Artificial Intelligence (AI) continues to dominate the tech industry, and savvy investors are on the lookout for promising AI stocks. Despite the growing interest in this revolutionary technology, there are two AI stocks that have seen significant declines in their valuations, presenting a unique buying opportunity.
Palantir Technologies (NYSE: PLTR), a leading AI company, is currently trading at a whopping 54% discount from its high. Despite the decrease in price, the company has demonstrated impressive revenue growth and progress towards profitability. Palantir’s revenue has skyrocketed from $595 million in 2018 to $1.9 billion in 2022. The company offers AI solutions to enterprises, institutions, and governments, helping them make sense of vast amounts of data and tackle critical challenges in various sectors.
Palantir’s revenue growth has also translated into improved profitability. Although the company reported an operating loss of $623 million in 2018, it recently announced revenue of $558 million and operating income of $40 million. While it needs to consistently deliver profitability over the coming quarters, its upward trajectory is certainly encouraging. With the increasing effectiveness of AI, the demand for Palantir’s services is expected to rise, making it an attractive option for investors looking to capitalize on the AI wave.
Another underappreciated AI stock that investors shouldn’t overlook is Smartsheet (NYSE: SMAR). While it might not be a household name, it has experienced a 46.5% decrease in its valuation, presenting a compelling opportunity. Smartsheet provides project management software to businesses and institutions, and their recent rollout of AI tools has received positive feedback from customers. The company generates most of its revenue from subscription-based software and has shown strong growth in this area.
In the third quarter, Smartsheet reported a 23% year-over-year increase in subscription revenue, reaching $232.5 million, while its professional services revenue remained stable at $13.4 million. Overall revenue was up 23% compared to the previous year, and the company achieved positive free cash flow of $11.4 million. Smartsheet’s thriving customer base, increased contract values, and improving margins all point to a promising future for the company.
Both Palantir Technologies and Smartsheet offer attractive investment opportunities in the AI sector. While Palantir’s valuation is relatively high with a forward price-to-earnings ratio of 60, its revenue growth and profitability make it an appealing option. On the other hand, Smartsheet’s current valuation allows for strong upside potential, and its continued momentum could lead to significant returns for long-term investors.
Investors should carefully consider the future potential of these AI stocks and evaluate their investment strategies accordingly. The AI revolution is just beginning, and these companies are at the forefront, poised for significant growth as the technology continues to evolve.
Please note that investing in stocks involves risks, and it’s essential to conduct thorough research and consult with financial professionals before making any investment decisions.
