Many stocks with an interest in artificial intelligence (AI) have soared recently. Nvidia stock more than tripled over the last year, while Microsoft shares gained 45%, easily outpacing the S&P 500 index's 22% gain over the same period.
But the AI boom didn't light a fire under every related stock, and you can still find some great companies with undervalued stocks in the AI corner of Wall Street.
Two of these tempting AI picks are data warehousing specialist Snowflake (SNOW +4.49%) and process automation expert UiPath (PATH +1.44%). These stocks have underperformed the S&P 500 over the last year and have endured price drops of more than 20% year to date.
That said, both companies should enjoy robust business growth in the ongoing AI frenzy. Starting from today's modest share prices, the stocks look ready to go on a bull run. Let me show you what I mean.
NYSE: PATH
Key Data Points
AI-automated business growth
UiPath merges AI with automation to streamline enterprise processes. Their platform uses AI to analyze and mimic human interactions with digital systems, providing businesses with the tools to automate tasks with AI-driven precision. This integration makes UiPath a unique service provider in AI-powered business automation, also known as robotic process automation (RPA).
The company's software robots are not chunks of automated hardware but software programs that can automate jobs people used to do. They're often called "bots" in the industry, but that's not UiPath's preferred terminology.
These computer applications work inside existing computer systems. They help businesses by doing repetitive tasks, like filling out forms or updating records, saving time and reducing mistakes. UiPath's software is deeply integrated with common business platforms, enhancing its ability to deliver effective RPA solutions across various industries and hyper-specific client needs.
You'd think an AI expert like this would see a soaring stock price in 2024. But UiPath's stock has only gained 20% in 52 weeks, including a 22% drop since New Year's. And it's down 77% from the all-time highs of mid-2021, just before the inflation crisis drove investors away from growth stocks.
But have you seen UiPath's rising cash profits and soaring revenues?
PATH Revenue (TTM) data by YCharts. TTM = trailing 12 months.
UiPath's financial performance highlights a company that's essential in an increasingly automated business world. The mismatch between its reasonable stock price and booming financial success could be an overlooked opportunity for investors ready to bet on the long-term proliferation of RPA technology -- with UiPath as a leading provider.
As businesses continue to seek efficiency and innovation, UiPath's stock might just be gearing up for significant gains.
NYSE: SNOW
Key Data Points
Giving AI experts easy access to squeaky-clean data
Snowflake helps companies store heaps of information in the cloud. But it's not just about storage. Snowflake also has smart tools that let businesses dig through their data to find valuable clues on how to grow or save money, making data work hard for them. It's like keeping a meticulously organized virtual filing cabinet accessible from anywhere.
The company plays a big part in the generative AI boom by being a super helpful librarian for AI systems. It organizes and manages lots of important data that AI engines use to learn and get smarter. Easy access to clean, organized data that's ready to use is valuable to companies using AI tools.
It's all about giving AI a strong foundation of knowledge, and that's what Snowflake does best. For example, companies can connect their Snowflake data stores directly to their UiPath tools. Whether you're training your UiPath systems or analyzing fresh business data in real time, Snowflake's seamless data flow makes it easy.
I'm sure you guessed it already, but Snowflake's business is firing on every cylinder right now. Trailing sales have more than doubled in two years, powering stellar cash flow gains:
PATH Revenue (TTM) data by YCharts. TTM = trailing 12 months.
Yet, Snowflake's stock chart doesn't reflect its soaring sales and profits.
The stock has only gained 6% over the last year, with a 24% drop so far in 2024. It's not as blatantly underpriced as UiPath, trading at 18 times sales and 64 times free cash flows, but this high-octane growth stock has earned every penny of that premium price tag.
So, if you're looking for a very affordable AI stock in today's market, UiPath deserves your consideration. Snowflake merits a second look if you're willing to make a bolder bet on AI-powered sales growth.
