Artificial intelligence is experiencing rapid growth in real-time despite still being in relatively early stages of development. AI, which is used to simulate human intelligence in machines and computer systems, is becoming widely accepted across various industries to boost productivity, efficiency and quality of service.
According to Statista and Next Move Strategy Consulting, the global AI market should grow from 2023’s projection of just under $208 billion to over $1.8 trillion by the end of the decade as a vast number of businesses adopt artificial intelligence within their operating structures.
But just because the awareness, possibilities and growth of AI seem limitless, that doesn’t mean that the industry won’t have short-term corrections. This boom is a great time to research AI companies and buy the dip. In fact, you can even use an AI-powered EFT to provide your portfolio exposure to a broad range of the best AI companies.
Although you might have missed the chance to buy into chipmaker Nvidia when it was trending lower (its stock price has grown over 173% in the past year and it recently became a $1 trillion company), there are plenty of opportunities for investors to capitalize on the massive return potential of AI at a relative bargain.
Here are five options that are being closely followed by dip experts, including small and big tech stocks.
Nerdy (NYSE: NDRY)
Starting with a stock under $10 (currently sitting around $4.55 USD), Insider Monkey is hyping Nerdy — the digital learning platform in the U.S. that provides live online tutoring in multiple formats — and others are joining in. Nerdy’s stock price has gone up by 92.4% in 2023 year-to-date, and the company’s shares are up by 89.0% since Oct. 2022, according to Seeking Alpha, which maintains a Buy rating for Nerdy.
With forthcoming growth in its institutional and consumer businesses (the company has launched more software products recently and plans on targeting bigger schools and school districts), valuation re-rating should be on its way.
HubSpot (NYSE: HUBS)
The Cambridge, Massachusetts-based HubSpot is primarily known as a leading customer relationship management (CRM) platform and a great place to work (named the #2 Best Place to Work by Glassdoor in 2022). As The Motley Fool noted, the company is dedicated to using AI in innovative ways, by employing generative AI to improve marketing strategies and better customers’ efficiency and reduce human errors.
Although it has hit recent bumps, its two AI products, ChatSpot and Content Assistant have “increased by ten times since its introduction in June, with 26% of HubSpot’s enterprise customers using it.”
Meta Platforms (NASDAQ: META)
It would’ve been easy to just list the top five mega-cap tech AI stocks and be done with it, but where’s the fun in that? The biggest names in tech and AI are some of the biggest companies in the world, like Meta, Amazon and Alphabet (Google). But bargains are relative. Just because a company is gigantic, it doesn’t mean it isn’t mispriced.
Crunching numbers for Seeking Alpha, Steven Cress found that Meta’s command of social media and virtual reality has helped it break through with AI-driven products too. Meta is up 130% year-to-date and exceeded second-quarter expectations in earnings per share by $0.09 ($2.98) and revenue by more than 11% year-over-year ($32 billion). Growth and profitability remain strong and growth is near-certain, making its current stock price attractive, and even a plausible bargain.
Palantir (NYSE: PLTR)
A risky buy, not because of any growth potential worries, but because shares have already gained significantly this year and profits have been increasing only modestly every quarter. AI technology has predicted strong growth for the AI-powered data-mining and analytics specialists and ARK Investment Management CEO Cathie Wood recently snapped up $12.5 million in Palantir Technologies shares. The company also announced a high-profile contract from the U.S. Special Operations Command last quarter, per CNBC.
While recent earnings have been as expected and stock overvalued, per some pundits, PLTR is up 166% so far this year and holds a #2 Buy rank with Zacks.
“We anticipate that we will become eligible for inclusion in the S&P 500 after we report our financial results for Q3 2023 in early November,” said CEO Alex Karp in a shareholders letter. “At that point, we will have been profitable on a cumulative basis over the preceding four quarters.”
Intuitive Surgical (NASDAQ: ISRG)
Intuitive Surgical is a pioneer in the field of robotic-assisted surgery and has used AI to its maximum advantage in its da Vinci surgical system, which has “robotic arms that precisely mimic a surgeon’s hand movements to perform general, bariatric, and urology procedures in a minimally invasive fashion,” per The Motley Fool.
On July 20, ISRG announced its 2Q earnings, which beat Wall Street expectations in revenue and EPS estimates. Second-quarter revenue increased to $1.76 billion, up 15% from $1.52 billion in the second quarter of 2022 and enjoyed revenue increases across the board, on instruments and accessories, systems, operations and net income. It won’t necessarily be cheap, but Intuitive Surgery is a good example of a company that would appeal to long-term, higher-risk investors who can afford to buy.
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