After a significant decline in April due to "Liberation Day" tariffs, the market for artificial intelligence (AI) stocks has shown resilience, rebounding in May. Notably, established players like Nvidia are once again approaching their all-time highs, while Palantir has even achieved a new record. This renewed vigor comes as investors appear to set aside worries about a potential trade war or an impending recession, redirecting their focus toward the ongoing AI revolution. Big tech companies are heavily investing — to the tune of tens of billions of dollars — in new data centers to support AI initiatives, signaling the continued growth and importance of AI technologies.
Despite this overall positive trend, some AI stocks remain undervalued, presenting opportunities for savvy investors. Here we delve into two AI stocks that are worth considering as they trade at attractive prices following recent market fluctuations.
Amplitude
One AI stock that hasn’t garnered as much attention as it deserves is Amplitude (AMPL). This software-as-a-service (SaaS) company specializes in product analytics, and its profile diminished following a meteoric rise during the pandemic. As many businesses recalibrated their spending priorities, Amplitude witnessed a slowdown in growth.
However, the company has adeptly pivoted, expanding its platform to offer a comprehensive suite of tools that empower businesses to examine how their customers interact with their products. Their features include pop-up guides that facilitate user support and session replay technology, enabling companies to analyze user navigation paths within applications or websites.
A pivotal point for Amplitude is its upcoming launch of AI agents on June 10, aimed at providing actionable insights and suggesting improvements tailored to its clients’ needs. This innovation not only streamlines the process for businesses to identify successful strategies but can also generate numerous website variants to determine which performs optimally.
Despite achieving gains this year, Amplitude’s stock is still significantly undervalued, currently down approximately 85% from its all-time high. With a market cap of just $1.6 billion, it competes with major players like Alphabet’s Google Analytics and Adobe Analytics. Should its new AI agents resonate well with clients, there is significant potential for market share growth.
Upstart
Similarly, Upstart (UPST) experienced a dramatic rise during the pandemic but faced a steep decline as interest rates increased and fears of an economic downturn took hold. Upstart is revolutionizing the credit evaluation landscape by utilizing AI to disrupt traditional FICO scores, and its innovative technology is focused on improving credit risk assessment.
One of the most promising breakthroughs for Upstart is its Model 18, capable of making up to one million predictions per credit applicant. This advanced assessment model not only reduces defaults but also increases approvals while managing risk effectively. The impact of this technology is evident in the company’s financial performance; recently, Upstart improved its conversion rate from 14% to 19.1%, facilitating a remarkable 67% increase in revenue to $213 million in the first quarter. On top of that, adjusted EBITDA surged to $42.6 million, marking a turnaround from a previous loss.
Upstart is also diversifying its service offerings, further bolstering growth. The company is ramping up business in both the auto and home loan markets, achieving remarkable year-over-year growth of fivefold in auto loan originations and sixfold in home loan originations. Despite recovering somewhat since its post-pandemic lows, Upstart’s stock is down approximately 44% from its 52-week high and 87% from its all-time highs.
As the benefits of its AI technology become apparent, Upstart is positioned as a compelling opportunity for investors looking to buy on the dip.
Conclusion
The landscape of AI stocks continues to evolve, driven by substantial investments and advancements in technology. Both Amplitude and Upstart exemplify the potential for growth and recovery in this evolving market, despite their current undervalued status. Investors looking to capitalize on the ongoing AI boom would do well to consider these two stocks that represent a blend of innovation and promising financial results. As the future of AI unfolds, these companies may not only recover but thrive in a competitive environment increasingly reliant on intelligent technology.
Investors should keep a close eye on these AI stocks as they develop and innovate, particularly in light of the strong implications for businesses now and in the future. Whether memories of past economic uncertainties linger or not, the current market sentiment shines a light on the bright prospects ahead for AI-driven solutions.
