3 AI-Focused Stocks to Watch
One of the most important trends taking place in the tech space today is the meteoric rise of artificial intelligence (AI) technologies.
Don’t believe me? Follow the money.
Industry forecasts suggest global spending on AI and related cognitive computing projects could reach $78 billion by 2022.
Google parent company Alphabet (Nasdaq: GOOGL) has already invested more than half a billion dollars into AI research with its acquisition of DeepMind in 2014.
Microsoft (Nasdaq: MSFT) is also a big spender, with speculation that the company has spent at least $1 billion on AI.
And IBM (NYSE: IBM) is estimated to have spent at least $15 billion to date on its IBM Watson-related research, which first launched in 2010.
Suffice it to say the scope of AI’s potential applications in the world – from big data analytics to healthcare – is truly game-changing. And major players are investing heavily to maintain dominance in this fast-growing space.
But in the shadows of these tech giants are much smaller companies that also show great promise – especially for investors.
In fact, I believe that some of today’s most exciting AI-focused companies can be found in the microcap arena.
Veritone (Nasdaq: VERI) is one example.
This company went public just two years ago. Yet it’s one of the fastest-growing AI companies on the market today.
Veritone is the developer of aiWARE – an operating system dedicated exclusively to AI.
It functions similarly to an ordinary computer’s operating system – like Microsoft’s Windows or Apple’s macOS – but it’s designed to give users a single platform to connect to the thousands of AI-based cognitive engines on the market.
These cognitive engines include speech-to-text applications, image processing algorithms, biometrics analysis and other data analytics programs being developed that rely on machine learning.
Since going public, the company has moved fast, generating respectable revenue growth over the past few quarters.
Veritone’s fourth quarter revenue rose a staggering 213% year over year to $10.9 million.
The company is also expected to see year-over-year growth of 163% and 194%, respectively, in its first and second fiscal quarters of 2019.
In spite of its fast growth, Veritone remains a microcap stock that isn’t on most investors’ radars. But it’s not just a tiny company with big dreams.
Veritone has friends in high places – specifically the U.S. government.
The Federal Risk and Authorization Management Program (or FedRAMP) is a U.S. government program that establishes a marketplace for federal agencies to access approved cloud-based information technology products and services.
Recently, Veritone announced it received FedRAMP authorization for its “aiWARE Government” platform.
This gives Veritone impressive credibility as a secure and trustworthy product provider.
AudioEye (Nasdaq: AEYE) is another under-the-radar AI stock.
The company’s focus is developing technology to help make websites more accessible and interactive for people with disabilities – especially vision impairment.
More recently, AudioEye has been focusing on incorporating machine learning and AI engines into its products and services.
The company has also seen remarkable and steady top-line growth over the past couple of years, which should continue into the near future.
In AudioEye’s fourth quarter, revenue rose 103% year over year to $1.8 million. And analysts expect revenue to rise 91% year over year to $2.2 million in its first quarter and another 103% year over year to $2.5 million in the following quarter.
Finally, Catasys (Nasdaq: CATS) is yet another microcap pure play on the AI boom, as well as healthcare.
Catasys is a data analytics company that helps health providers identify plan members with untreated behavioral health conditions that worsen existing diseases.
The goal is to help get those people treatment, as well as reduce overall health costs.
Since it manages data related to tens of thousands of patients, the company has turned to AI to make its analytics both more reliable and more cost-effective.
So far, that’s been very successful.
Catasys has also seen great revenue growth in recent quarters, including an 85% spike to $5.6 million in sales last quarter.
This quarter, revenue is expected to grow 241% year over year to $6.5 million. And next quarter it’s expected to rise 123% to $7.3 million.
Microcap stocks like these may offer some unique long-term returns that the big-league tech companies can’t.
So even though the tech giants are running the show, don’t discount the little guys.
You’ll definitely want to keep a close eye on these up-and-coming contenders.