BKSY - 3 Emerging AI Stocks to Buy Before It's Too Late
2024-07-12 06:20:00 ET
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Investing in emerging AI stocks presents a significant opportunity as the sector is poised for substantial growth. The global AI market is expanding rapidly, driven by advancements. Key trends include the integration of AI in various industries such as healthcare, finance, and e-commerce, where AI applications are enhancing efficiency and creating new revenue streams?.
AI’s role in healthcare is particularly promising, with applications in predictive diagnostics and personalized medicine. The e-commerce sector is also benefiting from AI through personalized shopping experiences and more.
However, these emerging AI stocks may not stay cheap for long. We’ve all seen the rise of AI companies like Nvidia (NASDAQ: NVDA ) that surged to new heights. Investors who manage to buy shares of these companies while they are still cheap may be handsomely rewarded, while the valuations of marquee brands in the AI space may already be too inflated for some people’s tastes.
So with that being said, here are three emerging AI stocks for investors to consider.
Aeva (AEVA)
Aeva (NYSE: AEVA ) designs and manufactures LiDAR sensing systems and autonomy-enabling software. Its 4D sensory system detects objects’ anticipated trajectories.
In Q1 2024, the company made significant progress, shipping a record number of sensors including to key customer Daimler Truck . Aeva remains on track with Daimler’s production timeline.
Aeva is seeing strong momentum in automotive, completing an important manufacturing audit with a top 10 global OEM. The company is advancing on multiple request for quotes with award decisions expected this year. To support its growth, Aeva established a new Automotive Center of Excellence in Germany.
While not yet profitable, Aeva has a solid balance sheet with $189 million in cash to fund its growth initiatives. Analysts see huge upside potential, with a consensus price target of $10.92 representing over 300% upside.
As Aeva’s differentiated 4D LiDAR technology gains traction, the company looks well positioned for robust long-term growth, which makes it one of those emerging AI stocks for investors to consider.
BlackSky (BKSY)
BlackSky (NYSE: BKSY ) provides geospatial intelligence and data analytic products through its satellite and ground systems.
The company reported strong Q1 2024 results with revenues increasing 32% year-over-year to $24.2 million. The growth was driven by both imagery & software services (+13%) and engineering services (+143%). Gross margins expanded nicely and operating leverage improved with cash operating expenses down 1%. This led to positive adjusted EBITDA of $1.4 million, a $5.5 million improvement from the year ago period.
BlackSky won important new government contracts and renewals worth $30 million in Q1. Customer demand appears robust for the company’s advanced satellite imagery and monitoring capabilities. With a strong revenue backlog, BlackSky is on track to generate $102 million to 118 million in revenue in 2024 along with $8 million to 16 million in adjusted EBITDA.
Trading around 1.5x forward sales, BKSY’s valuation looks very attractive given the growth and margin expansion potential. Analysts see major upside with a $2.69 average price target.
Palantir Technologies (PLTR)
Palantir Technologies (NYSE: PLTR ) specializes in big data analytics and has made significant progress in AI development.
The company delivered strong Q1 2024 results with revenue growing 21% year-over-year to $634 million. The company achieved GAAP profitability for the sixth consecutive quarter with EPS of 4 cents.
Adjusted operating margin expanded to 36% and free cash flow margin was 23%.
Commercial momentum remains robust, with U.S. commercial revenue up 40% year-over-year. U.S. commercial customer count grew 69% to 262 and remaining deal value rose 74%. Palantir’s government business also continues to perform well, with U.S. government revenue up 12%.
With $3.9 billion in cash and short-term investments, Palantir has ample liquidity to invest in growth initiatives. The company raised full year revenue guidance to $2.68 billion (up 23%) and boosted adjusted operating income expectations.
Although Palantir trades at a premium 84x forward earnings, its disruptive software, huge market opportunity and accelerating growth and margins support a bullish long-term view. The average analyst price target implies 25% downside, but contrarian investors may find the current valuation attractive.
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 .
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.
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