These 3 AI Stocks Report This Week... What to Know

Two words can sum up the reason for 2023's monster returns: artificial intelligence (AI).

Of course, corporations are taking note..., and every company is trying to figure out a way to thread AI into its business plan (or at the very least, an investor presentation).

In fact, in March, first-quarter earnings calls saw mentions of AI increase by 77%.

But the thing is, the purported value is not merely bluster...

A recent survey from McKinsey & Company said generative AI could add as much as $4.4 trillion per year to the global economy. For reference, that's more than the entire GDP of Germany.

And those estimates are only part of the story...

When adding in the estimated worth of generative AI to workplace productivity, the total value added rose to as much as $7.9 trillion per year.

Suffice to say, now is the perfect time to talk about AI and its economic impacts.

And we sit on the cusp of three major AI companies set to report this week.

Here's what you need to know...

IBM (IBM)

IBM's (IBM) currently watching the AI revolution from the sidelines.

Shares are down roughly 5% year to date, despite largely positive earnings reports the past two quarters. But that could be about to change as sentiment shifts...

Wall Street expects IBM to earn $2.01 per share on $15.77 billion in revenue. This compares to $2.31 per share and $15.54 billion in revenue a year ago.

However, last week, IBM announced its three-pronged "watsonX" AI technology platform. This is geared toward helping businesses improve their workflow productivity.

And two of the three prongs - generative AI models and data storage - are available now. The third, AI governance, is set to release in coming months.

Additionally, IBM expanded a collaboration with Adobe (ADBE) that pairs Adobe's creative generative AI expertise with IBM Consulting's strategical and logistical knowhow.

But the company's real commitment to AI is its $4.6-billion acquisition of FinOps software company, Apptio, last month. This will aid IBM's development of automation technologies moving forward.

In short, while this bluest of blue chips may not have the same AI momentum as Microsoft (MSFT) or Google parent, Alphabet (GOOGL), it is planting - and blooming - its own seeds to make a push in the space.

So, IBM is our AI stock to watch today, reporting after market's close.

Taiwan Semiconductor Manufacturing Company (TSM)

It's a no-brainer why Nvidia (NVDA) has seen its shares surge more than 220% in 2023: it produces something that's in increasingly high demand... AI chips.

Well, that's the same reason to watch Taiwan Semiconductor Manufacturing Company (TSMC).

Its shares are up 40% this year. And it manufactures the chips required by companies like Nvidia, Apple (AAPL), Broadcom (AVGO), Qualcomm (QCOM), and a host of other enormous companies.

That's why we think that 40% increase might not represent the company's true value.

Analysts are looking for $15.49 billion in revenue with earnings of $1.08 per share.

And even though the current state of AI chips faces some questions following U.S. export bans to China, Taiwan Semiconductor is a fixture in the AI development process. This figures to provide more than enough helium to TSM's rise.

The company already agreed to send more workers to Arizona to expedite construction of a new $40-billion manufacturing facility. In other words, it is a pivotal player in the move to domesticate U.S. semiconductor production.

So, whether fears over export bans or uncertainty surrounding China-Taiwan relations are the cause, the mere 40% gain for TSM in 2023 looks a bit suspect in the shadow of Nvidia's 220% ascent.

After all, Nvidia - and a hoard of other high-tech fixtures -- can't exist without Taiwan Semiconductor.

This is one of our AI stocks to watch for Thursday as it reports second-quarter earnings.

Intuitive Surgical (ISRG)

In 2000, the da Vinci Surgical System broke ground as the first FDA-approved robotic surgery system.

The company behind that device, Intuitive Surgical (ISRG), remains at the forefront of the medtech space to this day.

Of course, the line between robotics and AI is increasingly blurring. And as a result, Intuitive Surgical is well positioned in today's AI-fueled boom.

Already with a leg up on the rest of the industry when it comes to robotics, the company intends to further leverage that advantage in the AI space.

Intuitive has shown strong financials in 2023. In the first quarter, its earnings per share (EPS) were $1.23 on $1.7 billion in revenue. That easily topped expectations. And the driver is momentum for its da Vinci Surgical System.

In the first quarter, the installed base of da Vincis rose 12% year over year, and the number of procedures per system increased 13%.

Wouldn't you know, Wall Street is throwing its weight behind Intuitive Surgical.

In the past year, a number of the top institutional investors and hedge funds - including BlackRock and Morgan Stanley - have increased their stakes in the medtech company.

Currently shares of Intuitive Surgical are trading shy of their 52-week high of $351.96. But it's clear investors are bullish on this company's prospects moving forward.

This robotics surgery innovator should be on every AI investor's radar on Thursday, as it releases earnings after the closing bell.

Ultimately, these three represent a small sample of the opportunities that exist in AI today - both in the center and on the periphery, including "stealth AI" companies.

And you can be sure that as AI pushes the market higher, we will be following along, letting you know the AI stocks worth your time... and the ones to leave alone.

Until then,

Kyle Ottenheimer