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Prediction: These Could Be the Best-Performing Artificial Intelligence (AI) Stocks of 2030


Do you remember the first time you heard about this strange thing called a “cloud”? That was probably sometime in the 2010s. Many say this will be a boon for tech companies – and they’re right.

Spending on public cloud usage will increase from $31 billion in 2015 to nearly $200 billion in 2023. MicrosoftThe wisdom cloud and Amazonof (NASDAQ: AMZN) Amazon Web Services (AWS) provides an excellent revenue stream with an annual run rate of over $100 billion. The technique has been key to driving total returns for both stocks of more than 900% since 2015.

AI (AI) looks like the next big thing. Some say it will be as transformative as the Internet. The International Monetary Fund says it will transform nearly 40% of jobs worldwide, and data compiled by Statista shows the AI ​​market will grow sixfold from $300 billion this year to more than $1.8 trillion in 2030.

Bar chart showing estimated increases in artificial intelligence spending.

Bar chart showing estimated increases in artificial intelligence spending.

Here are four companies using artificial intelligence to grow and have the potential to make investors very happy over the next six years.

Palantir

Palantir (NYSE:PLTR) is a popular stock and most of the hype is well deserved. Managing, analyzing and using data to optimize decision-making is at the core of its business. Its platform for the private sector and government uses artificial intelligence to do this.

Palantir’s newest product, the Artificial Intelligence Platform (AIP), is also built for the defense and private sectors, deploying on customers’ networks and leveraging large language models (LL.M.). What does this mean? Here’s an example from Palantir.

Suppose you are a military operator in charge of a field force and receive data indicating that the enemy is massing equipment nearby. Operators can visualize the battlefield and ask questions like, “What enemy units are nearby?” and “What are the likely enemy formations?” They can then direct drones or satellites to capture the imagery. Using this technology can aid operators in planning and operational decision-making.

Palantir has historically performed well on defense revenue. This is an excellent source of revenue because the government has deep pockets. However, the private sector also provides a large market.

In the fourth quarter of 2023, the company’s commercial revenue increased 32% annually to $284 million (an acceleration from the 23% year-over-year growth in the third quarter), and government revenue increased 11% to $324 million. The company posted its fifth consecutive quarter of profitability on a generally accepted accounting principles (GAAP) basis — an impressive achievement for a high-growth technology company.

The stock trades at 25 times sales, which isn’t cheap, but based on sales forecasts, that number drops to 20 times. Since there are short-term risks to valuations, consider buying over time. Long term, Palantir’s AI credentials are top-notch.

UiPath

Here’s a phrase to add to your vocabulary: robotic process automation (RPA). This can automate tedious and non-value-added tasks.

For example, a mortgage broker may spend hours checking emails, downloading attachments, and manually entering data into applications. With RPA, this can be automated, allowing brokers to focus on higher-level tasks such as communicating with underwriters and contacting clients.this is an example UiPath (NYSE:PATH) What can be done for customers.

Speaking of customers, UiPath has over 10,800 customers who provide $1.4 billion in annual recurring revenue (ARR). UiPath’s fiscal 2024 third quarter (three months ended October 31, 2023) sales were $326 million. Considering the challenging economic environment in 2023, growth of 24% is impressive. UiPath also has a fortress-like balance sheet, with $1.8 billion in cash and investments and no long-term debt.

UiPath competes in a fragmented industry, which may be the biggest risk for investors. The company is profitable on a generally accepted accounting principles (GAAP) basis despite being cash flow positive, but its stock trades at 11 times, which is reasonable for the industry.

RPA has the potential to save companies significant amounts of money by automating low-level tasks, and UiPath could be a significant long-term beneficiary of this trend.

Evolution Technologies Corporation

Before I dive into this company, please note that this stock has a market capitalization of less than $1 billion, making it more speculative than other stocks. Managing risk is crucial, so speculative stocks should only occupy a certain percentage of your portfolio, depending on the age of your portfolio, i.e. how much time you have to recoup losses, and your risk tolerance. With this understanding, Evolution Technologies Corporation (Nasdaq: EVLV) Sell ​​fascinating technology that could save your life (and maybe make investors a ton of money).

Currently, when entering venues such as stadiums, people line up to pass through metal detectors in order, empty their pockets, and then conduct a second inspection with a scanning wand. This is inefficient and items are often missed.

Evolv’s technology is different. Multiple people could walk past an AI-powered machine, and detectors would identify guns or knives based on various characteristics such as shape, rather than sounding an alarm on all metals such as car keys. The alarm will show security personnel where the object was detected and they can take it from there.

Schools, hospitals and sports venues are Evolv’s target customers. Several major sports teams, school districts and medical schools are already using it. ARR in the third quarter of 2023 was $66 million, up 129% year over year, and subscriptions jumped 137% to just over 4,000. Evolv has a market cap of $676 million, trades at a reasonable 10x ARR, and has huge potential.

Amazon

I mentioned that there’s at least one company in this article that you’ve probably never heard of, but it’s probably not this one. Amazon AWS is best known for its online marketplace, but it will also benefit greatly from artificial intelligence because AWS is the world’s leading provider of cloud services.

Artificial intelligence software requires large amounts of data, much of which will be processed in the cloud. Amazon also provides other artificial intelligence solutions, such as basic models, which allow users to customize artificial intelligence software according to their needs.

Amazon has just released its fourth quarter 2023 financial report, and the results are very good. Total revenue grew 14% to $170 billion, and cash flow and operating income also grew significantly. As you can see in the chart below, the stock is up but still trading below its five-year average, based on sales and cash flow.

AMZN PS Ratio ChartAMZN PS Ratio Chart

AMZN PS Ratio Chart

Artificial intelligence will give Amazon a boost that should keep investors happy for years to come.

Should you invest $1,000 in Palantir Technologies right now?

Before buying Palantir Technologies stock, consider the following factors:

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John Mackey is the former CEO of Amazon subsidiary Whole Foods Market and a board member of The Motley Fool. Bradley Guichard Holds positions at Amazon and UiPath. The Motley Fool has positions and recommendations at Amazon, Microsoft, Palantir Technologies, and UiPath. Motley Fool at disclosure policy.

Prediction: These Could Be the Best-Performing Artificial Intelligence (AI) Stocks of 2030 Originally published by The Motley Fool



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