Nvidia has undoubtedly been the hottest artificial intelligence (AI) stock over the past year and a half. Since the start of 2023, shares of the chipmaker have risen an incredible 500%. Many stocks fail to produce such returns over time decade or even longer, and Nvidia did it in just 16 months. Given these kinds of gains, it’s not unreasonable to expect many Wall Street analysts to believe the stock is nearing a peak. Analysts’ consensus price target suggests Nvidia shares are only expected to rise another 13% from today’s levels.
AI investors may want to consider other options that may offer more scope to rise higher. The three stocks that analysts are significantly more bullish on include: SoundHound AI (NASDAQ:SOUN), Baidu (NASDAQ:BIDU)And UiPath (NYSE: PATH). Here’s a look at how big the potential of these stocks could be and whether they’re worth adding to your portfolio today.
1. SoundHound AI: 50% up
The analyst consensus price target for SoundHound AI is a little less than $7, which would mean SoundHound shares could rise about 50% assuming they reach that value within the next year or so could achieve.
SoundHound rose to prominence this year after investors learned that Nvidia had invested in the voice AI company. Its AI voice platform can help integrate AI into vehicles, drive-throughs, and other ways to create a conversational experience between the user and the AI. There is great potential for this type of technology in many industries to make the AI experience easier for customers.
The biggest problem, however, is that while there is a lot of hype around SoundHound, the results are still quite modest; The company has a lot to prove considering how much competition there is out there. Fast food restaurant chain Wendy‘s, for example, has already begun providing an AI-powered drive-thru ordering experience through its proprietary FreshAI platform, which leverages generative AI.
For SoundHound to be a good buy, it needs to prove that its technology is real and can be better than the competition. In the last three months of 2023, the company achieved an impressive 80% revenue growth and totaled $17.1 million in revenue. However, the company posted a net loss of $18 million and burned through cash, and it will likely need a large portion of that money to invest in its operations.
SoundHound AI could gain 50%, but if it does, it will likely be speculative; The company’s fundamentals are not yet strong enough to justify a slam dunk. It’s probably a little too early for most investors to invest in SoundHound AI.
2. Baidu: 60% upside potential
One stock that analysts say has even more upside potential is Chinese technology company Baidu; Wall Street expects the price to rise by about 60% to almost $172. The company is often compared to alphabetis Google because it has a popular search engine platform and a cloud business. The company is always looking to invest in new technologies, and AI is no exception.
The reason investors haven’t been too optimistic about the stock (it’s down 11% this year) is because there are concerns that it may have close ties to the Chinese government, which is not only impact their growth opportunities, but could also cause problems for the stock further down the line. In the past, investors have been concerned that Chinese stocks could be delisted from U.S. exchanges, and the U.S. government’s move to ban TikTok due to Chinese government influence may only increase those concerns.
In addition, Baidu’s growth rate was somewhat weak. In 2023, the company’s sales grew by 9% to almost $19 billion. Ideally, AI investors want to see a faster growth rate to be confident that a company is actually capitalizing on significant AI growth opportunities. However, there is hope that Baidu could have a potential growth catalyst there with its chatbot Ernie reaching 200 million users, which could help accelerate the company’s growth rate.
Given Baidu’s low valuation – the company trades at 10 times its expected future earnings – I could see a path for the stock to reach analysts’ price targets, as it’s a great opportunity to get into the Chinese tech market to invest, and Chinese stocks in general have been undervalued for a while. However, the stock involves some increased risk and may not be suitable for all types of investors.
3. UiPath: 40% upside potential
UiPath has an automation platform that helps companies create processes that save them time and money. It can remember users’ steps and automate them. Unfortunately, despite the potential value it can provide for businesses, UiPath stock has been a disappointing investment so far this year, falling 20% year-to-date.
The company posted some encouraging results, reporting revenue of $405.3 million for the quarter ended Jan. 31, representing 31% year-over-year growth. Another positive for the company is that it also posted a total profit of $33.9 million in the most recent quarter, a significant improvement from the same period last year when UiPath posted a net loss of $27.7 million.
Analysts expect UiPath shares could reach $27, up 40% from current levels. This does not seem unrealistic given the high growth rate, the possibilities for automation and the fact that the company also makes profits. With a price-earnings-growth ratio of less than 1, the stock could be a bargain for long-term investors.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Baidu, Nvidia and UiPath. The Motley Fool has a disclosure policy.
“3 AI Stocks That Wall Street Says Have More Potential Than Nvidia” was originally published by The Motley Fool