HomeMarket NewsThe Rise of Hidden Gems: Unveiling 3 AI Stocks Ready for Breakout

The Rise of Hidden Gems: Unveiling 3 AI Stocks Ready for Breakout

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As the artificial intelligence (AI) frenzy subsides, the momentum of advanced computing and AI-driven solutions powering innovation and market surges remains unwavering. While the limelight shines on marquee AI stocks, under-the-radar contenders stealthily lay the groundwork for exponential growth in the foreseeable future.

Identifying these overlooked AI darlings poses a challenge. Unlike prominent players emphatically flaunting an “AI first” narrative, these hidden gems refrain from adorning their product offerings with superficial AI branding — take, for instance, the ongoing AI-infused mayhem surrounding Amazon‘s (NASDAQ:AMZN) “Just Walk Out” experiment turning sour.

These three stocks epitomize the overlooked segment of the AI market, with their subtle ingenuity today laying the groundwork for substantial future upswing.

Reddit (RDDT)

Silhouette man using smartphone with Reddit (RDDT) logo on blurred background is an American social news aggregation, content rating, and discussion website.

Source: Poetra.RH / Shutterstock.com

While evidently overvalued at present, Reddit (NYSE:RDDT) harbors untapped and underestimated AI potential sourced from an unexpected realm: training and feeder data. Acting as a rich repository of authentic user-generated content, Reddit stands poised to offer third-party AI firms a goldmine of data for refining their models. This distinct advantage positions Reddit as a neutral entity unswayed by any particular AI stock’s performance — akin to supplying tools to gold miners.

The strategic move is not unprecedented. As early as 2019, subreddits that trialed nascent GPT models observed AI bots engaging in collaborative interactions to iron out glitches, test methodologies, and elevate GPT to its present caliber. Leveraging Reddit’s feeder data, these subreddits simulated standard user discourse, albeit with outcomes that occasionally pale in comparison to today’s more logical responses.

While the chatter around data dethroning oil or other traditional commodities has been incessant, the ascension of AI and the augmented emphasis on enhancing training data position platforms like Reddit as primary nurturing grounds set to capitalize on this enduring trend.

Parsons (PSN)

Illustration of geometric mask surrounded by tech symbols against blue background representing artificial intelligence (AI)

Source: shutterstock.com/Andrey Suslov

Unheralded AI contender Parsons (NYSE:PSN) emerges as a modestly sized player in defense technology, boasting a diverse product portfolio encompassing intelligence, security, ballistic missile site development, rocketry hardware, and nuclear site management, alongside significant involvement in national infrastructure projects like bridge constructions nationwide. This diversification strategically aligns Parsons with the slated surge in national infrastructure enhancement efforts following the recent Baltimore bridge catastrophe.

The broad gamut of projects undertaken by Parsons necessitates comprehensive data governance and oversight, domains where AI stands poised to exert significant influence. Parsons takes the lead with internally administered AI data solutions and pushes the envelope through its AI-driven drone applications.

Beyond military applications, Parsons propels the reach of its AI-based drone solutions into infrastructure inspection realms, revolutionizing the assessment of existing and ongoing projects like bridges, roads, and water treatment plants. This foray positions Parsons as a pivotal actor in deploying AI to challenging or perilous terrains necessitating thorough and meticulous safety appraisals.

AeroVironment (AVAV)

The Unseen AI Potential of AeroVironment (AVAV)

AeroVironment: A Drone Tech Powerhouse with AI Potential

Just like Parsons, AeroVironment (NASDAQ:AVAV) hides a treasure trove of AI potential within the folds of its defense sector reputation. While retail investors often overlook this gem, Cathie Wood’s substantial holdings hint at its untapped value. Specializing in drone technology, AeroVironment’s Raven UAS stands as a cornerstone tool for the US military and its global allies. But what truly sets AeroVironment apart is its venture into AI, a journey that predates the recent AI frenzy.

A Strategic Move: AeroVironment’s Dive into AI Territory

In a pivotal move back in 2021, AeroVironment swooped in to acquire Progeny Systems Corporation’s Intelligent Systems Group, planting the seeds for a new division dedicated to AI-powered visual detection tools. These innovative tools, crucial for the future landscape of warfare, bolster AeroVironment’s capacity to pinpoint specific objects, conduct change detection assessments, and decipher “pattern of life” activities – all vital elements for efficient drone surveillance and targeting in an era where drone warfare reigns supreme.

Leader of the Pack: AeroVironment’s Stealthy Climb in AI Stocks

Through this acquisition and its venture into AI-centric intelligent robotics, AeroVironment stealthily cements its place among the top dogs of undervalued AI stocks. Its strong foundation rooted in core clients within the US federal government and allied nations not only ensures its longevity but also propels its potential for sustained growth.

On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Jeremy Flint, an MBA graduate and adept finance writer, excels in devising content strategies for wealth managers and investment funds. His knack for simplifying intricate market concepts shines through in his focus on fixed-income investing, alternative investments, economic analysis, and the oil, gas, and utilities sectors. For more of Jeremy’s work, visit www.jeremyflint.work.

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