The artificial intelligence (AI) megatrend has driven valuations of big tech stocks such as Nvidia, Meta Platforms, and Microsoft higher since the start of 2023. According to multiple research reports, the AI market will rapidly expand and surpass US$1 trillion within the next five years.
However, several AI stocks are trading below their all-time highs, making them top investments if they can benefit from an expanding addressable market. Here are two beaten-down AI stocks every Canadian investor should closely watch in October 2024.
UiPath stock
Valued at US$6.84 billion by market cap, UiPath (NYSE:PATH) provides an end-to-end automation platform that offers a range of robotic process automation (RPA) solutions in the U.S. and other international markets. The company provides software solutions to build, manage, run, engage, and measure automation within the organization.
In the fiscal second quarter (Q2) of 2025 (ended in July), UiPath reported annual recurring revenue of US$1.55 billion, an increase of 19% year over year. The number of customers spending over US$100,000 annually on the UiPath platform has risen to 2,163, while 293 customers spend more than US$1 million annually. Its dollar-based net retention rate for Q2 stood at 115%, which means existing customers increased spending by 15% in the last 12 months.
UiPath has increased its revenue from US$336 million in fiscal 2020 to US$1.38 billion in the last four quarters. In fiscal Q2, it reported revenue of US$360 million and adjusted free cash flow of US$49 million. Its steady revenue growth has enabled UiPath to benefit from operating leverage and grow its free cash flow faster than revenue. In the last 12 months, UiPath has reported a free cash flow of US$327 million, compared to a cash outflow of US$34 million in fiscal 2023.
Analysts tracking UiPath expect adjusted earnings to expand from US$0.40 per share in fiscal 2025 to US$0.44 per share in fiscal 2026. So, priced at 28 times forward earnings, PATH stock is reasonably priced and trades at a 25% discount to consensus price target estimates.
Hive Digital stock
Valued at $483 million by market cap, Hive Digital (TSXV:HIVE) is a cryptocurrency mining company. Typically, the stock prices of crypto mining companies are tied to Bitcoin, and for good reason. During the 2021 crypto bull run, Hive Digital reported revenue of US$211.2 million in fiscal 2022 (ended in March), up from US$67.7 million in 2021 and US$29.2 million in 2020. As BTC prices fell more than 80% from all-time highs in 2022, Hive Digital saw its top line decline by 50% to US$106.3 million in fiscal 2023.
Hive Digital and several other crypto miners are diversifying their revenue base by investing in AI. In 2021, Hive Digital purchased US$66 million worth of graphic processing units (GPUs) from Nvidia, which are currently used to power energy-intensive AI workloads.
A CoinTelegraph report states, “Hive’s AI bet has generated significantly higher revenue than crypto mining.” For instance, Hive explains that the GPUs used for AI tasks generate around US$1 per hour, compared to US$0.12 per hour for mining crypto.
Further, Hive is upgrading its New Brunswick and Sweden data centres to support these workloads. It also announced plans to build a 100-megawatt mining site in Paraguay, which should double its mining hash rate.
HIVE stock is down 80% from all-time highs and trades at a discount of almost 90%, given consensus price target estimates.
