Are you an investor who is feeling bullish on the AI revolution?
When it comes to artificial intelligence, the future is uncertain. However, certain companies are poised to capitalize on their AI stocks. These firms pilot the development of core AI technologies and machine learning algorithms, which companies then apply innovatively across diverse industries such as healthcare, finance, and automotive.
For investors eager to strike gold quickly, let’s delve into three AI stocks to consider purchasing. The valuations of these companies could change rapidly due to their small market caps, so investors should act promptly.
Exploring Pegasystems (PEGA)
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Pegasystems (NASDAQ:PEGA) focuses on customer engagement and business process management. Despite some hurdles surrounding the stock, PEGA could be an appealing buy due to encountering macroeconomic and structural problems.
The company is guiding for a full-year average contract value growth of 12% at the midpoint, amid broader economic concerns and an internal restructuring, including a 4% reduction in headcount. Nonetheless, PEGA has reported significant revenue exceeding expectations, attributed to its subscription license segment’s outperformance. Additionally, the company’s 2024 guidance on revenue, EPS, and free cash flow has surpassed analysts’ expectations.
Underscoring the bullish sentiment is the fact that eight Wall Street analysts have given Pegasystems a moderate buy rating, with a consensus price target of $56.
Analyzing Recursion Pharmaceuticals (RXRX)
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Recursion Pharmaceuticals (NASDAQ:RXRX) specializes in drug discovery with its AI and machine learning algorithms.
This year could be pivotal for RXRX as two major data readouts are anticipated in the second half. These comprise results from the phase 2 SYCAMORE trial for REC-994 and the phase 2/3 POPLAR study for REC-2282, targeting cerebral cavernous malformation and Neurofibromatosis Type 2 (NF2), respectively, in areas devoid of approved drugs.
While RXRX stock has witnessed negative free cash flow of $276 million in the past twelve months, the company reported a robust cash position with cash and cash equivalents totaling $389.5 million. This financial stability is bolstered by strategic partnerships, notably a $50 million investment from Nvidia (NASDAQ:NVDA).
Several analyst price targets for the stock average $16.8, implying a potential surge of 35.16% from the current price.
Deciphering SoundHound AI (SOUN)
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SoundHound AI (NASDAQ:SOUN) offers advanced voice recognition and natural language understanding capabilities.
Last year, the company announced targeted restructuring measures aimed at expediting its path to profitability. This included a heightened focus on its SaaS product, SoundHound for Restaurants. Additionally, the business reported robust Q4 revenue, up 84% year over year (YOY).
This year, SOUN plans to capitalize on a $160 billion total addressable market across its core industries. The company’s strategic focus includes enhancing its product offerings and leveraging its extensive blue-chip client roster, particularly in the automotive industry.
Analysts rate SOUN as a strong buy, with a 17.02% predicted upside for its stock price. Moreover, analysts like Scott Buck from HC Wainwright & Co. are even more bullish, giving it a price target of $5, which represents a 32.98% upside. Furthermore, forecasted revenue for next year is $72.24 million, with a predicted increase for its EPS.
Hence, given these recent financial outcomes and projections, SOUN stands out as one of those AI stocks worth investing in.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
