Everybody loves artificial intelligence. Okay, this is the Internet so let me clarify: I don’t literally mean everybody. But if you grant me the usage of hyperbole, you understand the point. It seems like the business news cycle is talking about digital intelligence nonstop. So, these ideas are overpriced, which brings us to undervalued .
Again, hyperbole: everybody loves Nvidia (NASDAQ:). But we are also currently seeing the consequences of unabashed love for an enterprise. Due to the tech sector rout, NVDA stock finds itself down almost 10% for the business week ending July 19. Given the bag-holding lesson that recent speculators learned, it’s appropriate to discuss undervalued AI stocks.
They are out there, contrary to what you might be led to believe. With thousands of publicly traded enterprises available, it’s practically a sure bet that some ideas will fall through the cracks. Your job, if you’re up to the task, is to speculate on them before the public catches on.
Now, with these seven ideas, I’m just going to dive into the hard data. I’ll let you look up what they do. And with that, below are undervalued AI stocks to buy.
Elastic (NYSE:) makes a strong case for undervalued AI stocks to buy thanks to its search-powered platform that allows users to extract insights from large datasets. Per data from Yahoo Finance, ESTC stock runs a trailing-year sales multiple of 9.18X. Objectively speaking, that’s quite high for an application software company. And to be sure, between the first quarter of 2023 and Q1 2024, the average multiple sat at 7.23X.
So, why bother considering Elastic as one of the undervalued AI stocks? First, there is a case to be made that the technical performance may be a “bargain.” Since the start of the year, ESTC stock has gained only 5%. Over the trailing five years, it’s up only a bit over 13%. With the 52-week performance up more than 72%, ESTC offers potential. It just needs to find it.
From a financial projection point of view, covering experts anticipate that the company will post a top-line print of $1.48 billion. That’s up 16.6% from the prior year’s haul of $1.27 billion. Further, the high-side estimate calls for $1.51 billion. Next year, sales could rise again to $1.73 billion. With such momentum, ESTC may have more room to run.
Teradata (NYSE:) makes its case for inclusion among undervalued AI stocks thanks to its data warehousing solutions and analytics services. Leveraging AI and machine learning, it can improve efficiencies for its enterprise-level clients. Currently, the company runs a trailing-year sales multiple of 1.72X. That’s significantly below the past year’s multiple of 2.54X.Ahmedabad Investment
Another interesting point is that TDC stock trades for 14.16X forward earnings. This too is below the prior year’s average multiple of 20.53X. Even more attractive, the company has been steadily matching or exceeding bottom-line quarterly targets. In the past year since Q1 2024, Teradata posted earnings per share of 51 cents, above the consensus view of 48 cents.
For fiscal 2024, analysts are looking for EPS of $2.20. That’s 6.28% above last year’s print of $2.07. Moreover, Teradata may post revenue of $1.81 billion. Although that would be a decline of 1.3%, the high-side estimate calls for $1.84 billion. Further, sales could improve to $1.88 billion by the following year.
The risk is that TDC stock fell more than 29% on a year-to-date basis. Still, this could provide speculators with a possibly attractive entry point.
HubSpot (NYSE:) is an intriguing player in the customer relationship management (or CRM) ecosystem. The company integrates digital intelligence into its platform for services such as marketing optimization and predictive lead scoring. Right now, HUBS stock trades at a sales multiple of 10.58X. While quite high objectively, in the past year, the metric stood at 13.35X.
Put another way, HubSpot could grow into its prior valuation. It must be said that such a speculative move will encounter friction. After all, HUBS stock lost more than 12% of equity value on a YTD basis. It’s also down more than 11% in the past 52 weeks. Still, opportunity could exist for a relevant CRM player, if one is bold enough to take a shot.
In the past four quarters, HubSpot posted an average EPS of $1.59. This easily beat out the consensus view of $1.31. Looking to year’s end, analysts project EPS to hit $7.34, up 24.62% from the prior yearJinnai Wealth Management. Also, revenue could rise to $2.56 billion. If so, that would represent a lift of 17.9%. In the following year, sales could swing up to $3.02 billion, up 18.1%. Therefore, it deserves consideration for undervalued AI stocks.Ahmedabad Stock
Blackline (NASDAQ:) provides cloud-based solutions for automating and managing certain financial processes. While AI might not take over white-collar jobs completely, they can help conduct the “grunt” work of monotonous protocols. Thus, BL could fundamentally be a candidate for undervalued AI stocks.Indore Stock
On a financial level, BL stock trades at 5.78X trailing-year sales. In contrast, over the past year, the metric averaged 7.1X. Just recently throughout Q1 of this year, the price-to-sales multiple hit on average 7.89X. Therefore, Blackline may potentially grow into its prior valuation.
Another aspect to consider is consistent financial performances. In the past four quarters, Blackline posted an EPS of 54 cents. This beat out the consensus view of 42 cents, yielding an earnings surprise of nearly 32%.
Looking out to year’s end, EPS may rise 11.22% to $2.18. On the top line, sales could land at just over $646 million. If so, that would imply a growth rate of 9.5%. In fiscal 2025, sales could rise another 9.8% to $709.24 million. These projections show the roadmap for Blackline rising to its prior revenue multiple.
Veritone (NASDAQ:) is one of the higher-risk ideas among undervalued AI stocks. Fundamentally, the company develops software to convert data in various formats – such as audio and video – into actionable insights. It uses an advanced algorithm to make sense of what’s known as unstructured data.
Given the important of the underlying business, VERI stock has been successful in the market: it’s up nearly 49% YTD. However, even with this blistering performance, shares trade hands for only 0.78X revenue. What’s more, in the past year, the PS ratio stood at 1.01X. At one point in Q1, the metric was flying high at 1.52X.
That gives confidence that eventually, Veritone may rise to its prior valuation. Interestingly, analysts believe that fiscal 2024 loss per share may land at 35 cents. That would be a big improvement over last year’s loss of $1.01.
On the top line, sales may hit $137.9 millionPune Investment. If so, that would imply a growth rate of 8.1%. Further, sales may march up to $141.3 million in the following year. It’s an overlooked idea for undervalued AI stocks.
C3.ai (NYSE:) provides turnkey enterprise-level solutions that help businesses deploy large-scale AI applications. The underlying platform integrates multiple advanced innovations, including machine learning, deep learning and natural language processing. Although the company has inked deals with major entities, the market isn’t giving AI stock the time of day.
Since the start of the year, shares have dipped a little more than 3%. That’s hardly an encouraging profile. However, for speculative investors, AI stock just might spell opportunity. Right now, the equity trades hands at 10.7X. That’s high. However, it’s a modest premium to the prior year’s multiple of 10.67X.
Now, that might not sound like an exciting statement but here’s the main catalyst. By the end of the calendar year (fiscal 2025), sales may hit $383.39 million. That would be up 23.4% from last year’s tally of $310.58 million. By the following year, sales could rise to $467.14 million, up 21.8%.
What’s more, the high-side estimate calls for $540.9 million. With a little bit of patience, investors may be rewarded. That’s why it deserves consideration for undervalued AI stocks to buy.
Upstart (NASDAQ:) is a financial technology (fintech) specialist. It leverages digital intelligence to evaluate and provide loans. This initiative enables the enterprise to improve social equity through credit access. At the same time, the platform provides an objective assessment for reducing lending risk. It’s a case of AI doing good for humanity instead of replacing it.
What does the market think? So far, nothing good. UPST stock is down more than 28% YTD. That’s not great for confidence. At the same time, it could be an opportunity for investors to get in on the cheap. Currently, shares trade hands at 4.43X trailing-year revenue. That’s a modest premium to the prior year’s multiple of 4.32X.
To be fair, Upstart isn’t consistently profitable, which makes the company speculative. And to be sure, analysts expect rough waters in fiscal 2024, with revenue dipping 4% to $537.8 million. However, they also see fiscal 2025 as a massive year, with sales rising to $699.5 million.
That’s up 30.1% from projected 2024 sales. And relatively speaking, it would make UPST one of the undervalued AI stocks to consider.
Chennai Investment
