known communications software program inventory doing enterprise with Nvidia . Jefferies analyst George Notter reiterated his purchase score on Amdocs , citing the corporate’s key benefits inside the synthetic intelligence house. “There’s a ton of opportunity to shift customers to Cloud,” he wrote in a latest observe. “The company also has a strong runway ahead in their AI opportunity, especially with their new Nvidia deal. Legacy business pressures seem to be temporary. We remain bullish on the stock.” DOX 1Y mountain Inventory efficiency during the last yr Underpinning Notter’s bullish stance is a wager on the corporate’s alternative runway as corporations transition to the general public cloud, noting that 90% of Amdocs customers run antiquated non-cloud primarily based choices. Crucial to the corporate’s AI technique is its latest partnership with Nvidia to customise giant language fashions using the chipmaker’s AI foundry service, Notter stated. Its “mission-critical system” and boundaries to implementing AI-based software program instruments into service supplier networks additionally places it . “Amdocs is a high-quality company with a competitive moat, very sticky customers, nearly 75% recurring revenue, and good growth prospects,” he stated. “Moreover, we think they’re just beginning to tap into a nice potential opportunity to drive additional business as operators push AI and Cloud” into their programs. Regardless of these alternatives, Amdocs is bracing for slower development in 2024 as legacy companies divert spending towards giant community transformation initiatives, Notter famous. However these headwinds ought to move. “Hence, this revenue pressure — at some point — should come off for Amdocs,” he wrote. “Keep in mind that Amdocs’ guidance assumes the pressure remains a factor over the balance of the year. This is an area of potential upside in our view.” Amdocs shares have added about 1.7% this yr, however sit about 2.6% decrease month thus far. Jefferies retained its $105 value goal, implying about 17% upside from Tuesday’s shut.
