2 ASX AI shares that could be set to soar in 2024 and beyond

The share market has been getting very excited about the artificial intelligence (AI) megatrend this year.

And rightly so. It’s no exaggeration to say that AI is going to change the world.

We’ve only really had a small taste of this in the last few years but expect things to accelerate as AI continues to improve and more money is invested in the space.

The good news for investors is that there are ways to gain exposure to AI with ASX shares.

And I don’t mean with supposed AI shares like Brainchip Holdings Ltd (ASX: BRN), which has promised the world and delivered nothing in a market dominated by a US$3 trillion behemoth.

I mean with genuine industry leaders that are leveraging AI to cement their position and drive long-term growth. Let’s take a look at two:

Pro Medicus Limited (ASX: PME)

The first ASX AI share to look at is health imaging technology company Pro Medicus,

Goldman Sachs recently spoke about how the company’s AI revenues could grow from a small percentage of its overall sales into something significant in the future. It said:

AI opens an incremental US$620mn TAM today (growing at a +34.7% CAGR) with radiology receiving the majority (c.80%) of recent FDA AI algorithm clearance. We believe PME is well positioned to take share as the incumbent viewing platform across many large, and likely early adopters of new technology.

PME is generating revenue from its Visage breast density AI algorithm (developed via a partnership with Yale) today, and we see the potential value for AI to be significant with adoption driven by improved accuracy and clinical outcomes. We forecast AI to comprise 9% of PME’s revenue by FY30E (from <1% in FY25E), with upside if PME achieves faster AI attach penetration, higher price per scan, and a greater proportion of algorithms developed in-house where no royalties are paid to a partner.

Goldman has a buy rating and $136.00 price target on its shares.

NextDC Ltd (ASX: NXT)

Another ASX AI share to look at is data centre operator NextDC. While it isn’t necessarily offering AI services, it is servicing the huge data centre demand for capacity that AI needs to function.

In April, Goldman Sachs commented on this. It said:

NextDC believes AI is driving global data centre growth from 15% to 19% with Australia and broader APAC remaining well-positioned for growth and the fastest growing region. AI is increasing average power density racks (kW/Rack) growing 2.5x to c80-100kW. NXT are seeing demand pipeline for singular deals in the vicinity of 50-100MW and see market growth accelerating. AI demand is also stemming from a 40%/60% mix from inference/training, with upside for inference to reach 70%.

The broker currently has a buy rating and $18.59 price target on its shares. Though, it is worth noting that other brokers are even more bullish. For example, Morgan Stanley has an overweight rating and $20.00 price target.

The post 2 ASX AI shares that could be set to soar in 2024 and beyond appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Nextdc and Pro Medicus. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Pro Medicus. The Motley Fool Australia has recommended Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.