If you're like me, you don't remember much about your high school geometry class. But I still remember some things, such as an interesting curve called a parabola.
In our adult lives, we don't encounter many good old parabolas. However, investors may have the opportunity to see Geometry in action on a selected group of stocks. These three artificial intelligence (AI) stocks (listed in descending order of market capitalization) have the potential to go parabolic with rapid price increases over a short period of time.
1.UiPath
Trajectory to 2024 UiPath's (NYSE:Pass) The stock looks like the left side of a downward sloping parabola. The robotic process automation (RPA) software company's stock price fell by double-digit percentages.
However, this decline does not reflect a major problem for UiPath. The company reported record sales of $405 million for the quarter that ended Jan. 31, up 31% year over year.
UiPath also achieved first-quarter profitability under Generally Accepted Accounting Principles (GAAP) since going public in April 2021.
Cathie Wood's ARK Invest predicts that the market for AI software could grow from less than $1 trillion in 2022 to a $14 trillion market by 2030. UiPath should be in a great position to benefit from this tremendous growth.
Everest Group rated its business automation platform as the best in terms of functionality, market impact, and vision.
UiPath's market cap is relatively low at around $11 billion, so there's plenty of room for growth. ARK Invest sees the company as part of the “AI sleeper wave,” or promising AI companies that aren't as widely supported as the mega-stock behemoths. The company believes that UiPath's ease of use and scalability give it a competitive advantage in the AI automation market.
2. BigBear.ai Holdings
AI-powered decision intelligence software company BigBear.ai Holdings (NYSE:BBAI) It had already gone parabolic early this year, more than doubling by early March. But then the stock price gave up all those gains, and then some.
Some on Wall Street think BigBear.ai is poised for a big rebound. The stock's average 12-month price target reflects 124% upside potential. One analyst predicts the stock could more than triple within the next 12 months.
This optimism is not based on the latest financial performance. The company's revenue for the first quarter of 2024 was down 21.4% year over year. BigBear.ai posted a net loss of $125.1 million in the same quarter.
But the company has gained momentum with recent contracts, including an $8.3 million extension with the U.S. military. He also recently completed his acquisition of Pangiam, a leader in vision AI.
3. Stem
stem (NYSE: STEM) is the smallest company on this list, with a market capitalization of just over $200 million. The company was also the group's worst performer this year, dropping nearly 70%.
The battery systems and smart energy AI software provider reported a 62% year-over-year decline in revenue for the first quarter, a significant deterioration in revenue.
Can Stem turn things around? Several analysts think so. The company's average 12-month price target is almost 240% above the current stock price.Most optimistic analyst survey LSEGThe owner of the London Stock Exchange believes the share price could soar more than 8.5 times.
Stem canceled some of its less profitable contracts and focused on other contracts with higher margins. The company expects these efforts to improve profitability. The recent introduction of the PowerTrack Asset Performance Management suite for managing storage, solar and hybrid energy portfolios could also help accelerate growth.
There is no guarantee that this stock (or UIPath or BigBear.ai, for that matter) will rise parabolically. However, the global market for energy storage systems is projected to nearly double to $506.5 billion by 2031, according to Statista. If Stem can capitalize on this huge opportunity, it could return to the winning streak of a few years ago.
Should you invest $1,000 in Stem now?
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Keith Speights has no position in any stocks mentioned. The Motley Fool has a position in Stem and UiPath and recommends Stem and UiPath. The Motley Fool has a disclosure policy.
“3 Artificial Intelligence (AI) Stocks That Could Go Parabolic” was originally published by The Motley Fool.
