Having pushed the S&P 500 into a new bull market while other businesses lagged, AI stocks have been by far the hottest assets of 2023 so far.
While huge names like NVIDIA, C3.ai and Super Micro Computer dominate the discussion of AI stocks, there are many smaller companies attempting to profit from the technology. Here are seven AI-related stocks that trade under $10 per share.
One of the most-discussed startup stocks of the last several years is Planet Labs (NYSE:PL).
This innovative aerospace company images the entire Earth every day and has created an enormous library of satellite image data, which is valuable to both public and private entities.
Planet’s existing stockpile of historical imaging data provides it with an ever-growing moat against potential competitors. Recently, Planet Labs has invested more heavily in AI as a method for maximizing the value of its image database.
In partnership with Microsoft, Planet Labs is developing AI-powered search tools that will allow customers to query its maps for features and buildings in much the same way they would search the internet. A test version of this system has already been debuted, though this first iteration focuses only on maps of the state of California.
Today, Planet Labs trades at just $2.58 per share. The median target price for the stock, however, is $5.23, creating the potential for an upside in excess of 100 percent. The growing company is also in a relatively strong financial position, holding no long-term debt and having a current ratio of 3.68.
SoundHound (NASDAQ:SOUN) is an AI speech recognition company specializing in music recognition, speech-to-meaning processing and natural language processing. The company is perhaps best known for its self-titled smartphone app, which allows users to identify pieces of music.
SoundHound’s real value, however, lies in the commercial applications of its technology. Commercial partners Hyundai, Vizio and White Castle have all begun integrating SoundHound’s AI voice recognition platform into their businesses. The fact that SoundHound’s AI can be used across so many different industries points to a large addressable market.
It is worth noting that SoundHound has fallen significantly since its IPO. The stock currently trades at under $2 per share despite initially opening at $8.72.
Analysts, however, still see room for significant upside from SoundHound, placing a median price target for the stock at $4.57, implying significant upside potential.
Investors should, however, be aware that the company is also carrying a 4.8 debt-to-equity ratio that could put a drag on growth while interest rates remain elevated.
Alithya Group (NASDAQ:ALYA) is a digital services, consulting and development company that provides technology services to businesses across a wide range of industries.
The company is known for its digital transformation services, but it also provides services and consulting related to emerging tech fields such as the internet of things (IoT) and AI.
Alithya Group expects to achieve non-GAAP positive earnings this year, with adjusted EPS rising to $0.05. This comes on the back of extremely strong revenue growth over the past few years.
Since Q1 of 2021, Alithya’s quarterly earnings have increased from $61 million to $98 million. Another encouraging aspect of Alithya Group is its modest debt-to-equity ratio, which currently stands at just 0.27.
From its current price level, analysts expect Alithya stock to nearly double to $3.33 per share over the coming 12 months.
Unlike many AI stocks, Alithya also shows at least some signs of undervaluation. To begin with, the stock trades at just 0.39 times sales. The price-to-cash-flow ratio of 4.1 is also quite attractive. As such, Alithya may be a good option for those looking for an undervalued AI stock.
Although better known as an up-and-coming producer of electric vehicles in China, NIO is also emerging as an innovator in the AI field.In 2020, the EV manufacturer rolled out its signature vehicle AI system, NOMI.
As the company moves further toward the development of fully autonomous vehicles, NIO will have to invest more of its resources into AI research.
Although NIO has not yet reached profitability, the company is expected to pare its losses from $1.77 to $1.12 per share over the next year. Over the same time period, analysts expect NIO shares to rise to a consensus price target of $12.68.
Despite its significant potential, NIO does face the risk of competition within the Chinese market. Other major EV companies, most notably BYD, are locked in a close competition to offer vehicles to Chinese consumers at attractive prices. As a relatively small firm this competition could prove difficult for NIO.
On the plus side for NIO, the company could gain a lucrative new revenue stream from smartphone sales. In addition to its vehicles, NIO hopes to market smartphones in China and emerge as a direct competitor to Huawei. This new business line could help NIO’s push to achieve profitability while also providing additional funding for expanding the company’s vehicle business.
AudioEye (NASDAQ:AEYE) is a company specializing in digital accessibility solutions. It also offers a comprehensive platform for monitoring and testing of digital platforms.
AudioEye helps customers improve accessibility for those with a wide range of disabilities, including but not limited to dyslexia, epilepsy and color blindness.
Although AudioEye is relatively new to the AI field, the company has demonstrated some promising early results by integrating generative AI into its platform.
In a test performed earlier this year, AudioEye found that fixes recommended by AI allowed human experts to solve accessibility issues nearly 10 times faster than humans working alone.
Although AudioEye’s losses are expected to widen over the coming year, analysts remain more or less bullish on the stock.
AudioEye stock is forecast to rise to a price target of $9 over the coming 12 months, according to analysts. Much of this bullishness may be driven by AudioEye’s rapid customer growth, which hit 37 percent year-over-year in the second quarter.
The company is also poised to profit from increasing awareness surrounding digital accessibility issues.
BigBear.ai has had a rough run recently, having missed its Q2 revenue expectations by nearly $1 million. The company does, however, have a $206 million work backlog that could provide an ongoing tailwind to the company.
The firm is reducing losses with EPS improving from $-0.45 per share in Q2 of 2022 to just $-0.12 in the most recent quarter.
As the company works through its backlog, it is likely to enjoy solid revenue growth and a continuation of progress toward eventual profitability.
While BigBear.ai has lost over $121 million over the past 12 months, it has also been able to operate out of its cash reserves and has not taken on long-term debt.
Looking forward, analysts expect the stock to rise to a target of $4.00 per share, translating to an upside of nearly 200 percent.
It should be noted, however, that this will require management to successfully work through its backlog and increase revenues at a robust rate if investor confidence is to be improved.
Learning platform Nerdy (NYSE:NRDY) is exploring AI technology to create an immersive and personalized learning experience.
In addition to integrating a version of ChatGPT into its tutoring platform, Nerdy has begun using AI to curate lesson plans and provide chat-based tutoring.
In Q2, Nerdy announced year-over-year revenue growth of 16 percent and total revenues of $48.8 million. Memberships also grew to 31,000, reaching a level even higher than that expected by management. Learning memberships accounted for 73 percent of total revenue.
Like most AI startups, Nerdy is still losing money. The company is, however, expected to reduce its losses from $0.51 to $0.35 per share in the next year. The stock has a median target price of $5.93, implying an upside opportunity of over 80 percent.
It’s worth noting, however, that, Nerdy isn’t the only publicly traded education platform experimenting with AI. Coursera, for example, offers multiple courses in AI technology and also uses the technology widely on its platform. As such, Nerdy may face competitive risks from other companies attempting to capitalize on AI in the education sector.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.