It’s no surprise that many high-quality AI stocks have achieved sky-high valuations. However, progress remains to be made in this trend. If you have some money to invest right now that you don’t need to cover bills or other contingencies – even if it’s just $200 – buy these three stocks AI now could strengthen your portfolio in the long term. .
In the third quarter, its revenue jumped 30% year-over-year to $729 million, while its operating margin stood at a solid 38%. The company also generated free cash flow of $435 million.
Rapid adoption of Palantir’s Artificial Intelligence Platform (AIP) led to a 39% year-over-year expansion of the company’s customer base, reaching 629 in the third quarter. This included a 77% increase in commercial customers. Unlike several competing AI platforms that primarily focus on model development, AIP has prioritized the development of ontologies, that is, frameworks that establish relationships between digital assets and applications of the real world.
So, rather than spending resources on models, which are increasingly commoditized, Palantir’s strategy has helped it quickly implement AI solutions in production environments for different use cases.
A final point in the stock’s favor is that Palantir was also recently added to the S&P 500 index. Given its multiple tailwinds and increased liquidity, the stock could appreciate significantly in the coming months.
In the third quarter, its revenue jumped 89% year-over-year to $25.1 million. Management expects to report revenue between $82 million and $85 million for 2024 and has set a target range of $155 million to $175 million for 2025. Additionally, the company plans to convert a backlog of bookings worth more than $1 billion in revenue over the next half year. six years.
SoundHound has also managed to reduce its over-reliance on a few customers. While a single customer contributed nearly 72% of its revenue in 2023, that same customer accounted for just 12% of revenue in the third quarter of 2024. Additionally, while its top five customers have contributed to 90% of turnover in 2023, they represented only 33% of its turnover in the third quarter of 2024.
Rapid adoption of SoundHound’s voice AI and conversational intelligence solutions in the restaurant and automotive industries, among others, has helped reduce the company’s customer concentration risk.
SoundHound also differentiates itself from its competitors with its proprietary Polaris founding model, which leverages billions of real-world conversations and millions of hours of audio in dozens of languages, collected over the past two decades. Polaris helps improve the accuracy of its offerings while controlling hosting costs. Polaris, which now powers a third of the company’s AI interactions for restaurant customers, could become a powerful catalyst for growth in the years to come.
The business is not without risks as an investment. In addition to its high valuation, SoundHound has a cash balance of just $136 million, which seems tight compared to its high cash burn rate. The company reported a GAAP net loss of nearly $92 million during the first three quarters of 2024. Given these challenges, savvy investors would be well advised to acquire only a small stake in this stock, their thus allowing you to benefit from its upside potential. , but by limiting their downside risk.
With a 35.8% share in the robotic process automation (RPA) market, UiPath (NYSE:PATH) is a dominant player in its space. It’s no surprise that the company is one of the biggest beneficiaries of this market’s explosive growth, which Grand View Research predicts will grow at a compound average rate of 39.9% from 2023 to 2030.
UiPath has built an extensive partner ecosystem that includes tech giants such as Amazon, Microsoft, SAPAnd Alphabetwhich opened it up to new opportunities for business expansion. Additionally, the company differentiates itself from the competition by offering low-code tools for automating existing systems and new applications, helping its customers avoid vendor lock-in. Additionally, UiPath offers enterprise governance services to manage automation agents, people, and models.
It also helps customers create, maintain and deploy automation agents, thereby targeting the new agentic automation space. Agentic automation involves the use of software agents that can perform autonomous actions based on information provided by large language models, generative AI technologies, large action models, and other management tools. ‘AI.
Market research firm IDC expects the agentic work automation market to grow from zero in 2023 to nearly $4.1 billion by 2028. The agentic automation offering of UiPath has already generated strong customer interest, with over 1,000 organizations already signing up for private previews of this agent generator. .
Although the company’s shares have crashed about 48% in 2024, in part due to management changes and reduced revenue guidance, the rapidly evolving agentic automation opportunity could drive a recovery of the share price in the years to come.
UiPath’s recent financial and operational numbers have also been quite healthy. As of its most recent quarter, ended October 31, the company had a strong balance sheet with $1.6 billion in cash and no debt. It also saw a solid 17% year-over-year increase in annual recurring revenue, to $1.6 billion, and achieved a customer retention rate of 97%.
Given its healthy business and evolving opportunities, UiPath could be an attractive choice for retail investors.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of the board of directors of The Motley Fool. Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Alphabet, Amazon, Microsoft, Palantir Technologies and UiPath. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Mad Motley has a disclosure policy.
3 Obvious Artificial Intelligence (AI) Stocks to Buy for 2025 with $200 Right Now was originally published by The Motley Fool
