Tuesday's IBD 50 Stocks To Watch pick, artificial intelligence leader Eaton, is approaching a new buy point and new highs on the stock market today. That makes Eaton stock one of the best AI stocks to watch right now. Shares rallied 1% midday Tuesday, just shy of their buy point.
The company provides electrification, digitization and power management hardware such as inverters, circuit breakers, fuses, power distribution units and surge protectors as well as the software to manage and optimize power distribution.
The surge in generative AI is sparking a sharp increase in power requirements, which could be a boon for Eaton's power management tools.
The company also offers development tools as well as AI and machine learning algorithms for cloud and on-premise applications.
On Feb. 1, Eaton earnings climbed 24% to $2.55 per share. Revenue rose 11% vs. the year-ago period, to $5.96 billion.
"We're pleased with our teams' strong execution in the fourth quarter, which resulted in record quarterly sales, adjusted earnings and operating cash flow to close the year. Ongoing strength in our backlog shows robust demand and gives us continued confidence in our growth outlook," Chief Executive Craig Arnold said in the press release.
AI Stock Eyes New Highs
After a more-than-32% gain from a 229.01 cup-with-handle entry, the AI stock is trading tightly, according to IBD MarketSurge chart analysis. The current three-weeks-tight pattern offers an add-on entry at 303.40. A decisive move past that level would place the AI stock in a new buy area, offering investors a chance to pick up shares.
The three-weeks-tight pattern forms when a stock closes within 1.5% of the prior week's close for two straight weeks. Volume will be quiet during this period as the stock consolidates after breaking out of its base. This signals institutional investors are comfortable with the stock's advance and could be set to propel shares even higher.
Following big price gains since July 2022, the AI stock shows a solid 94 out of best-possible 99 IBD Composite Rating, according to IBD Stock Checkup. That makes Eaton one of the best AI stocks to watch.
On another bullish note, the stock's relative strength line hit new highs last week, reiterating the stock as a market leader. That's a sign of strong stock market outperformance. Remember, the RS line measures a stock's price performance vs. the S&P 500 and is the blue line plotted on IBD Charts.
Best Stocks To Buy And Watch
Three recent IBD 50 Growth Stocks To Watch picks are among the best stocks to buy and watch.
| Company | Symbol | Buy point | Type of base |
|---|---|---|---|
| Arista Networks | 292.66 | Flat base | |
| Netflix | 579.64 | Tight area | |
| Cloudflare | 102.30 | Tight area |
Source: IBD Data As Of March 19, 2024
Follow Scott Lehtonen on X, formerly known as Twitter, at @IBD_SLehtonen for more on the best stocks to buy and watch and the stock market.
