UDMY - 3 Stocks to Buy Based on Mary Meeker's AI Report
2024-07-12 13:20:42 ET
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Mary Meeker, a prominent figure in the tech investment landscape, released a report last week urging a collaborative effort among the tech industry, government, and higher education institutions to accelerate artificial intelligence ( AI ) advancement, highlighting potential stocks to buy in the EdTech sector.
The report emphasized the significance of the current moment, which Meeker describes as an “inflection point of epic proportions,” for the future of democracy and power dynamics globally. Meeker, known for her influential tenure as a Morgan Stanley (NYSE: MS ) analyst and her impactful “Internet Trends” report, which ceased publication after 2019, has been a vocal advocate for the tech sector.
Since transitioning to venture capital in 2010 and founding Bond Capital, her insights have continued to shape industry perspectives. The latest report, titled “AI & Universities,” highlights the importance of partnerships between tech companies and academic institutions in maintaining a competitive edge in AI development.
Meeker suggests that AI could revolutionize education by providing personalized lesson plans to address student learning gaps and by enhancing the role of teachers in the classroom. She envisions a future where educators can focus more on motivation and personalized technology-supported coaching.
To facilitate this vision, Meeker calls on tech companies to make their technologies more accessible to educational institutions. She underscores the importance of supplying schools with essential resources like GPUs, which are critical for running advanced AI applications.
The report also addresses the broader implications of AI on society, stressing the urgency for universities and regulators to grasp the potential of AI to influence both positive and negative outcomes.
Along these lines, here are 3 EdTech stocks to buy.
Udemy (UDMY)
Udemy (NASDAQ: UDMY ) offers a vast library of online courses catering to a diverse range of subjects and skill levels. Its flexible learning platform and strong global reach make it a popular choice for both individuals and enterprises. It promises significant growth potential as the demand for online education continues to rise, making it one of the stocks to buy.
In May, this EdTech company saw its shares jump sharply after it topped market expectations for the second quarter and raised its earnings guidance. In response to this report, Citi (NYSE: C ) analysts said there is still upside potential for the improved earnings guidance, which bodes well given the pressure seen in the broader sector.
Similarly, Needham & Company analysts said the online education stock boasts an attractive valuation given its growth profile. For the first quarter, Udemy posted a 12% increase in total revenue year-over-year.
Annual recurring revenue ( ARR ) jumped 21%, while a net dollar retention rate surged 104%. This helped Udemy lift its full-year sales guidance to $800 million, up or down $5 million.
Stride (LRN)
Stride (NYSE: LRN ), formerly known as K12 Inc., focuses on providing online K-12 education and career learning programs. It benefits from the increasing acceptance of remote learning, driven by its comprehensive curriculum and personalized education models, appealing to families seeking alternative schooling options and vocational training.
As one of the stocks to buy, the company saw its stock target lifted at Citi from $75 to $77. The investment firm has also reiterated its Buy rating on its shares in response to third-quarter results and an increase in the full-year guidance.
Stride’s Adjusted Operating Income forecast, expected to rise by roughly 4.1% in fiscal year 2024, has contributed to Citi’s positive stance. Moreover, the EPS forecast has been bumped by 9.4%, with an average uptick of about 2.4% projected for the subsequent years. This enhanced EPS outlook has played an important role in Citi’s decision to revise the price target upward.
Laureate Education (LAUR)
Laureate Education (NASDAQ: LAUR ) operates a network of higher education institutions globally, primarily in emerging markets. Its focus on expanding access to quality education and strong presence in Latin America and other developing regions positions it well to capitalize on the growing demand for higher education in these markets.
As one of the notable stocks to buy, Laureate Education reported its first-quarter results for the calendar year 2024. Revenue increased over the year to $275.4 million. The com, surpassing analysts’ expectations’s adjusted EBITDA, also exceeded forecasts, coming in at $30.6 million against the anticipated $25.0 million, marking a 22.4% beat.
Despite the positive revenue and EBITDA performance, Laureate Education posted a GAAP loss of 7 cents per share, which did not meet analyst expectations of a 3 cent loss per share. However, this still represents an improvement from the 17 cent per share loss reported in the same quarter of the previous year. The company anticipates its full-year revenue to be around $1.57 billion, aligning with analysts’ projections.
President and CEO Eilif Serck-Hanssen highlighted the company’s 25th anniversary and its commitment to expanding access to higher education, particularly in Mexico and Peru.
On the date of publication, Shane Neagle did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article 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.
Shane Neagle is fascinated by the ways in which technology is poised to disrupt investing. He specializes in fundamental analysis and growth investing.
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