2 Artificial Intelligence (AI) Stocks That Could Go Parabolic

Palantir Technologies stock and this tiny Canadian AI stock could rally as their new platforms bring new customers in 2024.

| More on:
crypto, chart, stocks

Image source: Getty Images

Artificial intelligence (AI) is creating new wonders in 2024. OpenAI’s latest generative AI platform for video content production, Sora, is turning heads. News that prominent filmmaker Tyler Perry is shelving plans for a US$800 million expansion to an Atlanta studio after witnessing what Sora can do should be bullish for relevant AI stocks. Whether these new AI platforms may replace mighty Hollywood remains anyone’s guess. However, their growing usefulness and cost-saving capabilities could propel some AI stocks to new highs soon.

Palantir Technologies (NYSE:PLTR) stock and Coveo Solutions (TSX:CVO) stock could rally ahead as their new AI platforms generate new customer interest in 2024. Let’s take a closer look.

Palantir Technologies

Palantir Technologies is a US$54 billion defense analytics and intelligence software vendor that recently launched an AI platform for private commercial customers, a new product that has unlocked strong revenue growth and helped spark a 52% rally in Palantir stock over the past month.

Fourth-quarter 2023 revenue grew sequentially by 9% to US$608.4 million, marking a significant reacceleration of growth in the company’s topline. Palantir’s U.S. commercial sales surged by 70% year over year during the past quarter as AI demand shot through the roof. The segment will be a significant growth driver in 2024. Thanks to AI breakthroughs, Palantir has entered a new growth cycle that could lift its stock price back to all-time highs.

A rally back to all-time highs near US$40 a share implies a potential 66% gain in PLTR stock price from current levels. The rally may not be as parabolic as some may desire, but good enough a gain to richly reward investors.

But why would Palantir stock reclaim all-time highs? Profits are piling up more sustainably at Palantir, and the AI stock looks undervalued. At the time of writing, PLTR stock has a forward price-to-earnings (P/E) of 63, long-term earnings growth outlook of 85.2%, and PEG ratio of 0.9, which implies shares may be undervalued given their expected earnings growth potential.

Coveo Solutions

Coveo Solutions is a $1 billion AI stock that has been iterating its intelligent offerings over the past decade, culminating in the release of a generative AI platform, the enterprise-ready Relevance Generative Answering solution, in December 2023. The generative answering model could attract a growing institutional customer base in 2024 and help drive the growth stock higher.

The company develops AI platforms that aid customer support functions and boost e-commerce website recommendations. Its latest generative AI platform could gain more customer trust due to established relationships built over the years. Coveo counts Salesforce and Adobe as customers, and its latest AI platform iterations could help drive revenue growth, reduce customer support costs, and boost customer return on investments in digital assets.

Coveo Solutions reported 11% year-over-year growth in quarterly revenue to US$31.8 million during the past three months to December 31, 2023. It maintained strong gross margins above 77%. Operating losses declined significantly, and the company expects to start generating positive cash flow from operations sometime this year as generative AI demand soars.

“We had a strong third quarter and saw a broad resurgence in new bookings with new and existing customers,” Coveo’s CEO Louis Têtu said in a recent earnings release in February. “We believe we are beginning to see the strong early interest in generative AI turning into tangible opportunities with customers…” he continued.

Looking ahead, Bay Street analysts project 16.2% growth in sales over the next 12 months. However, following the release of a trendy generative AI platform that may attract corporate customers in 2024, growth could exceed market estimates by wide margins.

Time to buy?

Coveo stock trades at a price-to-sales multiple of 7.1, which compares favourably against an average industry multiple of 9.6. Although shares haven’t gone anywhere since Coveo’s initial public offering (IPO) in late 2021, the recent IPO stock has been silently and steadily growing its AI revenue from enterprise customers over the past few years, gaining corporate customer trust and winning industry awards. It’s possible that it has laid good groundwork for strong revenue and earnings growth and a parabolic stock rally ahead.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends Adobe, Palantir Technologies, and Salesforce. The Motley Fool has a disclosure policy

More on Tech Stocks

woman data analyze
Tech Stocks

1 Stock I’d Drop From the “Magnificent 7” and 1 I’d Add

Tesla (NASDAQ:TSLA) stock is part of the Magnificent Seven, but Shopify (TSX:SHOP) is growing faster.

Read more »

close-up photo of investor Warren Buffett
Tech Stocks

3 Stocks Warren Buffett Owns That Should Be on Your List, Too

Investing in quality Warren Buffett stocks such as Mastercard can help you generate outsized gains in the upcoming decade.

Read more »

Man data analyze
Tech Stocks

Missed Out on NVIDIA? My Best Growth Stock Pick to Buy and Hold

Despite its consistently improving fundamental outlook, this Canadian growth stock has seemingly been ignored by most investors for a long…

Read more »

A worker drinks out of a mug in an office.
Tech Stocks

The Best Stocks to Invest $5,000 in Right Now

Here's why investing in blue-chip stocks such as Visa should help you deliver outsized gains in 2024 and beyond.

Read more »

Young woman sat at laptop by a window
Tech Stocks

3 Stocks I Think Every Canadian Should Own in 2024

Here's why Canadian investors should hold blue-chip stocks such as Microsoft in their equity portfolios in 2024.

Read more »

Shopping and e-commerce
Tech Stocks

Is Shopify Stock a Buy, Sell, or Hold?

Down close to 60% from all-time highs, Shopify stock trades at a significant discount to consensus price target estimates.

Read more »

Different industries to invest in
Tech Stocks

TSX Information Technology in April 2024: The Best Stocks to Buy Right Now

For investors looking for the best stocks to buy to play a surge in IT spending in 2024 and beyond,…

Read more »

four people hold happy emoji masks
Tech Stocks

Forget Side Hustles: This Blue-Chip Stock Is Your Next Income Stream

Don't waste your time (literally) on a side hustle. Instead, consider this proven blue-chip stock that's seen average growth of…

Read more »