ChatGPT has flipped the business world upside down, and suddenly it seems that every company is talking about artificial intelligence (AI). The implications of the new generative AI tech are vast, but there's also a lot of hype in the market -- some AI stocks have jumped by more than 100% this year.
However, if you're looking for an under-the-radar option in AI, you may want to take a closer look at Appian (APPN -0.89%). The cloud software company is best known as a provider of low-code technology. It offers an integrated product suite that allows enterprises to improve and automate their digital workflows.
Appian's software suite already includes robotic process automation, a similar technology to AI that automates repetitive tasks. Now, the software company is taking a step forward with new AI products.
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Appian and AI
CEO Matt Calkins laid out his company's approach to AI in the company's latest earnings report, describing an emerging split between public and private AI.
As Calkins sees it, public AI tools like ChatGPT have gotten the lion's share of the attention in the last six months, but there's a problem. Many companies don't want to send their data to OpenAI or Microsoft, where they have no control over how it's used.
Many of Appian's customers, including the federal government and large banks, handle sensitive information, and some of them may also face legal restrictions on how they process customer data. They don't want to train an algorithm that their competitors could use; they want customized AI solutions that have been designed specifically for them.
In other words, they want a private AI, and that's where Appian sees a huge opportunity. Its technology, called data fabric, gives it the ability to assemble large data sets that can then be used to train private AI algorithms to service its customers.
At its recent Appian World conference, the company unveiled a number of new AI capabilities, including AI Skill Designer, a low-code way to deploy custom machine-learning models, and it has made an OpenAI/ChatGPT generative AI skill extension available on the Appian app marketplace.
It's also launching a new AI product called Process HQ, which will make its process mining solution much faster to deploy using AI tools.
Will Appian launch a chatbot?
While the company didn't discuss any plans for a chatbot, the response to ChatGPT has shown how popular the chat interface is when applied to AI. It would seem to be a good fit for both public and private AI since enterprises need a seamless way to communicate to take advantage of AI, much as everyday ChatGPT users do.
Still, investors should also be mindful not to focus too narrowly on chat when it comes to AI stocks since the applications of generative AI go well beyond the chat feature.
Appian's aim to use AI to automate tasks for its customers and allow them to be more productive should add more value to its product suite.
Is Appian a buy?
The software stock is down sharply from its peak in 2020. It has trended with the broader software sector, which has been hit hard by the bear market as valuations have collapsed and growth rates in the industry have slowed.
However, Appian has delivered a steady performance along the way, posting 31% cloud subscription revenue growth in the first quarter. The company continues to lose money, but said it would trim its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss margin to within 10% by the second half of the year.
If it can show meaningful improvement on the bottom line and gain traction in its AI initiatives, the stock could have a lot of upside potential.
Keep your eye on the Process HQ rollout this year and the company's other AI investments. Appian could be a hidden winner in artificial intelligence with its focus on private AI.
