3D printing stocks haven’t seen the surge in popularity they once did — investors recognized that the sector is capital-intensive and, while the industry matures, low margin. But that’s beginning to change as the top 3D printing stocks pivot away from focusing on hardware and begin focusing on niche, targeted software to maximize existing hardware’s potential.
Expected to hit over $50 billion by 2030, the 3D printing sector is rapidly growing even as investor attention shifts away from once-popular stocks. That creates a unique opportunity for investors (who may have missed the first run-up) to buy the best 3D printing stocks at a bargain – but they won’t remain this cheap for long.
Altair Engineering (ALTR)
Altair Engineering (NASDAQ:ALTR) is a mid-cap 3D printing stock focused largely on providing the software underpinning product development and analysis before the design moves to the next step in the 3D printing process. This analysis, design and simulation software suite is particularly useful in complex engineering tasks where product tolerances are measured in nanometers.
Altair ended 2023 with a bang as a strong fourth quarter compensated for wider sector weakness at the beginning of the year. Altair’s fourth-quarter highlights include $155.9 million in software revenue, of which its 3D printing segment is a part, more than 7.5% higher year-over-year (YoY). Likewise, earnings per share hit a respectable 22 cents while free cash flow nearly doubled YoY to $19.3 million.
Altair’s year-end report left a bit to be desired, largely due to early-year economic weakness. Still, software sales hit $550 million for the year, an 8.6% YoY increase, while its net loss narrowed to just $8.9 million compared to 2022’s hefty $43.4 million. Despite the end-of-year rebound, shares haven’t yet quite hit analyst price targets, averaging $88.71 per share.
Desktop Metal (DM)
Desktop Metal (NYSE:DM) falls firmly within the small-cap and penny stock territory, trading below $1 per share with a total market cap of just $280 million. Still, despite its size, this 3D printing stock has plenty of bullish tailwinds, setting it up to expand rapidly.
Desktop Metal’s healthcare-focused subsidiary, Desktop Health, recently unrolled an expansive initiative targeting dental professionals. The subscription-based platform, called ScanUp, helps elevate dental practices to the digital age. This segment is a surprisingly massive market considering “half of the dentists in the United States have not yet adopted intraoral scanning,” which is the baseline foundational step to dental digitization. This means Desktop Metal targets a huge, untapped market with a recurring revenue subscription plan that brings in more cash with greater predictability, as the ScanUp platform requires an initial 36-month plan.
Desktop Metals closed 2023 with a much narrower, though still substantial, net loss of $323.4 compared to 2022’s $740.3 million loss. While still racing on the path toward profitability, Desktop Metal remains a high-risk but high-reward speculative 3D printing stock at a price that’s tough to beat.
Autodesk (ADSK)
On the other side of the market capitalization spectrum is 3D printing stock Autodesk (NASDAQ:ADSK), which offers investors an array of revenue streams beyond just 3D printing to help diversify risk away from a single sector. Like Altair, Autodesk’s 3D printing tools let users design and test models digitally. But, unlike Altair, Autodesk’s Fusion 360 platform also syncs directly with printers to bring the digitized product into the material world. At the same time, Autodesk’s tools also enable subtractive finishing (removing material from existing objects) to further refine niche engineering and manufacturing products that demand high fidelity and quality.
Investors who want to capture a slice of 3D printing’s long-term potential while diversifying away risk seen in 3D pure-plays can almost certainly find something to like in Autodesk’s stock. Autodesk’s software offerings include tools tailored to the construction, entertainment, education and engineering industries — which means a wide swath of customer segments leverage Autodesk’s platforms beyond just 3D printing enthusiasts.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.