For this article, I used Microsoft’s AI Chatbot, Bing, for help in finding AI stock predictions. As someone of a certain age, this reminds me of the pre-internet days when you might have to go to a librarian and ask for help with research. Then, like now, the quality of what you get back is based on what you prompt.
With that in mind, my specific prompt was as follows:
Hi Bing, I’m writing an article for InvestorPlace about stocks to buy right now. Can you help me with that? I’m particularly interested in stocks that may be undervalued.
In seconds, I had more ideas than I could possibly put in this article. It was a reminder that, when it comes to using AI for your stock research, it only gets you so far. From the list of sources Bing was helpful enough to provide, I’ve come up with three AI stock predictions to look at in more detail.
Disney (DIS)
First up on this list of AI stock predictions is Disney (NYSE:DIS). I’ll admit that I don’t agree with Bing on this one, but it did show up on a plurality of the sources it provided, so it merits a discussion.
The bullish case is that DIS stock is, well, undervalued. The stock is down almost 23% in the last 12 months. Keep in mind, however, this is right about the time in 2022 when Robert Iger returned as CEO.
The company has managed to beat on earnings in the last three quarters. However, much of that has to do with cost-cutting measures that Iger has taken to “cut the fat” out of the company, specifically as it relates to ESPN. Still, earnings are projected to climb by 33% this year so it’s fair to say the stock is undervalued.
The basic problem as I see it is that just a few years ago, Disney was the definition of a sum-of-its-parts stock. The company had so many revenue avenues and all of them were profitable. Today, each one is creating a problem for the company in one way or another. My InvestorPlace colleague Will Ashworth described it as a “ship leaking from all sides.”
The question is “why?” and the answer may not be something that cost cutting alone can fix. That being said, I know many people for whom a trip to Disney World was part of their revenge travel plans. And with the company’s cruise lines back in operation, there could be some momentum building.
Verizon Communications (VZ)
In terms of AI stock predictions, Verizon Communications (NYSE:VZ) is another stock that made it on multiple lists. This one is easier for me to get behind. The wireless model is a tough one because the desire of consumers is incongruent to the sticky revenue that carriers like Verizon would like.
It’s a low-growth model and Verizon’s earnings report reflect that. The company has missed on revenue both sequentially and year-over-year (YoY) for several quarters. And earnings are down on a YoY basis over that same period. Not surprisingly, VZ stock is down 16% in 2023.
Moving forward, 12 analysts have issued ratings on VZ stock. The consensus is “Moderate Buy” with a 17.51% upside. Combined with a safe dividend that yields 7.9% at this time, VZ would appear to be a stock that would be ready to fly if consumers get even a little break from interest rates.
PayPal (PYPL)
Sticking to my list of AI stock predictions that got a plurality, let’s look at PayPal (NASDAQ:PYPL). At the time of this writing, PYPL stock is trading for around $51.49 a share. That’s a price investors haven’t seen in about six years.
There are many reasons for the stock’s rapid decline in the past two years. However, most of comes down to competition. There are simply more options for consumers and businesses to choose from, and PayPal may have been a little late recognizing that when the e-commerce sector exploded in 2020 and 2021.
That being said, it pays to be a leader and PayPal continues to hold about 41% of the market share in this space, It’s generating profits and free cash flow that would be the envy of many of its rivals. The company is also taking steps to move into the “buy now pay, later” space.
And PYPL stock trades at around 14x forward earnings which means this may be a dip that’s too good to pass up.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.