Artificial intelligence has generated quite a lot of buzz in recent months, especially on Wall Street. Stock prices of AI-related companies have skyrocketed, while investors are increasingly looking into AI-powered ETFs that are supposedly better than even human analysts. Because of the growing intrigue into AI-related investing, I was curious to use AI prediction to see which quiet stocks Google’s Bard AI would pitch us.
As I said in a previous column, AI is best used as a tool or an assistant for you to pick stocks. Investors should always scrutinize and pick the stocks they invest in by themselves instead of blindly putting money into what the AI algorithms think are the best. An example of this is the underwhelming performance of AI Powered Equity ETF (NYSEARCA:AIEQ) due to its overreliance on AI. Alternatively, ETFs that use AI only as a tool, like Ark Innovation ETF (NYSEARCA:ARKK) have yielded great results.
While Bard AI did have a bad reputation for being underwhelming due to its early release, Bard has outperformed both Bing AI and ChatGPT regarding stock-picking and is trained on a much larger dataset.
Me: Hi, Bard! I’m writing an article for InvestorPlace titled “3 Quiet Stocks That AI Predicts Will Surprise Everyone in 2023” Can you provide me with three such candidates that you think will surprise everyone this year?
Here’s what Bard picked:
Unity Software (U)
Bard: “Unity Software is a leading provider of real-time 3D development platform. The company’s platform is used by game developers, artists, architects, filmmakers, and other creative professionals to create interactive 3D content. Unity’s platform is gaining traction in a number of industries, including gaming, e-commerce, and advertising. The company is well-positioned to benefit from the growing demand for 3D content.”
Unity Software (NYSE:U) is an excellent pick in terms of quiet stocks, as it hasn’t gotten much attention so far this year. After the selloffs from late 2021 through 2022, gaming stocks have faced a lot of turbulence and many are yet to recover. That’s because consumers are not spending as much on video games due to a lack of room for discretionary spending.
In addition, the falling ad revenue has been hurting the Unity ads segment, while indie game development has been dying for the past few years. These indie developers are a significant user base for Unity and make up a large proportion of its sales.
However, U stock has likely bottomed out at its current range and should deliver a lot of upside this year. Revenue growth is still strong, and the momentum will continue this yea. Analysts project 52.8% growth and positive earnings in 2024. That should cause a lot of appreciation.
I’m also very optimistic about its upcoming earnings call later today.
Snowflake (SNOW)
Bard: “Snowflake is a cloud-based data warehousing company. The company’s platform allows businesses to store and analyze large amounts of data in the cloud. Snowflake’s platform is gaining traction in a number of industries, including finance, healthcare, and retail. The company is well-positioned to benefit from the growing demand for cloud-based data warehousing.”
While it is not exactly a “quiet stock,” analysts have started to form some mixed feelings about Snowflake (NYSE:SNOW). Headwinds are brewing in the cloud industry, but I remain very optimistic about the company and its stock. It has been building momentum since March and is accelerating after Stifel’s report that the headwinds “are starting to slow and with easier comparisons in the back half of the year, revenue growth may stabilize around the high 30% range.” Accordingly, analyst Brad Reback raised his rating to a “buy” for SNOW stock.
Still, according to most analysts, the upside potential is limited here. Better deals exist in the market, but it is still a buy in my book. SNOW can hit $200 or more in a 12-month timeframe, especially if there is more hype regarding cloud computing usage.
But again, Bard may be correct that it could surprise everyone in 2023!
The Trade Desk (TTD)
Bard: “The Trade Desk is a programmatic advertising company. The company’s platform allows advertisers to buy and sell digital advertising space in real time. The Trade Desk’s platform is gaining traction in a number of industries, including retail, media, and technology. The company is well-positioned to benefit from the growing demand for programmatic advertising.”
If you aren’t familiar with programmatic advertising, it “refers to buying and selling ad inventory in real time, using an auction-based software rather than manual negotiations. This gives an advertiser the ability to pay for impressions based on the value of the eyeballs viewing their ad instead of a flat CPM across all impressions on a website,” according to Element Three. The Trade Desk (NASDAQ:TTD) specializes in this sort of automated advertising, which is more efficient than manual advertising methods.
Indeed, the company’s financials have been on a consistent uptrend despite many other digital marketing companies seeing a downfall. The Trade Desk’s sales are projected to continue accelerating along with its earnings, and investors are paying a hefty premium.
Nonetheless, the forward price-earnings multiple here is more than 60! Thus, I’d have to disagree with Bard’s pick here, as that’s very expensive right now. As the AI craze dies down, you’ll likely be able to grab a share of TTD for cheaper later on.
But again, the Q1 report is underway, and it might surprise everyone with growth near or above 20%. That’s still nowhere near what is needed to sustain such a rich valuation.
On the date of publication, Omor Ibne Ehsan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.