HomeBusiness2 Artificial Intelligence (AI) Stocks That Could Go Parabolic

2 Artificial Intelligence (AI) Stocks That Could Go Parabolic

The excitement about artificial intelligence (AI) appears to be driving the stock market higher. Those stocks that Wall Street sees as AI winners, for example Nvidia or Super microcomputerhave multiplied in value over the past year, a parabolic journey that has made investors very wealthy.

Perhaps the next big steps in AI will be companies integrating AI technology to become better companies. In this category are stocks such as UiPath (NYSE: PAD) And monday.com (NASDAQ: MNDY) comes to mind. These two stocks have done well over the past 18 months, but there could be more upside potential ahead.

1. UiPath: Accelerate with AI

UiPath is an excellent example of artificial intelligence positively impacting a company’s business model. UiPath is a leader in robotic process automation (RPA). This software can observe, learn and automate repetitive office tasks such as completing or filing documents, managing interfaces or sending communications. UiPath has been around since the early 2000s, so the product has improved as the broader technology has improved, especially in the last decade.

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Today, UiPath implements AI across all three phases of RPA: discovery, automation, and operation. During the fourth quarter earnings call, management reported a survey showing that 70% of executives surveyed have a demand for AI-driven automation. In other words: using AI to make companies more efficient could become an important theme.

UiPath’s revenue growth has accelerated since the beginning of last year, ending the year with 24% year-over-year growth.

PATH revenue chart (quarterly annualized growth).

PATH revenue chart (quarterly annualized growth).

The company is profitable and analysts believe that profits will grow at an average rate of 35% per year over the next three to five years. With a price-to-earnings ratio of just 45 today, UiPath is a buy if it can meet analyst expectations. As a publicly traded company, the company has outperformed analyst expectations every quarter, which is promising for the future.

Outperform expectations, AI tailwinds and a cheap starting valuation? UiPath could be on its way to monster profits in the coming years.

2. Monday.com: Changing the work environment

Monday.com is reimagining the way employees collaborate, making the addition of generative AI a potential game-changer for the company. Monday.com is cloud-based collaboration software. You could see it as an operating system for your work. Instead of working through a dozen disjointed apps, employees can work seamlessly on Monday.com through dashboards that can be updated in real time.

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The company is adding AI powered by OpenAI and Azure, creating a ChatGPT-like bot within Monday.com’s platform. Users can ask the bot to quickly generate questions, task ideas, and other content.

The company has become increasingly profitable over time. Approximately 28% of turnover is free cash flow.

NVDA PS ratio (forward) chartNVDA PS ratio (forward) chart

NVDA PS ratio (forward) chart

Could Stocks Go Parabolic from Here? Today, Monday.com has a market cap of $10 billion and trades at just over eleven times revenue. That’s a notable discount to some of the market’s popular AI stocks, including Palantir Technologies (19 times turnover), CrowdStrike (19 times sales) and Nvidia (20 times sales). Monday.com is growing revenue the same way as CrowdStrike and faster than Palantir. Admittedly, Nvidia is in a group of its own.

It is said that Wall Street is asleep on Monday.com. The company must continue to prove itself, including beating analyst estimates in the coming quarter. If AI Monday.com can help, perhaps Wall Street will see the stock in a new light.

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Monday.com is small enough and growing fast enough that a positive change in sentiment could send the stock soaring.

Should you invest $1,000 in UiPath now?

Before you buy shares in UiPath, consider the following:

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Justin Pope has positions in Monday.com. The Motley Fool holds positions in and recommends CrowdStrike, Monday.com, Nvidia, Palantir Technologies, and UiPath. The Motley Fool has a disclosure policy.

2 Artificial Intelligence (AI) Stocks That Could Go Parabolic was originally published by The Motley Fool

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