As large organizations collect more data, they will need more artificial intelligence (AI) tools to process and analyze all of this information. However, the constant buzz about new AI technologies can make it difficult for investors to separate the winners from the losers in this complex industry.
Today, I’ll take a look at three companies that are leveraging AI technologies to simplify the tasks of government agencies, large corporations, and individual consumers, and why their actions could be solid long-term investments.
Palantir (NYSE: PLTR) brings together and organizes data from disparate sources to help clients make data-driven decisions. Its Gotham platform serves government agencies and its Foundry platform serves corporate clients. A third service, Apollo, constantly updates the software for both platforms.
The US military reportedly used Gotham to track down Osama Bin Laden in 2011, while US Immigration and Customs Enforcement (ICE) has used it to track down and deport undocumented immigrants in recent years. Palantir boldly declares that it will become the “default operating system for data throughout the US government,” and it is leveraging that seasoned reputation to extend Foundry’s reach.
In its last quarter, Palantir generated 56% of its revenue from government customers and the remaining 44% from commercial customers. Both segments are growing their revenues at high double-digit percentage rates, and Palantir expects its annual revenue to grow by more than 30% each year from 2021 to 2025.
Palantir is not yet profitable, but its adjusted operating margins have increased over the past year. Its stock is not cheap at nearly 20 times next year’s sales, but it could still have plenty of room to operate as more government agencies and large corporations gain access to its exploration tools. data powered by AI.
C3.ai (NYSE: AI) develops AI algorithms that can be integrated into companies’ existing software infrastructure. It also provides pre-built AI applications that can be accessed as stand-alone services.
Like Palantir, C3.ai only serves large enterprises and government customers, who deploy its services to increase operational efficiency, streamline their supply chains, improve employee safety and detect fraud.
C3’ai’s revenue growth slowed last year as the pandemic disrupted the industrial and energy sectors that generated most of its revenue. But this year, its growth has accelerated again as those headwinds fade, and the company expects its revenue to increase by 35% to 36% for the entire year.
Next year, analysts expect C3.ai’s revenue to grow 33% next year, but those forecasts have yet to factor in its recent five-year, $ 500 million contract. with the US Department of Defense. An annual payment of $ 100 million would equate to 40% of his estimated earnings this year.
C3.ai is not yet profitable, but its inventory is cheap at 10 times the estimated sales for next year. He even recently cleared a $ 100 million buyback over the next 18 months to highlight his stock’s value, but inflation fears are still holding back his near-term gains. Therefore, I think it’s always a great time to rack up some C3.ai stock before those last tailwinds kick in.
Lemonade (NYSE: LMND) simplifies the Byzantine insurance buying process with a mobile app powered by a chatbot. It offers renters, homeowners, term life, pet and auto insurance products on a unified app, and uses AI algorithms to provide its users with an insurance policy in 90 seconds and process their complaints in three minutes.
This streamlined approach made Lemonade popular with younger insurance buyers and for the first time in the United States. It served 1.36 million customers in its most recent quarter, up from 1.21 million customers a year earlier, but it could potentially win Tens of millions new customers as it expands into other states and introduces additional insurance products.
This year, Lemonade expects his in-force premium to increase from 78% to 80%, his gross earned premium to increase from 83% to 84%, and his earnings to increase from 33% to 35%. But next year, analysts expect Lemonade’s revenue to jump 70% as it changes its proportional reinsurance deals that temporarily slowed its reported revenue growth in 2021.
Lemonade is not yet profitable, but its stock no longer looks too expensive at 12 times next year’s sales. It still faces many challenges in the short term, but its disruptive potential could make it a winner in the long term.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.