Shoulda, woulda, coulda. That could be the refrain for some investors who didn't own shares of Nvidia (NVDA +2.57%) in recent years.
No company has been at the center of the artificial intelligence (AI) boom as much as Nvidia. The demand for its graphics processing units (GPUs) has exploded, causing Nvidia's share price to skyrocket.
Missed out on Nvidia's ginormous gains? Don't worry. Here's an AI stock you can buy right now.
NASDAQ: NVDA
Key Data Points
Think smaller
It's possible that Nvidia could keep its momentum going at the frenetic pace we've seen over the last couple of years. However, I'd argue it's not probable for one simple reason: size. With Nvidia's market cap now hovering around $2.3 trillion, delivering a 3x or greater return is much more difficult. Investors seeking huge growth should think smaller, in my opinion.
I think UiPath (PATH 5.63%) is exactly the kind of AI stock that anyone who missed out on Nvidia's meteoric rise should consider. The company sells enterprise automation and AI software. UiPath appears to be in a sweet spot with a market cap of roughly $11.6 billion. Of course, a smaller size doesn't necessarily mean that UiPath will be a big winner in the coming years. But I think it will.
NYSE: PATH
Key Data Points
For many of the most successful companies today, achieving profitability was an inflection point in their growth trajectory. UiPath recently recorded its first profitable quarter as a public company.
Business is booming. UiPath's revenue in its quarter ending Jan. 31, 2024, soared 31% year over year to $405 million -- an all-time high. The company boasts a dollar-based net retention rate (a measure of recurring revenue from existing customers) of 119%. Its gross margin is nearly 90%.
Putting AI to work
If AI merely provides entertaining chats and creates interesting images, it won't be a game changer. The real opportunity for AI (as with any new technology) is increasing productivity. UiPath's primary focus is putting AI to work.
The company's Test Suite product for application testing stands out as a great example of how UiPath uses AI to boost productivity. A recent study revealed that Test Suite customers realized average annualized benefits of over $4 million with a return on investment of 529% over three years and a payback on investment of only six months.
Ark Invest predicts the AI software market could grow to $14 trillion by 2030 with a compound annual growth rate of 42%, fueled by huge productivity gains. I believe UiPath is in a strong position to capitalize on this tremendous opportunity.
Most importantly, UiPath has shown it can deliver the innovation required to stay atop the AI automation market. The company also has an impressive partner network, including Accenture, Deloitte, EY, pwc, and SAP. CEO Robert Enslin noted in the latest quarterly conference call that over 70% of UiPath's deals involve its partners.
Better than Nvidia?
Is UiPath better than Nvidia? It depends on your perspective.
Nvidia is unquestionably the stronger company. The GPU maker dominates the AI chip market and will likely do so for a long time to come. However, I think investors who didn't profit from Nvidia's huge gains have a great opportunity to jump aboard another AI leader that's still in its early stages of growth with UiPath.
