🤖📈 Top Trade Ideas for June 26

Duolingo is a dominant player in the language-learning industry due to its use of user data to train AI models and tailor lessons to individual students. The digital learning industry is expected to grow significantly. The author is bullish on Duolingo and its current valuation, with a target price of $102 that has already been surpassed with the current price of $140. Duolingo has successfully updated and improved its platform, with the upcoming release of Duolingo Max offering new features for an affordable price of $14 per month. Duolingo's international expansion efforts have seen positive trends and subscriber growth in every region. The author believes that DUOL's current valuation is sustainable and sees further upside to the stock with a price target of $189. However, the online language-learning market is highly competitive, and DUOL must constantly improve its platform to maintain its market dominance. The author reiterates a buy rating on DUOL due to its dominant position in the language-learning industry, fueled by its vast user data and AI-driven personalized lessons.

Taiwan Semiconductor Manufacturing Company Limited (TSM) is a major supplier to most big chip companies, manufacturing about 59% of all computer chips used worldwide. TSM has a new growth driver in the form of Nvidia's AI chips, and the author is upgrading their rating to 'strong buy.' TSM is likely to benefit from Nvidia's increase in AI chip orders, which could drive a revenue beat in its upcoming release. TSM is more favorably valued than Nvidia, with lower multiples for earnings, sales, book value, operating cash flow, and free cash flow. While TSM's revenue is expected to decline in Q2, Nvidia's AI chip orders could make up a larger percentage of TSM's business this year. However, there are risks and challenges to the long thesis on this stock, including a potential invasion of Taiwan and competition from Intel. Despite these risks, TSM is one of the best ways to play the AI phenomenon today, with a positively modest valuation and positive revenue growth last quarter.

The author is bullish on Adobe, citing its comprehensive and integrated end-to-end offering, generative AI services, trusted reputation, and investment in AI as strengths. Adobe's Q2 2023 performance exceeded expectations, and its rapid innovation and release of AI-enabled creative tools are seen as long-term growth drivers. The Document Cloud unit is expected to experience mid-to-high teens sales growth for at least the next three years, and the Experience Cloud segment represents a significant expansion opportunity. Adobe's emphasis on trust, model ownership, adherence to copyright laws, and proper content attribution is seen as a significant differentiator. The potential saturation of Adobe's existing offerings and competition from various software vendors are seen as potential risks. The author believes Adobe has an organic solution for future growth through its generative AI platform called "Firefly." The stock is viewed as a buy with an end of fiscal year price target of $566 based on a 12x EV/CY24 Sales.