Software stocks have taken it on the chin over the last year, and Amplitude (AMPL 3.69%) isn't an exception.

The cloud software company is known as a pioneer in digital optimization, or helping companies track and analyze data from their digital products. It went public in September 2021, just months before the Nasdaq peaked. As a result, its valuation has come down substantially since then, and its growth has slowed as tech companies and other customers have pulled back on spending due to the broader economic slowdown.

The stock is now down nearly 90% from its peak shortly after its IPO, and shares recently fell below the $10 mark. Still, if you have $1,000 -- about a week's pay for the average American -- investing it in Amplitude could double your money, especially after the recent sell-off. Here are two reasons why.

Profitability is rapidly improving

Amplitude's sell-off this year isn't entirely undeserved. The company is seeing its top-line growth slow, and it laid off 13% of its staff in April due to the slowdown and a shift in focus to profitability.

The company now sees revenue of $266 million to $269 million, down from a previous range of $283 million to $291 million. The new guidance represents an increase of just 12% at the midpoint. That includes the 25% growth the company posted in the first quarter, implying just a single-digit growth rate for the duration of the year.

Amplitude has historically been strongest with customers in the tech sector, which has naturally been an early adopter of digital optimization tools. That explains why the company is experiencing a slowdown in revenue growth. Layoffs have become widespread in the tech industry, and nearly every company is taking a cautious approach, given the slowdown in demand.

Amplitude became one of the companies to lay off staff in April, cutting its workforce by 99 people. But the upshot of those layoffs and the restructuring that came with them is that the company now expects an adjusted profit this year, at earnings per share of $0.02 to $0.04, compared to an earlier forecast of a loss of $0.11 to $0.16, and the adjusted per-share loss of $0.21 in 2022.

Amplitude's revenue growth should reaccelerate once the economy and the tech sector rebound, and it should gain significant leverage thanks to those cost cuts. 

Amplitude is moving into AI

Nearly every company has something to say about artificial intelligence (AI) these days, but Amplitude could have an edge in the emerging technology.

The company hasn't formally launched any new AI products, but it is beta-testing a number of ideas. CEO Spenser Skates sees a lot of potential in the new technology. In the Q1 earnings call, he declared: "Recent advances in artificial intelligence have the potential to greatly accelerate the growth of our category."

In generative AI, a lot of the value comes from the data set the AI is trained on. This puts Amplitude in an advantageous position, especially as generative AI programs have the potential to replace humans in extracting insights from available behavioral data. Over the long term, Skates envisions the company building a model that is used to understand and interpret behavioral data, which could drive a lot of growth for the company.

Amplitude expects to release some of its new AI products later in the year, and the company dubbed June its "month of AI," with plans to host an AI+ hackathon and a new AI design partner program.

The company's moves into AI show that it's still a growth stock with a lot of potential, even if its top-line growth is expected to be sluggish this year. If the company's new AI products are well received and the tech sector starts to rebound, the stock could be an easy double from here in another year, as it currently trades at a price-to-sales ratio of just 4.