AI stocks to watch on the ASX with real earnings growth

Artificial intelligence is moving from a buzzword to core infrastructure, while markets juggle inflation data, interest rate expectations, energy risks, and a mixed global economic growth picture. With AI-related demand now a major focus of tech company earnings and trade data, investors are looking for clearer ways to target companies directly tied to chips, software, the cloud, and large-scale language models such as ChatGPT. This AI stock screener filters for companies that are at the heart of that theme across semiconductors, platforms, and tools. In this article, we highlight three stocks from our screener that are especially noteworthy.

Aura Consolidated Group (ASX:AXQ)

overview: Aura Consolidated Group (ASX:AXQ) offers a suite of digital safety and privacy tools for consumers and families across Australia and the US, covering credit monitoring, identity theft protection, device security, VPN, spam call blocking and fraud prevention. It also offers online safety features for kids, including parental controls, gaming and messaging monitoring, and AI-driven alerts for digital wellbeing.

operation: Aura Consolidated Group generates revenues of approximately US$192.5 million, all within Australia, from security software and services.

Market capitalization: AUD 1.1 billion

Aura Consolidated Group sits at the intersection of AI and cybersecurity, using AI tools within the Aura Intelligence platform to monitor online risks across identities, devices, and children’s digital activities. Revenues increased 31.3% year over year to US$192.5 million, demonstrating demand for bundled protection services. Investors should weigh that performance against the company’s net loss of US$140.8 million and financing period of less than a year. Recent IPOs, the appointment of a chief AI officer, and product-focused hires indicate an aggressive build-out phase. With its current P/S of 3.9x compared to the domestic software average, investors may want to consider how much of its growth story is already reflected in the price.

Aura Consolidated Group’s rapid revenue growth and emerging AI leadership raise big questions about how much risk is already priced in. There’s 1 major reward and 3 big warning signs (2 are big!) worth considering in this story.

Zero (ASX:XRO)

overview: Xero (ASX:XRO) provides cloud-based accounting, payroll, payments and tax software that enables small businesses and their advisors to manage their day-to-day finances in one place. It also owns tools like Planday for staff scheduling, Hubdoc for invoices and receipts, and several AI-enabled products that turn raw data into reports, forecasts, and workflow automation.

operation: Xero generates all of its NZ$2.75 billion revenue from providing online solutions for small and medium-sized businesses and their advisors across Australia, New Zealand, the UK, the US and other markets.

Market capitalization: AUD 11.9 billion

Investors looking beyond pure chip and infrastructure stocks to AI powerhouses may want to keep an eye on Xero. With tools like JAX, XeroForce, and deep integration with Anthropic Claude and Microsoft 365, the company puts AI at the heart of small business finance, bringing AI to day-to-day bookkeeping and cash flow decisions. Both earnings and revenue are expected to grow significantly, but recent margin compression, high P/E ratios, and year-over-year revenue declines highlight execution risks if growth and cost discipline decline. Partnerships with platforms like Fresha and Wagepoint demonstrate how deeply Xero can be integrated into customers’ workflows. Therein lies the real opportunity for AI, and the main risk posed by high expectations.

Xero’s AI push is right where small business workflows and high expectations meet. But the real story is how growth forecasts stack up against that pressure, and what analysts are quietly hinting at in their predictions for Xero.

Echo IQ (ASX:EIQ)

overview: Echo IQ (ASX:EIQ) develops AI-based diagnostic tools to help cardiologists detect structural heart disease and assess risk for conditions such as aortic stenosis, diastolic dysfunction and heart failure using its EchoSolv platform. The company is collaborating with leading institutions such as the Mayo Clinic to refine cardiac risk models for patients, including those undergoing cancer treatment.

operation: Echo IQ currently generates approximately A$0.09 million in revenue from developing artificial intelligence software.

Market capitalization: A$991.29 million

Echo IQ is a small revenue company trying to tackle a big problem, using AI to help doctors diagnose structural heart disease, and currently working with leading partners including Mayo Clinic and Mount Sinai Health System. Expected sales growth is said to be very high, some analysts expect the stock price to rise, and new, experienced leadership, such as a recently appointed CFO, suggests a more mature commercial push. At the same time, Echo IQ is in the red and is expected to remain in the red for at least three years, has riskier debt, and has a very high P/B multiple, making the stock volatile. The real question for investors is how the combination of medical reliability, growth expectations, and financing risk compares to current prices.

Echo IQ’s meager revenue and nearly A$1 billion valuation suggest investors may not have priced it well enough. Before you think growth solves everything, weigh your optimism against 2 important rewards and 3 important warning signs (1 is major!).

The three stocks in this article are just a starting point. Our complete Artificial Intelligence/AI stock screener shows that 14 more companies directly connected to chip, cloud, LLM, and the broader ChatGPT are built with similarly compelling stories. Use Simply Wall St to identify and analyze the specific catalysts, AI narratives, and financial filters that are important to you so you can focus on the highest-conviction ideas on the subject.

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Looking for new alternatives to these AI stocks?

Markets move fast, and the best breakout opportunities right now may have flown by unnoticed. Take a look at these fresh stock ideas and consider them now before the crowd catches up.

This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

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