Three Artificial Intelligence (AI) Stocks That Could Take a "Parabolic" Turn

The past year has seen an explosion in the artificial intelligence (AI) market forNvidia(math.) andMicrosoft) and other tech giants have lit a fire under them. But as these AI darlings soar, many other AI-related businesses have been overshadowed.

Three of these stocks areUiP ath (NYSE: PATH),SentinelOne (NYSE: S)respond in singingBaidu (NASDAQ resonance code: BIDU)Today, I'm going to explain why these three underappreciated AI stocks could surge higher in the near future. Today, I'm going to explain why these three underappreciated AI stocks could move significantly higher in the near future.

1. UiPath

UiPath developed a Robotic Process Automation (RPA) tool that can be plugged into a company's existing software applications to automate repetitive tasks such as data entry, processing invoices, greeting customers, and mass mailings. According to Gartner (name) UiPath is the world's largest RPA company, serving more than 10,800 clients in more than 100 countries, according to UiPath.

UiPath's growth continued to accelerate throughout the pandemic as more companies replaced manual labor with UiPath's RPA tools. In fiscal year 2023 (ending January 31, 2023), UiPath's revenues grew by 19% even as inflation, rising interest rates, geopolitical conflicts and other macro headwinds drove many companies to rein in spending.

In FY2024, after some of the pressure eased, UiPath's revenues jumped 241 TP3 T. In FY2025, the company expects revenues to grow by another 191 TP3 T. Analysts expect its adjusted EPS to grow 61 TP3 T. The company is also expected to grow its adjusted EPS by $4.5 billion.

UiPath's shares, which are trading at eight times this year's sales, don't look too expensive, but they're still trading at more than 60% below the IPO price for two reasons: the company is still unprofitable according to U.S. GAAP, and investors are concerned that new generative AI tools, such as ChatGPT, could displace UiPath's stand-alone RPA products. UiPath maintains that the generative AI tools will actually enhance its RPA service with new features and that the company will continue to grow stronger as it rolls out more advanced AI tools to analyze its automated data. If UiPath achieves these goals, its stock price could soar to the price of its initial public offering.

2. SentinelOne

SentinelOne is a cybersecurity company that delivers Extended Detection and Response (XDR) tools through a mix of on-site appliances and cloud services. The company believes that its Singularity XDR platform, which is powered entirely by artificial intelligence algorithms, will help organizations respond to cyberattacks more efficiently and eliminate the need for human analysts. Although the company is small, three of the Fortune 10 and hundreds of the Global 2000 are already using its services.

SentinelOne's revenues more than doubled in FY2023 (as of last January) and grew another 47% in FY2024, and the company expects to grow 31% to 32% in FY2025.

SentinelOne's growth is slowing, but it continues to win large customers with annualized recurring revenue (ARR) of more than $100,000 as the company maintains a net underwriting ratio of more than $1,00% on a dollar basis. SentinelOne's shares are still trading at nearly $40% below its IPO price, which is a reasonable valuation of 8 times this year's sales relative to its growth. SentinelOne shares remain nearly $40% below its IPO price, valuing it at eight times this year's sales relative to its growth, which seems reasonable, and the company reportedly mooted several takeover offers last year before deciding to remain independent.

SentinelOne is not profitable on a GAAP or Non-GAAP basis, but losses may shrink as it expands its business and locks more companies onto its XDR platform. If SentinelOne's business stabilizes, its stock price could soar over the next few years.

3. Baidu

Baidu operates China's largest online search engine. It also owns China's leading cloud infrastructure platform and is a major player in the AI race with its Ernie chatbot and Apollo driverless car. By the end of 2023, Baidu had 667 million monthly active users of its mobile apps and owned the streaming media platform Baidu.com.AICHIYAThe majority of the shareholdings.

In 2022, Baidu's revenue declined by 11 TP3T, but adjusted earnings per ADS grew by 101 TP3T.This slowdown was caused by macro headwinds in China, which prompted many companies to rein in advertising and cloud computing spending. In the digital advertising space, theCharacter jumping(known overseas as TikTok), and the TencentThe pressure has been exacerbated by fierce competition from WeChat, which is owned by the company.

In 2023, Baidu's revenue and adjusted EPS grew 9% and 37%, respectively. Baidu stabilized its core advertising business by expanding its Koonlive business page noodles (Koonlive's presence throughout its ecosystem) to reduce its reliance on traditional search and display advertising. The company also continued to expand its smaller cloud computing and artificial intelligence divisions.

Analysts expect Baidu's revenue to grow by 7% in 2024, while earnings will fall by 3%. Those growth rates may seem modest, but its shares look cheap at a forward P/E of 10x - and if the bulls embrace Chinese tech stocks again, Baidu's shares could soar.

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Leo Sun has no position in any of the stocks mentioned above. the Motley Fool recommends Baidu, Microsoft, INVISTA, Tencent, and UiPath. the Motley Fool recommends Gartner and Aqiyi, and also recommends the following options: Microsoft January 2026 $395 Call Option Long and Microsoft January 2026 $405 Call Option Short. The Motley Fool has a disclosure policy.

3 Artificial Intelligence (AI) Stocks That Could Only Go Parabolic was originally published by The Motley Fool.