Are you busy selecting Artificial Intelligence (AI) stocks for your portfolio? Often combined with Machine Learning (ML) technology, AI innovations are seizing the investment world by storm. It’s a crowded field, but the stocks of the ground-breaking companies which come good can be expected to soar.
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The AI sector is very much in the same mould as the early days of tech stocks, which went on to make life-changing returns for their investors. This review considers the best artificial intelligence stocks under $10, each one having a plausible claim to be included in your portfolio.
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What are AI Stocks?
AI represents the potential to replace any human thought process with a computer design that improves over time. The process mimics us, much in the same way that the brain assimilates new data and associations to innovate and create new solutions for existing challenges.
The prospects for AI are immense and the move towards using it has started. AI has already become part of everyday life. Insurance companies use the technology to filter claims, search engines use the technology to improve user experiences, and Siri and Alexa give a taste of the benefits of having a virtual assistant.
AI stocks are those of companies which are developing products and services which look to expand the potential of AI and ML. Picking the best stocks involves understanding the potential for a product but also the likelihood of it being commercially successful.
The Best AI Stocks Under $10 to Buy Now
Exchanges such as the NASDAQ, which are a natural home for tech stocks, are a good starting place for those looking to buy AI stocks. It’s got a track record of incubating disruptive companies which are about to change the way people interact and see their share price take off.
Other exchanges, such as the New York Stock Exchange (NYSE), also hold AI stocks. The key being to start with a wide-reaching analysis of stocks in the sector and filtering out the best prospects.
Our guide focuses on those which are currently priced under $10. These are the ‘moonshot’ style stocks which could outperform all other stocks in your portfolio.
Alithya Group Inc (NASDAQ:ALYA)
Alithya is a Montreal head-quartered digital strategy and technologies company. Founded in 1992, the company employs around 3,900 people around the world but focuses its activity on Canada and the US.
Alithya’s cutting-edge technology is used to design and build innovative solutions to the business operations of the firm’s clients. The software engineering consulting services cover fields ranging from the “Internet-of-Things” (IoT), market to machine learning, business intelligence, and legacy systems optimisation.
The firm has a particularly strong position in the finance sector. Its products are used by institutional fund managers to streamline and enhance operations ranging from compliance to trade selection. Its front-to-back service includes AI feasibility studies, proof of concept testing, and implementation.
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Alithya doesn’t currently pay a dividend, all of its revenue is re-invested in new projects. It’s a growth stock, which as recently as last year, was trading at twice its current value. As a long-term player in the sector, it has the critical mass to weather any broader economic downturn and is a stock which AI fans should be stepping in to buy during price dips.
Amesite Inc (NASDAQ:AMST)
Based in Detroit, Michigan, Amesite Inc builds artificial intelligence software products designed to make learning more affordable, accessible, and engaging. It was founded in 2017 and its stock trades on the NASDAQ exchange under ticker AMST.
The company uses AI in the services it delivers to clients in the education, corporate, and museum sectors. It also leverages the Software-as-a-Service (SaaS) revolution by utilising cloud-based payment plans.
Schools and universities aren’t the only organisations which need to optimise their delivery of education and learning. While Amesite may have started out providing services to such establishments, the real growth potential for the stock stems from the way corporate partners can utilise the Learning Community Environment AI tool for compliance and staff training.
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In line with other tech stocks, AMST had a tough 2022. The market-wide move away from risk resulted in Amesite stock losing more than 70% in value. That makes the stock currently look undervalued. Its core client base is made up of public sector institutions, which are relatively recession-proof. Once the economic tide turns, Amesite will still be in a position to expand its private sector client base.
CooTek (Cayman) Inc (NYSE:CTK)
This NYSE-listed company has assembled an elite class of senior managers from Microsoft and has established a reputation for top-of-class mobile software development, distribution, and operation. Due to its stellar beginnings, its stock was hyped some years back, but it has gradually come back to down Earth and price levels where buy-and-hold investors are taking renewed interest.
The AI products the firm offers span some of the sectors which are most open to that disruptive technology being able to shake up the status quo.
The firm describes itself as a ‘global mobile internet company’. Its products are largely mobile phone-based and it has used AI to develop a matrix of mobile games favoured by gamers with fast-paced lives. The online literature product it offers compliments the gaming division by providing clients with content which is interesting and relevant and sourced using a proprietary AI engine.
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Currently trading at ‘pennies’, existing shareholders in CooTek have been badly burnt by the fall in stock price, which has come down from as high as $12 in January 2019.
Despite the price slide, the firm is continuing to roll out new products which could turn its fortunes around. The CooTek metaverse is a new entertainment which merges novels and games, and the company’s balance sheet will be supported by the introduction of In-App advertising.
Innodata Inc (NASDAQ:INOD)
Innodata Inc is viewed as a pure AI/ML play. Its speciality is engineering data analytical tools for companies with massive amounts of data and using its AI-based solutions to convert data analysis challenges into workable marketing solutions.
The growth of ‘big data’ means INOD’s services are in demand across the globe. Its client base includes Lucent Technologies, SONY, Michigan State University and Wolters Kluwer.
Innodata has been operating for more than 30 years and has 4,000 staff. It’s an established player in the AI sector and has kept its core focus on artificial intelligence and machine learning rather than broadening into a range of other sectors. The core operations centring on data collection, data annotation, and applied AI services.
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INOD stock is currently trading at below $3 but in November 2021, was printing prices as high as $11.25. Investors with a long-term view which involves AI reaching anything like its full potential will be stepping in at current levels in the knowledge that as a high-beta stock INOD could at any time rebound.
Lantronix, Inc (NASDAQ:LTRX)
California-based Lantronix has been operating since 1989. It offers both hardware and software services based on AI with its ‘SaaS’ engineering and hardware services offering exposure to the IoT market.
Lantronix is a global company with a client base that extends to the Americas, the Middle East, Europe, Africa, and the Asia Pacific Japan region. In a way, it is a three-play, taking advantage of formidable trends in SaaS, IoT, and AI/ML technology arenas.
One of the attractive features of Lantronix is the diverse nature of its clients. Its products are sold to companies in the industrial, financial, energy, healthcare, transport, security, IT, and government sectors. A healthy range of income streams can help during periods of economic uncertainty but open the door to above-average growth when the wider economy is buoyant.
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Lantronix is a well-regarded firm in a growth sector. Investors have so far largely stuck with the stock, which has a long-term trading base level of $2. Any short-term weakness that takes LTRX is a chance to bottom-fish a stock that was trading above $10 less than 12 months ago.
Why Invest in AI Stocks
Most stock valuation models derive the current price of a share from projected future earnings. When you consider the potential of the AI sector, any firm that makes a significant breakthrough can be expected to generate exponentially greater future revenue. That would lead to the stock price surging in the same way that Microsoft and Apple stock did when those firms were starting out.
Investing in AI stocks can also be a hedge against stocks in your portfolio losing value due to the technological changes which look inevitable. Even if you take small positions in AI stocks, tracking the growth of the sector can offer a sideways look at other stocks you hold.
AI is essentially a disruptive technology and there will be winners as well as losers as it becomes a larger part of the economy. Market guru Warren Buffett is one who has flagged up a need to monitor developments. Speaking to his investors, he said:
“I would certainly think they [artificial intelligence developments] would result in significantly less employment in certain areas, but that’s good for society… It may not be good for a given business.”
Source: Carrier Management
What to Know Before Investing in AI stocks
Investing in AI is made more difficult by the specialist knowledge that is needed to be able to fully understand the sector. If you haven’t got years to dedicate to studying for a Masters in robotics, then you’ll have to rely on research and analysis of third parties.
One edge retail investors do have is they may be better judges of whether a product is really needed, or just a neat idea. But getting to that stage requires a degree of trust in the opinions of experts.
Unfortunately, even some of those experts think that AI capabilities have been over-hyped. Rodney Brooks, a MIT roboticist and co-founder of iRobot, claims that Artificial General Intelligence (AGI) will not arrive until 2030. Sanguine quotes from Brooks and other AI experts speak more to the long-term nature of AI:
Rodney Brooks: “It is a fraught time understanding the true promise and dangers of AI. Most of what we read in the headlines… is, I believe, completely off the mark”.
Source: McKinsey
Yann LeCun, a professor at the Courant Institute of Mathematical Sciences at New York University (NYU): “It’s hard to explain to non-specialists that AGI is not a ‘thing’, and that most venues that have AGI in their name deal in highly speculative and theoretical issues”.
Source: McKinsey
Richard Sutton, professor of computer science of the University of Alberta: “Understanding human-level AI will be a profound scientific achievement (and economic boon) and may well happen by 2030 (25% chance), or by 2040 (50% chance)—or never (10% chance)”.
Source: McKinsey
Ignoring the opinions of Ivy-League professors would appear churlish. The one counterweight to the above comments is that while AI as a whole still faces challenges, there are proven instances of it already working in the real world.
Areas where most progress has to date been made include object recognition, language understanding, manual dexterity and, to a lesser extent, social understanding.
Final Thoughts
The potential of the AI sector is hard to dispute, but as the price charts demonstrate, investing in AI stocks can be something of a roller coaster ride. Building a degree of patience into your strategy is highly recommended as that allows trade entry points to be optimised when the sector goes through its ups and downs.
Buying AI stocks during a broader market sell-off is another approach. The way AI stocks overshoot to the downside does allow investors to get in at rock-bottom prices. Risk management is also important, with the easiest way of taking the emotion out of the situation being trading in small size. That makes them easier to hold on to, and if one of your stocks comes good, it could still generate a significant cash return.
With the AI sector growing in popularity, more brokers are offering markets in them. This list of trusted brokers includes firms that are well-regulated and have been reviewed by the AskTraders team. They offer all the tools required to help your trading of AI stocks get off to the best possible start.
