The AI revolution is in full swing, showering accolades on the pioneers propelling this transformative technological wave. While many AI stocks bask in the glory of lofty valuations, there exist hidden gems waiting to be unearthed by discerning investors. These obscure players, still embryonic in their growth journey, harbor immense potential to catapult portfolios towards lucrative vistas in the years to come. Let’s delve into three such under-the-radar AI stocks with promising trajectories.
Data Storage Corp (DTST)
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Data Storage Corp (NASDAQ:DTST) has caught my eye for a while now, and my intuition bore fruit! Although priced around $5 per share, I firmly believe the unfolding narrative of this hidden gem has only just begun.
Despite traditional valuation metrics initially painting DTST stock as dear, a broader gaze reveals its promising trajectory and future prospects, making the premium seem like a bargain. With Data Storage Corp still trading at a substantial discount vis-a-vis industry titans, a vast growth runway beckons in the forthcoming months.
The signs of hypergrowth are emerging, with Q3 showcasing a staggering 36% year-over-year revenue surge, nearly 20% above Wall Street’s projections. The CloudFirst segment alone raked in $3.7 million, with net income exceeding $800,000 and EBITDA soaring past $1.1 million. Impressive figures for a company skirting most investors’ radars.
Given these figures, it’s a mere waiting game before DTST captures the attention of both Wall Street and retail investors, catapulting it towards new zeniths.
Alibaba (BABA)
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When contemplating AI juggernauts, Alibaba (NYSE:BABA) might not spring to mind immediately. Yet, dismissing this Chinese tech giant is at one’s peril, for Alibaba wields significant prowess in the AI domain.
True, Alibaba’s roots lie deeply entrenched in e-commerce. Nevertheless, pigeonholing the company as a mere “dated online shopping platform” would be a gross oversight. Alibaba’s tech dominion spans across myriad spheres, with AI occupying a prominent spot in the current roadmap.
While BABA stock has endured a rough patch recently, more a consequence of the broader Chinese market turmoil than a reflection of its potential, I foresee a robust turnaround on the horizon. As Beijing initiates stimulus measures to reignite growth, I anticipate stocks like Alibaba poised for a remarkable resurgence.
Alibaba stands poised to deliver multi-fold returns from its current standing, holding the fort as an undervalued tech behemoth. In the AI realm, its in-house models, though trailing Western counterparts in some aspects, tap into a colossal captive market. Chinese businesses are likely to favor local AI solutions over English variants.
Additionally, Alibaba is ramping up its cloud business aggressively, a pivotal component of its AI growth blueprint. Slashing product costs by up to an astounding 55% recently, Alibaba aims to enhance the allure of its offerings vis-a-vis entrenched cloud rivals like Tencent (OTCMKTS:TCEHY). With the right mix of ingredients, Alibaba sets the stage to emerge as an AI powerhouse in the making.
Innodata (INOD)
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For those seeking a dive into the burgeoning AI data annotation sphere, Innodata (NASDAQ:INOD) merits a closer inspection. This global data engineering entity specializes in supplying the lifeblood that propels modern AI models: meticulously labeled data. However, following a recent short seller report, INOD stock finds itself relegated to the bargain bin, plummeting 40% down at the time of writing.
The crux of the bear argument revolves around contentions that Innodata’s AI models and data annotation services lack the robustness advertised. Yet, such aspersion arguably taints every AI company under the sun currently. Recall the scrutiny faced by SMCI (NASDAQ:SMCI) in January 2023 – a tale where the stock soared nearly 1,000% since then, as I scribe this in March 2024.
Dismiss your worries regarding Innodata; this company has inked lucrative pacts with four of the globe’s top five tech juggernauts, with significant institutional investor buy-in. Their due diligence speaks volumes. As smart money continues to suture this narrative, retail investors will inevitably flock.
Does this imply Innodata wields spotless, unparalleled AI prowess? Not quite. At this nascent stage, no firm boasts flawless tech. I contest this isn’t a company bucking industry norms or indulging in egregious misrepresentations. The short report fixates on Innodata’s 12-month losses while conveniently overlooking the consecutive two-quarter profitability streak. This narrative is far from the stark dichotomy painted by the bears.
On the publication date, the writer did not hold any positions in the securities mentioned herein. The opinions expressed are his own, subject to the InvestorPlace.com Publishing Guidelines.
The writer, an autodidact investor, focuses on growth and cyclical stocks underpinned by robust fundamentals, value, and long-term promises. His penchant extends to high-stakes ventures like cryptocurrencies and penny stocks. Follow him on LinkedIn.
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