Investors are often on the lookout for new opportunities, and artificial intelligence (AI) stocks might be a smart bet for 2021. There are some large AI stocks on the market already, but this article will focus on two lesser-known AI companies with market capitalizations under $1 billion. Although these stocks may come with more risk than traditional tech stocks, they also offer potential upside.
SoundHound AI (SOUN -3.38%) is a specialist in conversational artificial intelligence; a type of AI which recognizes and responds to spoken language. SoundHound’s technology enables businesses in different industries to make use of AI-based applications; including order taking, answering customer queries and creating an intuitive driving experience with voice-commanded features. In just 12 months since it went public, SoundHound already boasts 90% of the world’s top automakers as customers and with an estimated order backlog of $331 million. Although the company had a loss in 2022 and faces a cash crunch, they were able to secure financing worth up to $125 million which gives the company’s stock potential growth opportunities.
BigBear.ai (BBAI 1.38%) is another company that provides AI-powered solutions to businesses and the U.S. government. Their technology simulates key decisions, allowing customers to factor in different scenarios before investing in real-world projects. For example, Baystate Health was able to save over a million dollars thanks to BigBear AI while DuPont avoided spending $480,000. BigBear.ai also secured a long term, $900 million contract with the U.S. Air Force. Although their revenue growth slowed in the year 2022, the estimated size of the AI and machine learning industry is projected to be worth $310 billion by 2026. Although BigBear.ai isn’t currently profitable and has a dwindling cash balance, their successful private placement for $25 million in January could give investors a good opportunity.
Overall, AI stocks come with their own risks but could have significant upside potential. Investors should research both companies and decide for themselves if either one is worth investing in. By doing their own due diligence and evaluating the risks, as well as understanding the potential for growth, investors can be well informed when it comes to investing in artificial intelligence.
