You don’t have to be a rocket scientist to know how important artificial intelligence (AI) is to the tech industry and the world in general. After all, I wouldn’t be asked to write about AI stock splits if it wasn’t something readers were clamoring for.
However, as I thought about what I would write about on this subject, I couldn’t decide if it was better to recommend tech stocks such as Alphabet (NASDAQ:GOOG), (NASDAQ:GOOGL) that are deep into AI and have split in recent years, AI businesses that could split in the near future, or companies that use AI to leverage their businesses but aren’t in the tech field.
I’ve come up with three possible themes, so it makes sense to recommend one company from each of them. To ensure they are quality companies, I’ll select those with a market cap of $2 billion or more, profitable, and growing.
I should ask ChatGPT for suggestions given the AI theme. Maybe not.
Bio-Techne (TECH)
I don’t know if you’ve noticed but stock splits don’t happen very often. As I looked through stock split calendars to find one that’s already taken place and uses AI in their business, I had to go all the way back to November 2022.
Bio-Techne (NASDAQ:TECH) is a company that uses AI behind the scenes to develop life science reagents and proteins, diagnostic instruments, and provides services to the scientific community.
Bio-Techne announced a 4-for-1 stock split on November 1, 2022 with each shareholder getting three new shares on Nov. 29 for every share held before the split.
In September, I included it in a list of three healthcare stocks that should be on every investor’s radar this fall.
“Financially, its balance sheet, income, and cash flow ($200 million annually) statements look healthy,” I wrote on Sept. 23. “It has only $350 million in long-term debt, which is less than 4% of its market cap. In fiscal 2023, its revenue and operating income didn’t grow much, but its gross and operating margins are high.”
Bio-Techne got involved with AI and machine learning back in 2018 when it put its R&D systems on the BenchSci platform so that scientists could “match their research with published data on validated antibodies,” stated the October 2018 press release.
If you look closer you can find more examples where the company has used AI and machine learning to accelerate the growth of its product portfolio.
Fair Isaac (FICO)
Fair Isaac (NYSE:FICO) is a data analytics company based in Bozeman, Montana, of all places.
I did a flip-flop on this stock this past summer recommending investors sell its stock in June and then turning around in July recommending it. Before you scream “hypocrite,” let me explain the change of heart.
In my June piece, I suggested that while I didn’t think the company behind the FICO score would see its stock plunge any time soon, I did argue that it traded at a premium. Specifically, its price-to-sales ratio was 13.6, higher than its historical norm. Four months later, FICO’s P/S ratio is even higher at 16.0.
So, in the end, I argued a 10-20% correction was in the cards before the end of year. As I write this, its share price is down nearly 8% without any news providing an explanation.
In July, the task at hand was to come up with three stocks to turn $9,000 into $9 million over the next 30 years. Fair Isaac, Ulta Beauty (NASDAQ:ULTA), and Builders FirstSource (NYSE:BLDR) were my three names. I stand by each of them.
As I stated about Fair Isaac in July, “artificial intelligence (AI) and financial data were made for each other.” Further, it was the kind of stock you buy on the dip.
Trading around $850, a 10-for-1 stock split sounds about right.
Rush Enterprises (RUSHA, RUSHB)
On July 25, Rush Enterprises (NASDAQ:RUSHA, NASDAQ:RUSHB) announced that both its Class A and Class B shares would split on a three-for-two basis on Aug. 28. That means for every share held in either class, you got a half-share at the end of August.
You don’t often see 3-for-2 stock splits but the commercial truck retailer — the largest network of truck centers in North America with more than 150 — thought that was the best way to go.
On the same day it announced its stock split, it also reported its Q2 2023 results.
On the top line, it reported sales of $2.0 billion, 11.8% higher than a year earlier. On the bottom, its net income fell 10.8%, to $98.3 million. However, its operating income was $142.9 million, 5.9% higher than a year ago. Higher interest and taxes caused the decline in net income.
Its Class A shares are up more than 142% over the past five years compared to 177% for its Class B. The Class A gets a lot more volume on a daily basis.
The company uses AI and machine learning in its fleet maintenance business to ensure its customers’ trucks stay on the road by analyzing all the data they give off in the course of a day.
Time is money.
On the date of publication, Will Ashworth 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.
