If you’re an investor who regrets not jumping on the blazing Nvidia (NASDAQ:NVDA) growth train over the past few years, you may get a second or third chance to ride the artificial intelligence (AI) growth wave. Nvidia stock has skyrocketed more than 480% in three short years, fueled by an explosive surge in AI hardware demand. The company’s annualized revenue increased by 320% and operating income soared 607% during that time, thanks to Nvidia’s near-monopoly dominance in AI computing systems.
But while Nvidia’s impressive run is hard to replicate, some lesser-known AI growth stocks are poised to deliver compelling returns in the years ahead. Let’s explore two promising contenders: Paylocity Holding (NASDAQ:PCTY) stock and Globant (NYSE:GLOB).
Paylocity stock: Revolutionizing workplaces with AI
Paylocity is a US$11 billion mid-cap stock transforming human capital management (HCM) through AI-driven innovation. The company serves over 39,000 clients – mostly small- and medium-sized businesses with 10 to 5,000 employees – providing payroll, time management, recruiting, and collaboration solutions. Paylocity’s increasingly AI-powered features streamline operations for its customers, many of whom previously relied on manual processes.
One of its recent standout innovations is AI Assist, which enhances user experiences on Paylocity systems that automate workflows, provide actionable insights, and deliver advanced analytics to help small teams make better decisions. For example, the company’s AI-powered tools can help businesses optimize headcount planning or deliver real-time employee feedback, enhancing workplace efficiency and engagement.
Financially, Paylocity is a growth machine. Over the past five years, it has grown revenue at a compound annual growth rate (CAGR) of 26.8%, operating earnings at 41.8%, and free cash flow at 43.4%. The company’s sales climbed from US$519 million in 2019 and may exceed US$1.5 billion in 2025. A fired-up management team is targeting US$2.7 billion in annual revenue over the next decade. The revenue, earnings and cash flow growth momentum is already impressive, yet it’s only getting started on an AI-powered growth journey.
With a forward price-to-earnings (P/E) ratio of 27.5, the stock appears reasonably valued compared to the industry’s average historical P/E above 169.
Despite trading below its all-time highs, Paylocity stock’s 29% gain over the past year could signal the beginning of a new multi-year growth phase. If you’re looking for an AI stock that balances robust revenue growth with profitability and strong cash flow generation, Paylocity stock deserves your attention.
Globant: A leader in AI-driven digital transformation
Globant stock could be another hidden gem in the AI space. This US$9.2 billion tech services company helps businesses across industries adopt AI and cloud technologies to modernize their operations. Globant’s consultancy work spans sectors like entertainment, financial services, retail, and transportation, addressing a massive global market for digital transformation – one projected to grow from US$2.7 trillion in 2024 to US$12.3 trillion by 2032.
Globant has consistently delivered impressive financial results. Over the past five years, it achieved a 37% CAGR in revenue, a 32.9% CAGR in net income, and a 35.6% CAGR in free cash flow. Operating margins remain solid at over 10%. During the first nine months of 2024, AI-related projects generated $250 million in revenue, marking a 120% increase year-over-year.
Strategic acquisitions are also fueling Globant’s growth. For instance, its recent acquisition of Blankfactor, a specialist in financial services, bolsters its offerings in payments and banking verticals.
The AI growth stock’s forward P/E ratio of 29 and a forward price/earnings-to-growth (PEG) ratio of 0.3 suggest that the AI stock is significantly undervalued relative to its earnings growth potential.
Why Globant and Paylocity are standout AI stocks to buy and hold
Both Paylocity stock and Globant stock are capitalizing on AI’s transformative potential, but in very different ways. Paylocity focuses on automating and optimizing workplace operations for smaller businesses, while Globant enables enterprises to integrate cutting-edge AI into their processes. Their strong financial performance, innovative strategies, and attractive valuations make them compelling options for investors looking to tap into AI’s next wave.
While no stock can guarantee Nvidia-level returns, these two companies are positioned for significant long-term growth. By investing in Paylocity and Globant today, you could be setting yourself up to participate in the AI-driven revolution – and avoid missing out on the next big investment opportunity.
