Investing in Intelligence: 3 AI Companies Expecting Big Returns in 2024, New AI ETF Stock Hits the Market
Dec 19, 2023
The year 2023 saw a surge in advancements and developments in Artificial Intelligence (AI) technology. Major companies, such as Google, Microsoft, and Amazon, launched significant updates to their AI services, highlighting improved performance, user experience, and ethical practices. But as the tech giants took centre stage, smaller AI companies began to emerge and make an impact in various industries.
Promising Names in the AI Stock Sector
One such company is Upstart Holdings (UPST), which has leveraged AI to develop a loan evaluation tool that could potentially disrupt the credit rating industry dominated by Fair Isaac (FICO). With its AI-driven solution, Upstart claims to approve 44% more loans without increasing risks, making it a game-changer in the lending industry. This innovation caught the attention of many investors, propelling Upstart’s stock to reach an all-time high in 2021.
However, as interest rates rose in 2023, Upstart experienced a significant decline in revenues, causing its stock price to plummet by 97%. But with Federal Reserve Chairman Jerome Powell announcing potential rate cuts in 2024 hopes for a rebound in Upstart’s stock price have emerged. Despite reporting a 46% decrease in revenue and $198 million net losses in the first nine months of 2023, Upstart remains a promising player in the AI lending market.
Another AI company making waves is UiPath (PATH), which specialises in robotics process automation (RPA). However, UiPath goes beyond just automating tasks by offering an end-to-end platform that connects with enterprise products and applications. This unique feature has attracted companies such as Nielsen to drive digital transformation and empowered a retailer to process almost all its invoices using UiPath’s RPA technology.
Moreover, UiPath has fostered a strong community of millions of professionals in the development space who create and share applications within the company’s ecosystem. This community has been a key factor in UiPath’s growth, generating $903 million in revenue during the first nine months of 2023, a 20% increase from the previous year. Despite reporting operating losses, UiPath has managed to control expense growth, with operating losses falling from $301 million to $124 million in the same year-ago period. With a market cap of just $15 billion and a P/S ratio of 12, UiPath presents an opportunity for investors to potentially earn significant returns as more customers turn to its RPA technology.
Super Micro Computer
Another company, Super Micro Computer (SMCI), has been a pioneer in Edge computing and AI technology. The company provides advanced server solutions, including high-performance computing (HPC), AI, security, storage, and cloud computing for data centres worldwide. Super Micro’s cutting-edge technology enables enterprises to process large amounts of data at the edge of networks efficiently. This capability is crucial for industries such as healthcare and autonomous vehicles that require real-time data processing and decision-making.
Super Micro’s revenues have been on a steady rise, reaching $4.2 billion in fiscal 2023, an increase of 17.6% from the previous year. The company also reported a net income of $154 million, compared to a loss of $45 million in fiscal 2022. As Super Micro continues to expand its product offerings and cater to the growing demand for Edge computing and AI technology, its stock price has also soared. With a market cap of $4 billion and a P/S ratio of 0.98, Super Micro presents an excellent investment opportunity in the rapidly growing tech industry.
New AI ETF Stock Entering the Market
Apart from individual AI companies, investors can also consider investing in AI ETF stock options. These include the popular ROBO Global Robotics and Automation Index ETF (ROBO), Global X Robotics & Artificial Intelligence ETF (BOTZ), iShares Robotics and Artificial Intelligence Multisector ETF (IRBO), and First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT). These ETFs have an average expense ratio of 0.71%.
However, a new AI ETF stock called the WISE AI Global Intelligent Technology Index Fund (WISE) has recently been launched, attracting the attention of many investors.
WISE aims to identify and track 40 companies that generate their revenues from areas such as Artificial Intelligence, Data Analytics and Big Data, and other AI-driven services. The fund charges a low expense ratio of 0.35%, making it an attractive option for investors.
The top holdings in WISE include tech companies UiPath (5.97%), Microsoft (5.04%), and Nvidia (4.85%). With Information Technology taking up 72.1% of the fund, it’s clear that WISE is heavily focused on the tech sector. Additionally, the majority (80%) of the fund is invested in companies based in the United States, with Japan coming in second at 10.5%.
Disclaimer: This is not financial advice, and investors should conduct their research and consult with a financial advisor before making any investment decisions.