The 7 Most Undervalued AI Penny Stocks to Buy: October 2023
Dive into the dynamic realm of undervalued AI penny stocks, offering robust long-term upside potential. By 2030, artificial intelligence (AI) is set to fuel the global economy with a staggering $15.7 trillion injection. Big tech is riding the wave, no doubt, and it’s often the nimble, small-cap pioneers that pivot, dart, and ultimately sprint ahead in terms of exponential gains.
Sure, blue-chip entities have proven to be incredibly reliant investments, and AI is likely to add another layer to their endless growth stories. However, the true artistry effectively lies in pinpointing those powerhouses nestled in niche sectors. Their revenue sheets might not turn heads today, but these small-cap contenders are eyeing the priceless prize of a first-mover advantage. With that said, here are three under-the-radar mavens who are effectively game-changers in waiting.
Undervalued AI Penny Stocks: SoundHound (SOUN)
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Amid the bustling AI landscape, SoundHound (NASDAQ:SOUN) emerges as one of the most promising small-cap players, warranting a second look. Unlike other voice assistants, SoundHound pushes boundaries, aiming for naturally engaging conversations underpinned by AI. Consequently, this nuance effectively allows it to gauge context and deliver meanings beyond standard replies.
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The appeal doesn’t end there with a distinguished clientele, boasting names including Microsoft (NASDAQ:MSFT) and other notable EV players, along with robust financial momentum. With revenues surging to $8.8 million, marking a 41.9% year-over-year (YOY) bump, and an impressive cash reserve of $130 million as of June 2023, the company’s prospects continue to shine bright. Its 2023 revenue forecast ranges between a promising $43 to $50 million. Moreover, there’s palpable excitement as SoundHound anticipates turning adjusted EBITDA positive conclusion this year. Echoing this optimism, Tipranks consensus paints the stock with a “strong buy” label, hinting at a potential 195% upside.
Himax Technologies (HIMX)
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Taiwanese tech player Himax Technologies (NASDAQ:HIMX) stands as a beacon in the fabless semiconductor arena despite the cloud of investor apprehension and a global chip crunch dampening smartphone and PC sales. Anchoring its clout is its powerful foothold in crafting display drivers, critical for a plethora of AI-driven devices, along with an enticing stock valuation. This strategic positioning in the AI fabric heralds potential business proliferation for the company, placing it firmly on investors’ radars.
A striking second quarter performance showcased a gross margin of 21.7%, eclipsing expectations. Though revenues waned YOY, Himax doesn’t skip a beat, projecting its third quarter gross margins to fall in the 30.5% to 32.0% bracket. This forecast, blended with anticipated positive third quarter operating cash flows, fortifies its investment appeal, resonating with prudence and a trajectory of energetic rebound.
iCAD (ICAD)
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iCAD (NASDAQ:ICAD) is surging ahead in the high-stakes realm of medical technology, wielding its AI prowess to revolutionize breast cancer detection efficiently. The company’s synergy with Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) cutting-edge technology marks a major leap forward, evidenced by the integration of Google’s AI tech into its 2D mammography system. This collaboration will significantly amplify the effectiveness of iCAD’s solutions, underscoring its innovative edge. Furthermore, the nod from Health Canada for iCAD’s Profound Risk version 2.0 heralds a new era of global expansionary possibilities and a monumental surge in revenue streams.
Furthermore, the Canadian health regulator’s recent endorsement of iCAD’s advanced breast cancer assessment tool is a testament to its global appeal. On top of that, a pact with Radiology Partners, Canada’s premier radiology practice, unveils promising horizons. This alliance is poised to cascade iCAD’s technologies to “thousands of physicians and millions of patients,” setting the stage for a potential windfall in sales.
Veritone (VERI)
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In the rollercoaster domain of AI stocks, Veritone (NASDAQ:VERI) presents a paradox of innovation shadowed by turbulence in its financials. Known for revolutionizing productivity with its AI-driven solutions, particularly in the realm of media workflow automation, Veritone garnered acclaim with its aiWARE operating system. Yet, the company’s journey hasn’t been without its fair share of headwinds. Its ambitious stride, marked by its pricey Broadbean acquisition, led to a precarious dance with debt financing. This, coupled with a concerning revenue dip in the second quarter, paints a picture fraught with risk despite the firm’s undeniable technological ingenuity.
However, it’s not all storm clouds for Veritone. The recent securing of a $15 million deal with the U.S. Department of Justice highlights its innovative prowess in AI-driven transcription, translation, and data extraction, hinting at a lucrative horizon. This venture not only reinforces its position in government workflow solutions but signals the high-reward potential beneath the risks. While current financials might deter the faint-hearted, those with an appetite for risk and an eye on the long game could see Veritone’s long-term value.
BigBear.ai (BBAI)
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Navigating the intricacies of AI-driven defense and industrial innovation, BigBear.ai (NYSE:BBAI) has proven to be a true trailblazer. This dynamo, armed with robust AI analytics and cyber engineering artistry, is changing the game one contract at a time. Whether it’s the U.S. Army or top logistics entities, BigBear.ai’s client roster reads like a who’s who of sector heavyweights.
Moreover, in bolstering its financial position, it issued 11.84 million shares, plus warrants for another 8.88 million, all at a steal for $2.10 apiece, heralding a much-needed liquidity boost. Furthermore, H.C. Wainwright throws its weight behind the stock, tagging a “buy” rating and a $4 target. The forecast is likely to have been on a solid $206 million backlog, hinting at a revenue-rich horizon come 2024. Analysts at Tipranks hint at a massive 182% upside from current price levels.
Remark Holdings (MARK)
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In the pulsating AI space, Remark Holdings (NASDAQ:MARK) makes a compelling splash as an underdog with immense potential. Dabbling in everything from facial recognition to retail analytics, Remark is far from being a one-trick pony. Its tentacles stretch into spheres as diverse as healthcare, hospitality, and retail, a strategic sprawl that effectively whispers promises of diverse revenue avenues. Yet, the whispers are faint; the revenue, for now, is a mere murmur, as profitability remains a mere dot on the horizon.
But let’s not dress Remark in drab just yet. MARK stock trades at a relatively modest 0.7 times forward sales estimates, a humble valuation that belies the skyrocketing demand for AI. Hence, for the risk-tolerant investor, Remark Holdings might just be the long game worth playing.
Lantern Pharma (LTRN)
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Lantern Pharma (NASDAQ:LTRN), one of the top AI biotech stocks, is one of the avant-garde businesses effectively harnessing machine learning not only as a fashionable accessory but as a crucial cog in revolutionizing drug development. In an industry where innovation typically translates to prolonged timelines and rising costs, Lantern’s use of AI promises a faster route to elusive treatments, especially in cancer.
The intrigue doesn’t stop there, as Lantern recently earned the FDA’s nod to propel its LP-184 candidate into Phase 1 clinical trials , targeting formidable foes including advanced solid tumors and brain cancers. Additionally, a recent presentation showcased the commendable anti-tumor potency of another candidate, LP-284, setting sights on non-Hodgkin’s lymphomas. The FDA clearance for its Phase 1 testing against an array of cancerous challenges including pancreatic cancer and glioblastoma further boosts its credentials.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
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