Investing

AI Stocks Under $10 To Buy

Joey Frenette

Published: September 17, 2024 8:31 am

The broad basket of artificial intelligence (AI) stocks has been steadily selling off in recent months, primarily because of good (but not great) quarterly results and guides of steady and strong (but not blowout) demand in the coming quarter. Undoubtedly, it’s difficult to gauge how demand for all things AI will fare in a quarter, a year, or even three years from now.

There’s fear that a quarterly shortfall from the likes of a top semiconductor firm, most notably Nvidia (NASDAQ:NVDA) could pull the plug on the entire AI trade. That said, there’s also potential for more positive surprises to be had now that forward-looking expectations have been mildly reset after the past few months of selling activity.

In this piece, we’ll look at some attractive AI stocks with share prices below $10. Though low share prices aren’t the same thing as low valuations (for that, we need to look at various valuation metrics and stack them against our assumptions of future growth), the low share prices make them more accessible to new retail investors, many of whom don’t have access to purchasing partial shares of companies with much-larger share prices.

Key Points About This Article

• Some mid-cap AI innovators have share prices within the reach of small and new investors.
• Soundhound AI and Nio are two of the most promising AI growth stocks going for $5 and change per share.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Soundhound AI

At just under $5 per share, Soundhound AI (NASDAQ:SOUN) is an exciting mid-cap tech pick for investors comfortable with higher-risk, higher-reward trade-offs. The Nvidia-backed company has a $1.75 billion market cap and is in the business of AI voice technology, a corner of the AI scene that could experience above-average growth as the personalization factor of large language models (LLMs) takes things to the next level.

Undoubtedly, all of our favorite chatbots and digital assistants (think Siri, Alexa, and Cortona) already have natural-sounding voices that are becoming more human-like with every significant update. However, Soundhound AI makes use of natural language processing (NLP) to pick up easy-to-miss nuances in speech to gain a better understanding of users. Indeed, if human-AI communications are to advance, next-generation LLMs need to read between the lines to capture on meaning that less sophisticated LLMs may miss.

Moving ahead, Soundhound’s voice cloning and personalization tech could offer an intriguing runway for growth. If the firm can really excel at such innovations, I would not be surprised if tech titans end up licensing Soundhound tech in the future. Further, the firm also stands out as a great takeover target for firms serious about gaining an edge in the personalized AI race.

Shares of SOUN are down more than 50% from March highs but still up over 115% in the past year. Though pricy at 24.2 times price-to-sales (P/S), I do think the risky stock is worth watching closely.

Nio

Nio (NASDAQ:NIO) doesn’t stand out as an AI-first company until you look underneath the hood (pardon the pun) of the Chinese electric vehicle (EV) maker. The $10.9 billion EV juggernaut is in a multi-year bear market, with shares now off close to 92% from its early 2021 peak. Indeed, shares have crashed and burned, but there could be deep value in the shares for investors looking for an EV firm that’s cruising in the blind spot of some investors.

Recently, Nio revealed that August deliveries fell to 577,694, marking the second straight month in the red. Indeed, part of the blame goes to Nio, but I believe most of it is due to the weak economic climate in China. Looking ahead, AI tech may be the reason to give the long-time laggard the benefit of the doubt while it’s going for $5 and change per share.

Earlier this year, the company recently developed a 5nm system on a chip (SoC) named Shenji NX9031 for autonomous driving. As the firm aims to transform vehicles into AI-driven computers, I do think it’s a mistake to discount the firm while it’s in a historic funk. At 1.19 times P/S, you’re getting a lot of AI innovation for an absurdly low multiple.

With the stock recently getting a significant upgrade from JP Morgan (NYSE:JPM) analyst Nick Lai, who hiked the price target to $8.00 from $5.30, perhaps now’s the time to buy the dip.