Investors don’t need an excuse to acquire shares of enterprises tied to artificial intelligence. With the sector exploding in scope and scale, it’s inherently attracted significant attention. However, there’s a clear need for hidden AI stocks; that is, entities that haven’t quite captured the spotlight like Nvidia (NASDAQ:NVDA) or some of the other usual suspects.
Not to pick on the semiconductor giant but the company encountered a worrying barrage of selling pressure after briefly topping the rankings as the world’s most valuable corporation. Stated differently, following resounding success, the risk of holding the bag accelerates. Further, when such red ink materializes, those who get in late will likely be the first to jump out. That may spark heftier-than-usual downside action.
On the flipside, hidden AI stocks may be allowed the time and room to breathe. This sector is the equivalent of a slow-cooking meal. It may take longer to serve but the results could be worth it. With that, below are some compelling ideas to consider.
UiPath (PATH)
Based in New York City, UiPath (NYSE:PATH) falls under the infrastructure software space. It’s one of the hidden AI stocks thanks to its relevancies in robotic process automation or RPA. This protocol utilizes AI to automate repetitive or mundane tasks. By doing so, enterprises enjoy significant reductions in cost due to improved efficiencies and streamlined operations.
However, UiPath has been overshadowed by the race in the semiconductor field. That’s rather unfortunate because PATH stock delivers strong financial metrics. For example, between the fiscal second quarter of 2024 (calendar year 2023) and Q1 fiscal 2025, the software specialist posted an average earnings per share of 14 cents. This performance yielded an earnings surprise of 79.3%.
During the trailing 12 months (TTM), UiPath did incur a net loss of $86.72 million. However, sales reached $1.35 billion. Further, the latest quarterly sales growth rate (year-over-year) clocked in at 15.7%. For fiscal 2025, covering experts believe revenue could rise 7.6% to reach $1.41 billion.
In the following year, sales could jump 11.6% to hit $1.57 billion. Thus, PATH ranks among the hidden AI stocks to consider.
Lemonade (LMND)
Lost in the discussion of advanced graphics processors and their role in generative AI is the fact that several entities are already incorporating digital intelligence to help their customers. One such enterprise is insurance-tech firm Lemonade (NYSE:LMND). By leveraging an AI-powered platform, Lemonade helps provide critical insurance services to people via a seamless, user-friendly interface.
Over time, the company could potentially help pass down more costs to the customers, with the heavy work of underwriting being conducted by machines. Granted, the business is risky but the concept is oh so compelling. What’s more, Lemonade brings to the table financial substance. In the last four quarters, its positive surprise came out to 12.8%.
To be clear, Lemonade isn’t profitable at present. However, its losses per share are coming in lower than analysts have expected. During the TTM period, the company generated revenue of $453.7 million. Its latest sales growth rate (YOY) comes in at 25.1%.
For fiscal 2024, experts anticipate massive growth of 20% in the top line to reach $515.73 million. If you’re the speculating type, LMND is one of your hidden AI stocks to consider.
Cisco (CSCO)
Headquartered in San Jose, California, Cisco (NASDAQ:CSCO) is one of the stalwarts in the communication equipment industry. Recently, the company acquired Splunk in a $28 billion blockbuster move. Per industry resource CRN, Cisco stated that the acquisition represented an effort to “combine the two companies’ cybersecurity and observability strengths.”
Ultimately, company executives anticipate the development of a distinctive, AI-powered data platform. Given that AI can also facilitate nefarious activities, Cisco may have an edge in terms of leveraging digital intelligence with net security measures. Therefore, it’s one of the hidden AI stocks to consider.
Financially, Cisco isn’t exactly exciting but it consistently gets the job done. In the past four quarters, its average earnings surprise came out to 6.45%. During the TTM period, the enterprise posted net income of $12.12 billion or earnings of $2.96 per share. Revenue in the cycle reached $55.36 billion.
For fiscal 2024, analysts forecast even growth in EPS to $3.70. On the top line, sales might see a slight dip to $53.7 billion. However, fiscal 2025 could see an improvement, with sales possibly rising to $55.67 billion. With a dividend yield of 3.38%, CSCO ranks among the hidden AI stocks to buy.
Cerence (CRNC)
Based in Burlington, Massachusetts, Cerence (NASDAQ:CRNC) operates in the application software ecosystem. Per its public profile, Cerence provides AI-powered virtual assistants for the mobility and transportation markets in the U.S. It also serves many other international regions. Fundamentally, the underlying business should offer myriad benefits, including for the customer experience and driver safety.
By enabling drivers to interact with their vehicles in a quick and intuitive manner, they can receive the information they need, thereby shifting the attention back where it belongs: on the road. Still, despite being incredibly relevant, CRNC stock doesn’t quite enjoy the spotlight. Its performance in the charts this year has been, well, abysmal.
Still, the company has managed to deliver some surprisingly robust results in prior quarters. In the TTM period, the software specialist posted revenue of $348.58 million. For fiscal 2024, analysts anticipate a gargantuan leap in the bottom line to hit earnings of 87 cents per share. On the top line, sales could hit $329.5 million, up 11.9% from the prior year.
It’s also trading at a sales multiple of 0.36X. That could entice contrarians, making it one of the speculative hidden AI stocks to consider.
BigCommerce (BIGC)
Headquartered in Austin, Texas, BigCommerce (NASDAQ:BIGC) also operates in the application software space. Per its corporate profile, BigCommerce provides a Software-as-a-Service (SaaS) platform for enterprises, small businesses and mid-market firms. It’s one of the hidden AI stocks as it deploys digital intelligence for extracting customer insights along with attributes such as personalized recommendations and dynamic pricing strategies.
It’s one of the smaller – and therefore riskier – ideas you can find in the broader AI space, with a market capitalization of less than $1 billion. Still, Big Commerce is doing good for itself. In the past four quarters, the company’s average EPS came out to 3.5 cents. This translated to an earnings surprise of 85.28%.
During the TTM period, BigCommerce incurred a net loss of $48.94 million or 64 cents per share. However, revenue landed at $318 million. Looking out to the end of the year, analysts see EPS rising exponentially to 24 cents. On the top line, sales could see a bump up of nearly 8% to $333.19 million.
For the following year, EPS could rise again to 34 cents while revenue might reach $362.15 million.
Aspen Technology (AZPN)
A competitor in the field of application software, Aspen Technology (NASDAQ:AZPN) provides industrial software that helps customers in asset-intensive industries. It’s one of the intriguing hidden AI stocks to consider thanks to its machine learning algorithms. Its innovations help analyze data from industrial equipment and also predict maintenance needs. The technology also helps develop comprehensive and accurate modeling.
Aspen is one of the larger ideas you’ll find in the digital intelligence space. However, it’s not getting as much attention as your Nvidia, making it an attractive opportunity. To be fair, Aspen’s quarterly performances haven’t been all the great. However, in Q1 2024, it posted EPS of $1.70. This easily beat the consensus view of $1.45. Therefore, management could be turning a corner.
In the TTM period, Aspen incurred a net loss of $27.15 million or 42 cents per share. Revenue in the cycle hit $1.11 billion. For fiscal 2024, experts believe EPS will rise 10.3% to reach $6.31. On the top line, revenue may expand by 6.1% to hit $1.11 billion.
LivePerson (LPSN)
To be quite blunt, LivePerson (NASDAQ:LPSN) could be the riskiest idea on this list of hidden AI stocks. It’s not just its lowly market cap, which has swung in and out of nano-cap territory. That alone makes it inappropriate for anyone but hardened gamblers. It’s also that LPSN stock has utterly cratered since the beginning of the year. You’re going to be catching a falling knife.
If you’re okay with that, LivePerson entices contrarians because it focuses on conversational AI. According to its profile, LivePerson enables brands to connect with their customers through an integrated suite of mobile and online business messaging technologies. Basically, its chatbots allow companies to serve customers 24/7/365, theoretically promoting brand awareness and conversion opportunities.
Now, I say theoretically because of the severe volatility in LPSN stock. Additionally, its recent financial disclosures have been nothing to write home about. That said, during the TTM period, LivePerson generated sales of $379.47 million.
Here’s where it gets tricky. Analysts believe that sales could erode sharply in fiscal 2024 to $308.95 million. Last year, the result was just under $402 million. It’s not a great forecast. However, being a literal penny stock, LPSN could skyrocket on one positive news item.
On the date of publication, Josh Enomoto 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.
