In the ever-evolving world of tech investments, a new contender is stepping into the spotlight – Artificial Intelligence (AI). As the allure of Cryptocurrencies and Blockchain alike takes a backseat, AI emerges ready to redefine the investment landscape.
So why invest in AI stocks in 2024? According to a recent survey of executives and managers by McKinsey, it found that 40% plan to increase their investments in generative AI. With the increasing integration of Artificial intelligence into our daily routines, the demand for products and services related to AI is anticipated to expand. This positive trend sets a promising outlook for AI stocks on the ASX.
Here is a list of companies that could help diversify your portfolio when investing in AI on the ASX in 2024. Remember, past performance is no indication of future performance.
Information is correct as of 27 February 2024.
- Xero (ASX: XRO)
- Market Cap: $18.57B
- 52 Week Low: $74.590
- 52 Week High: $127.675
Another AI stock on the ASX to look out for is XRO, known notably as Xero. Xero, a cloud-based accounting software platform, incorporates elements of automation and machine learning to enhance its features in more recent years. Xero primarily focuses on providing account and financial management solutions for businesses, streamlining invoices, expense tracking, and payroll. Situated in New Zealand and listed in 2012, Xero has dedicated resources in AI tech for its services such as new AI-powered features in 2023. These enhancements aim to assist customers in finding solutions through the company’s learning and support portal, Xero Central.
Xero delivered strong half-year earnings for H1 FY24 with 21% revenue growth in Australia and New Zealand. The H1 FY24 Market Release also promises AI as a key part of Xero’s current offerings and the opportunity to invest and experiment further indicating its desire to always expand. Return on equity is forecast to be 19.9% in 3 years highlighting a stock to watch in 2024 for ASX investors.
Potential Risks:
Something important to note is the newly appointed CEO of Xero, Sukhinder Singh Cassidy who began the role in February 2023. Investors may want to see how she performs for the company and decisions she makes for longer than just one year.
- Bigtincan Holdings (ASX: BTH)
- Market Cap: $147.90M
- 52 Week Low: $0.135
- 52 Week High: $0.650
Among ASX AI stocks, Bigtincan provides a sales enablement platform powered by artificial intelligence, enabling sales and service organizations, along with their personnel, to interact effectively with customers. The company was founded in 2010 and is headquartered in Sydney, Australia.
Bigtincan serves customers such as eBay, Hilton Resorts, and UnitedHealth Group according to their new customer acquisition update in the Bigtincan FY23 Full Year Results.
BTH serves as an AI stock to watch in 2024 with earnings forecast to grow 98.66% per year indicating a highly optimistic future ahead. This could indicate an opportunity for the company to expand its customer base and take market share. Additionally, it is still trading at a competitive price in 2024.
Potential Risks:
Investors may want to acknowledge that Bigtincan Holdings’ current short-term assets do not cover its short-term liabilities.
- Appen Limited (ASX: APX)
- Market Cap: $92.08M
- 52 Week Low: $0.2600
- 52 Week High: $3.6014
Appen provides high-quality training data for machine learning and artificial intelligence. Appen plays a crucial role in improving the accuracy and performance of various AI systems by offering data annotation, collection, and other data-related services. The company was formerly known as Appen Holdings Pty Limited before changing its name to Appen Limited. Additionally, Appen Limited was founded in 1996 and is headquartered in Chatswood, Australia.
Appen partners with big household names such as Salesforce and NVIDIA and boasts customers like Google, Amazon, and Microsoft. Since its listing on the ASX, Appen grew to millions in revenue but has since delivered a decrease in revenue in Appen’s 2023 Annual Report fuelled by difficult macroeconomic conditions.
Given the modest cost and gradual appreciation, it may be an opportune time to consider investing in APX in 2024, especially if there’s potential for further value growth. Currently, Appen’s newly appointed Chief Executive looks to turn around the business to profitable growth again, coupled with three new AI products on the market to help companies produce trustworthy generative AI algorithms.
Potential Risks:
A potential risk to know is that APX has a highly volatile share price over the past 3 months, meaning that the stock fluctuates rapidly in a short period, hitting new highs and lows. As such, higher volatility comes with higher risk.
As with any investment, it is important to do your research to know which stocks to invest in and which is right for you.
