Machine learning stocks are on everyone’s radar, if nothing else, for the potentially $80 billion market opportunity up for grabs.
Underscoring the enormity of the situation, President Joe Biden has signed an executive order to ensure America, which is expected to have a $21 billion market in 2024, does not get left behind in this race, considering machine learning will impact almost every major market segment.
In connection, we will explore three machine learning stocks trading at more than 25% discounts from their 52-week highs, each from a different field.
Let’s explore further!
PagerDuty (PD)
PagerDuty (NYSE:PD) isn’t as well-known as, say, C3.ai (NYSE:AI) among machine learning stocks, but with four straight quarterly beats and a 34% discount to its 52-week high, it’s hard to ignore.
It saw its sales grow by 16% year over year in 2023 and its operating income grow by more than 1,200 basis points. This was the second year in a row that non-GAAP profits increased.
In a research study, PagerDuty found that when companies use AI, business problems increase by 16%. The study shows that this rise is because of the difficulty of integrating AI and changes in how things are done.
Because AI is becoming more popular and ubiquitous, PagerDuty is focusing on how it can improve operating success. This is the key to PagerDuty’s current and future financial success in recent quarters, its “Moderate buy” rating and its 30% upside potential.
However, rather than external catalysts, PagerDuty is also working to upgrade its product portfolio, adding unique AI-enabled use cases throughout the Operations Cloud to strengthen its automated problem management solutions.
In addition, PagerDuty has successfully finalized the purchase of Jeli with the intention of enhancing its comprehensive and automatically managed event management solutions.
However, PagerDuty is not done growing. The pricing of a $350 million private selling of convertible senior notes is evidence. Cautious investors might not like this but we are looking at machine learning stocks where capital is a constant need; however, the upside potential more than balances the risks in my eyes.
Sprout Social (SPT)
Sprout Social (NASDAQ:SPT) applications employ machine learning to deliver social trends, audience engagement and content improvement advice to over 25,000 customers worldwide who want to enhance their digital marketing with data-driven choices, small wonder analysts are projecting a 43% upside for the stock to go along with its “Strong buy” rating. Most of these customers are in the U.S., which is important because the U.S. spends the most on social media advertising.
Nowadays, it’s unstoppable financially. SPT beat earnings by 408%, 78%, 488% and 925% in the past four quarters.
G2’s 2024 Winter Reports highlighted Sprout Social’s 150 badges and its social customer support, analytics and management domination. It was a winner everywhere, including in the Middle East, Asia and Europe. This is great for investors who want SPT to reach more users around the world since it mostly works with clients in the U.S..
Finally, SPT is partnering with Reddit to allow users to track public debates and consumer actions more accurately for brand monitoring and industry trend analysis. It also introduced Social Customer Care to enhance consumer satisfaction by customizing and increasing service. Both of these moves ultimately help the end user, critical for any social media-focused company.
SoFi (SOFI)
I appreciate SoFi (NASDAQ:SOFI) because the majority of its 7.5 million accounts are millennials and Gen Z looking to refinance student debt, which means it locks in users at a young age with its ecosystem.
Over 8.1 million people have joined SoFi since the beginning of the year, an increase of 44% year over year. At the end of the quarter, SoFi had over 11.8 million items, 38% more than at the same time last year. It added over 989,000 new products. SoFi and its investors celebrated its second positive quarter on Monday, with a 638% earnings beat.
In terms of its machine learning initiatives, SoFi monitors account activity 24/7 using AI to detect suspicious activities, prevent cyberattacks and protect consumer data.
Moreover, AI and Pagaya Technologies (NASDAQ:PGY) expand financial options. Thanks to this arrangement, SoFi is able to lend to more non-qualifiers, lowering lender risk.
In addition, SoFi offers automated payments and robo-advisors. These programs simplify personal finance by using AI to manage assets based on objectives and risk tolerance, and boost margins.
Citi restarted SoFi coverage with a “Buy” rating and a price target of $11, citing recent loan and stock deals that are likely to improve SoFi’s finances, while Deutsche Bank is cautiously optimistic about SoFi’s growth, especially in its tech platform. Consensus points to a 22% upside compared to the last closing price of $7.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
