These 2 AI stocks may boom in the future

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The rise of artificial intelligence continues to expand at an impressive pace, and its impact on various sectors of society cannot be ignored. The growing presence of AI in everyday life, from search engines to personalized advertisements on social media, raises questions about the future of computing, statistics, data analysis, marketing, and advertising.

One thing is clear: AI is generating opportunities for a wide spectrum of companies. From digital advertisers to the Internet of Things (IoT), everyone will be affected by this phenomenon, and savvy investors are looking to capitalize on it.

However, investing in AI is not as straightforward as it may seem. It is essential to recognize that not all companies or stocks are directly related to this technology, as some may benefit from it without being directly involved in its development or software writing.

Furthermore, it is essential to broaden the scope beyond big tech companies, as numerous AI-related companies have not yet reached their full potential and could offer greater growth opportunities in the future.

Cerence Inc

Cerence, a software company with over 20 years of experience, has stood out for its focus on artificial intelligence. Its main goal is to develop AI-driven platforms to provide voice-activated assistant tools in the field of mobility. Cerence’s technology focuses on making vehicles smarter by working collaboratively with drivers, providing a safer and more comfortable driving experience.

With over 475 million current automobiles using their products, the company has a strong presence in the automotive industry, collaborating with original equipment manufacturers and renowned brands such as Subaru, Suzuki, GM, Ford, Mercedes, and Renault.

Cerence’s stock has experienced a 0.6% increase in the past four weeks and closed the last trading session at $25.42. However, Wall Street analysts suggest that there could still be significant room for value growth based on their short-term price targets. According to these targets, the average estimate of $32.25 indicates a bullish growth potential of 26.9%.

In its most recent financial report for the second quarter of 2023, Cerence recorded revenues of $68.4 million, showing a 21% decrease compared to the previous year. Despite this, it exceeded expectations by approximately $2.5 million. In terms of earnings, Cerence reported a loss of 4 cents per share, surpassing expectations by 9 cents per share.

The company experienced a significant increase in its bookings, reaching a total of $263 million at the end of the second quarter, representing an 11% year-over-year growth. Additionally, Cerence has raised its revenue guidance for fiscal year 2023, with a projected total revenue between $280 million and $290 million.

Experts highlight that the company is developing next-generation voice assistance products based on its deep learning intellectual property and state-of-the-art generative AI.

Following the recent results and optimistic outlook, Rajvindra Gill of Needham rates Cerence’s stocks as “Buy” with a price target of $42, implying a bullish potential of 47% in the next year.

With a consensus rating of “Moderate Buy” based on 5 analyst opinions, Cerence shows a 12% upside potential in one year, with an average target price of $32 and a current trading price of $28.52.

Etsy Inc

Etsy, an online e-commerce company, stands out for its potential to leverage the application of artificial intelligence (AI) in its current model. Although it is not an AI company per se, Etsy utilizes generative AI in its search engine to offer refined searches and improved results to buyers and sellers on its platform.

This technology allows for better identification of unique and customized items, which are common on Etsy, and facilitates the search for specific products.

In the first quarter, Etsy reported revenues of $640.78 million, surpassing estimates by nearly $20 million and experiencing a 10% year-over-year increase. Although the company’s net income decreased by 13% compared to the previous year, earnings per share exceeded expectations by 3 cents. These positive results reinforce Etsy’s position as a leading e-commerce platform.

Anna Andreeva, an analyst from Needham, considers Etsy one of the primary beneficiaries of generative AI. The company is working on further improving product search using this technology, which could increase purchase frequency and enhance the user experience. Andreeva gives Etsy’s stocks a “Buy” rating with a price target of $160, indicating a 97% upside potential in the next year.

Overall, analysts’ opinions on Etsy are mostly positive, with 12 buy recommendations, 5 hold recommendations, and only 1 sell recommendation. The average target price for the stock is $125.76, implying a 55% profit potential in one year. Currently, Etsy’s stocks are trading at $81.05, representing an attractive investment opportunity according to analysts’ consensus.

What is your opinion regarding artificial intelligence? Would you invest in any of these companies?

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(Information in this post is for general informational purposes only. It cannot and should not be considered as suggestions or recommendations regarding investing or financial decisions.)

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