Despite Artificial Intelligence (AI) being around since the 1950s with the advent of more powerful computers, AI stocks came under the limelight fairly recently. With the evolution of cloud computing, more powerful GPUs, and an explosion of data AI became more commercially viable, thus sparking investments into the sector.
Moreover, AI is important for business since it uses algorithms to detect patterns, make predictions, lower costs, and streamline business processes all while scaling the capacity and ability of the models it uses.
Accordingly, Finbold has found two AI stocks investors should consider in these volatile markets.
Sumo Logic (NASDAQ: SUMO)
Sumo provides a machine data analytics platform, helping companies make sense of the data generated by their internal systems. In its latest earnings report, the company surprised to the upside by posting revenue of $67.05 million, beating estimates by $2.73 million, an increase of 23.8% year-on-year (YoY).
Similarly, earnings per share (EPS) was -$0.13, beating estimates by $0.04. Further, the company raised its full-year guidance expecting a 21% to 23% growth YoY and offering growth guidance of 19% to 21% for 2023. Finally, Sumo has roughly $350 million of cash on hand and has only penetrated 0.5% of its $55 billion total addressable markets (TAM).
Yet, the shares are down over 40% year-to-date (YTD) despite the earnings beat, trading below all daily Simple Moving Averages (SMA). However, a double bottom pattern has been noted on the daily chart, possibly signaling that a change in sentiment might be coming.
Analysts rate the shares as a moderate buy, predicting that in the next 12 months, the stock may reach an average price of $12.58, 64.02% higher than the current trading price of $7.67.
UiPath Inc. (NYSE: PATH)
UiPath is the leader in robotic process automation, an industry expected to grow in leaps and bounds over the next decade. UiPath’s platform is built to span the entire automation lifecycle, providing customers with a comprehensive set of capabilities to manage its automation across their entire organization.
The firm posted a revenue of $245.07 million, an increase of 31.6% YoY, beating estimates by $19.7 million. Similarly, EPS beat by $0.03, making it a total EPS of -$0.03, increasing its full-year guidance.
The stock of the company is down over 57% YTD, with a recent spike in the share price that helped PATH close slightly above the 50-day SMA. Slight trading volume has also been noted while the shares seemingly created a new trading range between $15 and $22.
Even so, analysts rate the shares a moderate buy, with the next 12-month average price prediction at $28.84, 54.14% higher than the current trading price of $18.71.
With the recent market volatility, AI and tech stocks, in general, have been discarded by investors looking to sell their more risky assets.
Unfortunately, for AI stocks, a large percentage of them lost over 50% of their market value, on the other hand, this could represent a potential buying opportunity for investors looking to go long on industry leaders; the above two likely tick these boxes.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.