The AI frenzy has continued to dominate market commentary given recent commentary from mega-cap tech giants and other important software players throughout the Q2 earnings season.
Several stocks benefiting from the broader trend include Analog Devices ADI, Hewlett Packard Enterprise HPE, and, of course, NVIDIA NVDA, each paying dividends while providing exposure to the expanding AI ecosystem.
And as the cherry on top, each sports a favorable Zacks Rank, reflecting bullish earnings estimate revisions in the near term.
ADI Helps Keep AI Powered Up
Analog Devices designs and manufactures high-performance analog, mixed-signal, and digital signal processing (DSP) integrated circuits. Its products are used in industrial, automotive, communications, data center, and healthcare applications. The stock is currently a Zacks Rank #2 (Buy), supported by positive EPS revisions over recent months.
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It’s no secret that AI servers consume huge amounts of power, and getting that power efficiently to increasingly powerful processors is becoming a bigger challenge. ADI is leaning into that opportunity with power-management technology, including its recent acquisition of Empower Semiconductor.
The company just recently reported results, with revenues climbing 40% YoY to roughly $4.0 billion, with Data Center among the strongest areas of growth. As AI infrastructure gets bigger and more power-hungry, ADI’s growth trajectory remains bright. Shares currently yield 1.2% annually.
HPE: Building the AI Factory
Hewlett Packard Enterprise sells servers, storage, networking, and cloud infrastructure to businesses and large computing customers, helping customers train models, run inference, and deploy AI applications. The stock sports a favorable Zacks Rank #2 (Buy), with EPS revisions remaining bullish.
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Notably, HPE and NVIDIA collaborate closely to integrate NVIDIA's high-performance AI chips into HPE's enterprise server systems.
Demand has been strong for the company, with its latest quarterly release revealing that its Cloud & AI revenues climbed 22.9% YoY to $7.7 billion, while server revenues increased 32.7% YoY to $5.5 billion. Shares currently yield 1.1% annually.
NVIDIA Earnings Loom
Both EPS and revenue expectations for the upcoming release from NVIDIA have remained positive since mid-May, with earnings expected to climb nearly 100% YoY on 96% higher revenues. The sales growth rate actually reflects an acceleration compared to recent periods, reflecting just how strong the AI frenzy continues to be.
It similarly sports a favorable Zacks Rank #2 (Buy), with shares currently yielding 0.5% annually.
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Bottom Line
For those seeking strong exposure to AI trends paired with dividend-paying traits, all three stocks above – Analog Devices ADI, Hewlett Packard Enterprise HPE, and NVIDIA NVDA – fit the criteria.
While big share gains have pushed the dividend yields down, their growth trajectories remain notably bright, with each similarly sporting a favorable Zacks Rank.
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Analog Devices, Inc. (ADI): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).