2 AI Stocks With Bullish Catalysts & High Growth Prospects

Investing

Published: October 2, 2023 6:55 am

Last Updated: October 2, 2023 11:05 am

Artificial Intelligence (AI) is arguably the most significant technological innovation since the dawn of the internet. AI is transformative because it empowers machines to learn from data, recognize patterns, and make decisions. While AI technology has been around for years, OpenAI and Microsoft’s (MSFT) ChatGPT AI “Chatbot” has catapulted it into the mainstream and set off the race for AI supremacy amongst America’s top tech entrepreneurs. Microsoft, Nvidia (NVDA), and Alphabet (GOOGL) are the most well-known AI companies. However, beyond the obvious winners, two under-the-radar AI-adjacent stocks have high-growth potential and a plethora of catalysts:

Mobileye Global

Israel-based Mobileye Global (MBLY) is a leading provider in the autonomous driving space. Mobileye, which was spun off from semiconductor giant Intel Corp (INTC), develops fully autonomous driving systems that leverage AI to navigate complex urban environments, paving the way for the future of self-driving cars.

Robotaxi Catalyst

General Motors (GM), a client of MBLY, currently has robotaxis that are live and are being tested in San Fransisco. Like Uber Technologies (UBER) before it, if robotaxis and MBLY can clear the “red tape” obstacles in California and go nationwide, the growth potential is mindboggling.

A Consistent Earnings Winner

Even if investors discount the robotaxi catalyst, MBLY has an impressive earnings surprise history. Since MBLY went public, the company has delivered positive surprises (4 straight quarters).

Relative Strength

Investors are beginning to take notice of Mobileye’s prospects. In the past month, shares are higher by 13.4%, outperforming the S&P 500 Index handily.

Palantir Technologies (PLTR)

Palantir is a unique company specializing in software, security, and artificial intelligence (AI) solutions. The company’s largest customers are government and financial institutions. Government use cases include counterterrorism, intelligence analysis, and security and privacy.

Below are the 3 main areas PLTR specializes in:

Data

Palantir helps organizations integrate vast and diverse datasets from various sources. PLTR’s software is known for being able to handle massive volumes of data while simultaneously being able to make connections between disparate data sets. In other words, the company helps organizations simplify and make sense of complex data sets. The company’s software is highly coveted because it transforms the data into interactive visualizations.

Security & Privacy

Because of its high-level clientele, Palantir is well known for its best-in-breed security measures.

AI & Machine Learning

Palantir’s AI and machine learning capabilities enable customers to apply advanced predictive analytics to their data findings.

Robust Analyst Estimates

Zacks studies have found that improvement in consensus analyst estimates is the best way to predict future strength in a particular stock. Several Wall Street analysts have increased their earnings expectations in the past 60 days – a bullish sign.

Next quarter analysts expect PLTR to grow earnings by 500%. For full year 2023, growth is expected to come in at a healthy 283%

A+ Founding Team

The “Paypal Mafia” refers to a group of Paypal (PYPL) employees and founders who became successful entrepreneurs, venture capitalists and executives in the technology industry. Peter Thiel, a founding member of Palantir, is one of the best-known and successful of the bunch. In fact, Thiel was the first outside investor in Facebook. Having a solid founding team should act as a vote of confidence for prospective investors.

Gaining Momentum with Government Contracts

Despite national debt worries, having the US Federal Government as a customer is always a positive, as no one has deeper pockets. Last week, Palantir won a $250 million US Army Services contract for AI. The deal will be a windfall revenue win for the company’s fourth-quarter earnings numbers. Meanwhile, the US government is not the only one interested in PLTR’s services. PLTR is rumored to be the frontrunner for a ~$600 million contract with the UK National Health System.

Strong Price & Volume Action

PLTR is one of the strongest stocks this year, having gained 150% thus far. However, the recent pullback has likely shaken out weak hands and is setting up the stock for its next bull run as it crosses back above the important 50-day moving average.

Bottom Line

Investors can generate alpha by focusing on two under-the-radar stocks with high growth potential and big 2024 catalysts.
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