The tech giants dominate the market and companies such as Apple, Alphabet and Amazon are a ubiquitous part of our daily lives.
All are tech pioneers and Artificial Intelligence (AI) is widely used by all – from the iPhone’s FaceID and Google’s search algorithms on to Amazon’s cloud computing solutions which are used by millions across the globe.
In fact, you might not notice it, but AI is all around us these days – used in smart homes and cities, online shopping, cars, drones, and healthcare, amongst others.
But it is far more than just a tool for the mega-caps. There are many smaller companies making use of the technology; this in turn opens up opportunities for investors willing to dig deeper into the world of machine learning so to find the names poised to make a splash in the space.
With the help of TipRanks' database, we zeroed in on two lesser-known AI plays which Street analysts have been getting behind. Let’s get the lowdown.
UIPath might not be in the league of the tech behemoths, but this company is hardly a minnow, boasting a market cap of $10.23 billion. UiPath is an automation software specialist and operates in a fairly new segment -- Robotic Processing Automation (software which utilizes AI to make repetitive tasks simpler). Yet, this is one of the fast-growing tech markets around. Last year, Gartner estimates called for the global hyperautomation-enabling software market to be worth ~$600 billion by this year.
Slotting in here, UiPath reckons its current worldwide opportunity is worth around $60 billion. The company’s software "robots" can be used by businesses to carry out a variety of tasks that would often be done by humans, such as logging into programs, extracting data from documents, moving folders, filling out forms, updating information fields and databases, and many more. As a result, businesses are able to increase operational efficiency while decreasing the amount of mindless, robotic, repetitive work that employees must do.
Like many growing yet unprofitable names, UiPath has suffered in 2022’s difficulty stock market environment – shares are down by 56% year-to-date, yet the company still managed to beat expectations in its latest quarterly report – for F1Q23 (April quarter - delivered at the start of June).
Revenue increased by 32% year-over-year to reach $245 million, coming in about $20 million above the consensus estimate. Non-GAAP EPS of -$0.03 also bettered the Street’s call of -$0.06.
Encouragingly, and doubly so in the current environment, management increased its full-year revenue guidance from the range between $1.075 billion to $1.085 billion to between $1.085 billion and $1.090 billion.
All of this has Canaccord analyst Kingsley Crane bullish on UiPath. He writes: “The company’s ability to digitize the 'long tail' of human work opens up a vast and growing market opportunity... In our view, the growing need for automation combined with the ability for unattended bots to grow in a decoupled fashion from headcount create a compelling reason to own shares in an environment with macro uncertainty. As a category leader in RPA and a growing presence in other automation disciplines like Process Mining, PATH shares are a great way, in our view, to access this secular growth theme.”
All of the above makes it clear why Crane is now standing with the bulls. The analyst rates UiPath shares a Buy, while his $25 price target implies an upside of 33% for the year ahead. (To watch Crane’s track record, click here)
Overall, most analysts agree with Crane’s stance – 10 other recommend investors load up on shares. The stock is currently trading for $18.78 and its $29.03 average price target implies a 12-month upside potential of ~55%. (See UiPath stock forecast on TipRanks)
The voice assisting industry is no small niche; by 2024, the number of voice assistants is expected to reach 8.4 billion. By 2025, there are anticipated to be 75 billion IoT devices in existence and an enormous addressable market catering to businesses which range from IoT, retail, healthcare and hospitality to auto enterprise, contact center, and banking.
Being at the forefront of this industry, voice AI market innovator SoundHound could potentially capture a big chunk of the market. The company provides intelligent voice assistant technologies to businesses across the globe. Since being founded in 2005 by Stanford graduates, it has developed an intricate platform which provides exceptional AI voice interaction and capabilities. This allows for automated conversational services between businesses and clients.
There is obviously demand for such products as evidenced by the partnerships the company has secured so far with some of the world’s leading brands. These include Mercedes, Mastercard, Hyundai, Pandora, Honda and Snapchat.
SoundHound is new to the stock market and went public via the SPAC route earlier this year. However, since debuting on April 28 with a pro forma equity valuation of ~$2.1 billion, the shares have endured a torrid time – down by 60%.
Yet, 5-star analyst Daniel Ives, of Wedbush, thinks this new, lower stock price could offer new investors an opportunity to get into SOUN on the cheap.
“SoundHound is well-positioned to become the leader in Human-Computer interaction and the next generation of search monetization with the accelerating demand for voice AI products,” Ives writes. “In a market where 94% of companies are expected to use voice AI within the next two years and 90% of new vehicles globally are projected to have voice assistants by 2028, SoundHound has created a voice AI platform that exceeds human capabilities and brings value through an ecosystem of billions of products enhanced by innovation and monetization opportunities.”
To this end, Ives rates SOUN shares an Outperform (i.e. Buy) and backs it up with a $7 price target. Should the figure be met, investors will be sitting on returns of 99% a year from now. (To watch Ives’ track record, click here)
This stock is one of the market’s ‘pennies,’ trading for less than $5 per share. The current price, of $3.52, comes with an average target of $9, implying ~156% one-year gain. The shares have recent reviews from 3 analysts, who give SOUN 2 Buys and 1 Hold, for a Moderate Buy consensus view. (See SOUN stock forecast on TipRanks)
To find good ideas for AI stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
