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Sometimes a new technology will change the world forever. 5,000 years ago, an unnamed Sumerian began marking clay tablets with a stylus, and invented writing; a little over three centuries ago the steam engine took its place in our lives; At the beginning of the last century, Henry Ford invented the conveyor belt. It is not clear which innovation will turn out to be game-changing; but it is possible to narrow the field. And that brings us to AI.
Artificial intelligence, AI, may be the next big idea. It's not entirely new – computer scientists and programmers have been working on 'intelligent machines' since the 1950s, but the technology is finally maturing and autonomous computers capable of collecting data and making decisions in real time , are no longer a pipe dream.
The implications are staggering. Practical AI makes it possible for machines to learn and apply that learning. AI programs are the foundation of advanced speech and facial recognition systems and fraud detection programs, applications that rely on pattern recognition. More advanced AI is being applied in the automotive industry, where it is used to monitor car systems in real time – and to allow self-driving vehicles.
And this has not been ignored by Wall Street. Analysts say there are plenty of attractive investments to be found within this space. With this in mind, we opened the Investing Insights platform and secured three AI stocks that are at the forefront of the technology. Importantly, these stocks also score a smart score of "Perfect 10".
The platform gives each stock a one-digit score, based on the sum of 6 separate factors. The factors used are known to correlate with future overperformance; when they line up, this is a strong indicator for buyers to consider. Let's take a closer look.
TuSimple Holdings ( TSP )
The first AI stock we are looking at here, Tusimple Holdings (NASDAQ :), is deeply involved in the autonomous auto industry. The company is working on AI systems that power self-driving trucks, making them more efficient and safer in the long-haul transportation industry. TuSimple has developed an advanced autonomous driving system especially for the needs of the trucking industry; the company's AI supports a long-range observation system that can recognize, recognize and identify objects from up to 1,000 meters away.
Another achievement is that TuSimple launched an Autonomous Freight Network last summer, which will help the company address the challenges of the transportation industry. TuSimple's AI technology allows the company's trucks to perform long-haul freight rides. The AI ??will monitor sensor systems to keep the truck on the road and navigate to its destination – in all weather and even traffic conditions.
To raise capital, TuSimple held its IPO last month, offering 33.75 million shares to the public at $ 40 a share. Of those shares, 27 million were offered by the company, with an existing shareholder marketing 6.75 million shares. TuSimple received the proceeds from the stock it sold directly, totaling more than $ 1.08 billion gross of expenses.
Writing from Canadian investment bank RBC, analyst Joseph Spak notes that TuSimple is highly speculative – but if it succeeds, the rewards will be huge.
“We understand concerns about technology screening, adoption and the path to revenue and profitability. But if TuSimple succeeds, the power value is significantly higher. As such, we very much see TuSimple as a venture capital investment in the public markets or perhaps a biotech stock. The upside probability is huge. Evidence points (milestones, orders) along the way should increase market confidence in TuSimple's medium-term goals and long-term opportunities, driving the stock price up, ”explained Spak.
Consistent with his comments, Spak rates TSP as an Outperform (i.e., Buy), and sets a price target of $ 52 suggesting a 44% increase over the next 12 months.
In general, TuSimple personifies everything risk-minded investors want in the stock market. It uses advanced technology; it has plotted a position in a field that is not quite here, but is coming; and it is an early adopter. While the stock is still in the early stages of building out its products and AI systems, it has attracted 7 analyst reviews – 6 to buy and 1 to hold – giving it a strong buy consensus rating. The shares are selling for $ 36.08, and their average price target of $ 54.70 implies a ~ 52% rise for a year. (See TSP Stock Analysis)
NVIDIA Corporation ( NVDA )
Next is NVIDIA Corporation (NASDAQ :), one of the giants of the silicon microprocessor industry. These are the computer chips that make all high-tech systems possible. NVIDIA was the eighth largest chip maker last year, with total sales of more than $ 16 billion, up 53% from the year before.
NVIDIA & # 39; s main connection to AI is through the automotive industry. The company has long sold chips to automakers – the auto industry makes up between 5% and 10% of NVIDIA's sales – but the automakers have ordered more systems with AI in the past year. NVIDIA provides chips and associated packages that allow the AI ??system of an autonomous vehicle to build perception, mapping, planning and monitoring capabilities. NVIDIA is working on porting its automotive AI systems to the data center segment; the monitoring needs of large server stacks are comparable to autonomous vehicles, and will benefit from the application of machine learning.
Regarding NVDA for Baird, five-star analyst Tristan Gerra rates the stock as an Outperform (i.e. buy) along with a price target of $ 800, implying a ~ 45% rise. The bull thesis is based on "NVIDIA's short-term strong position in AI data center markets and longer-term opportunities in many accelerated computing applications."
“As NVIDIA increasingly moves to platform solutions that target and enable all AI markets, while diversifying its architecture offering, the company is poised to dominate the data center over time. Omniverse gives us an early glimpse of a virtual 3D world in which NVIDIA leads the way and eventually transitions into a matrix computing world. In the short term, GTC's announced foray into CPUs will expand NVIDIA's computing TAM, '' Gerra said.
In all, no less than 27 analysts have recorded ratings on NVDA, of which 24 will buy against just 3 to hold. NVDA stock is selling for $ 550.34; the average price target of $ 682.20 implies a 24% increase from that level. (See NVIDIA Stock Analysis)
Upstart Holdings ( UPST )
We end up in financial technology, where Upstart Holdings (NASDAQ 🙂 has applied AI technology to power a lending platform. Using AI, the company wants to evaluate borrowers to determine actual levels of risk and creditworthiness. A better understanding of the natural risks of lending money will allow lenders to approve more transactions, otherwise give marginal borrowers more access to capital and cost savings on both sides.
Upstart claims that its AI analytics platform has helped more than 698,000 customers acquire loans, and that its model offers 27% more credit approvals than traditional credit scoring methods. Upstart's AI evaluates 1,600 data points and results in borrowers accessing funds at 16% lower rates than would otherwise be possible.
The company has been in existence since 2012 and went to NASDAQ in December 2020. During the IPO, the company made 9 million shares available to the public for $ 20 each, raising $ 180 million.
In March of this year, Upstart released its first quarterly report as a publicly traded entity. The company reported $ 86.7 million in total revenues, 39% more than a year earlier. Of that total, $ 84.4 million came from usage fees. For the full year 2020, Upstart saw sales increase 42% yoy to $ 233.4 million.
One of the bulls is Piper Sandler analyst Arvind Ramnani, who is impressed by both the company's model and its outlook.
"We expect Upstart to expand its market share well beyond its primary product focus of unsecured personal loans, and its recently announced auto loans … The key to Upstart's AI offering is the a) inherent advantage of training data supported by the> 1,620 aggregated variables to inform their models b) AI algorithms extensively tested and refined c) More than 10.5 million individual payback events further validating the data and algorithms Upstart's SaaS-based earnings model (only ~ 1% exposure to balance sheet loans) has the potential to take our 58% CAGR (2020-2023E) up in a massive market ($ 700 billion NT; $ 3.4T LT opportunity), ”Ramnani opined.
To this end, the analyst rates UPST stock as an Overweight (i.e., buy), and its $ 143 price target implies a 65% rise.
Let's see how the rest of the street sees that 2021 looks forward to UPST. Based on buy 4 and hold 2, the stock has an average buy consensus rating. The average price target is $ 123.50, indicating 34.5% upside potential from the $ 91.82 trading price. (See UPST Stock Analysis)
For more ideas for stocks trading at attractive valuations, visit Investing Insights .
