The demand for Artificial Intelligence (AI) is rapidly surging as consumers, businesses, and organizations increasingly turn to it to boost efficiency and productivity. AI has become an integral part of the continuous technology expansion, positioning the market for continued growth in the upcoming years.
Given the industry’s strong outlook, investors could consider investing in fundamentally sound AI stocks such as Twilio Inc. (TWLO), UiPath Inc. (PATH), and Shutterstock, Inc. (SSTK) for substantial gains.
Artificial Intelligence (AI) is rapidly evolving and reshaping diverse industries and redefining methods across the globe. In recent times, the application of AI has not been limited to just technological enterprises but has branched out into aspects like aerospace, healthcare, industrial segment, and infra also, to name a few.
Besides, digital technologies like AI, IoT, and cloud computing are experiencing robust growth due to increasing internet penetration and growing demand for digital platforms such as social media and online shopping. Key players are increasingly investing in developing 5G technologies, resulting in favorable outcomes for the internet services market.
Globally, the artificial intelligence market is projected to hit around $184 billion in 2024, with the United States expected to have the largest market size of $50.16 billion. The market is further projected to grow at an impressive CAGR of 28.5% during the forecast period (2024-2030), resulting in a volume of $826.70 billion by 2030.
Moreover, with the rapidly evolving landscape of technology, AI’s significance is poised to expand exponentially. It’s becoming a go-to tool for companies seeking a competitive advantage, and AI is expected to create over 97 million jobs in 2025. Plus, it’s projected to contribute up to $15.70 trillion to the global economy by 2030.
Given the industry’s bright prospects, investing in fundamentally strong AI stocks such as TWLO, PATH, and SSTK could be wise for potential returns.
Let’s discuss the fundamentals of these stocks in detail:
Twilio Inc. (TWLO)
TWLO provides customer engagement platform solutions internationally. The company operates in two segments: Twilio Communications; and Twilio Segment. It offers multiple application programming interfaces and software solutions for communications between customers and end users.
On June 5, TWLO announced new product features - Linked Audiences and the Segment Data Graph, which enhances Twilio Segment's interoperability with data platforms and warehouses, offering efficiencies for businesses that manage customer data and need a real-time, unified view of their customers.
The solutions allow businesses to build audiences, enrich customer profiles, and drive more effective marketing campaigns with real-time insights. It also unlocks the transformative potential of AI, ensuring access to advanced models to drive better customer engagement results.
For the second quarter that ended on June 30, 2024, TWLO’s revenue increased 4.3% year-over-year to $1.08 billion. Its gross profit rose 9.9% from the prior year’s period to $555.85 million. Its non-GAAP income from operations of $175.32 million reflects a growth of 46% year-over-year.
Furthermore, non-GAAP net income attributable to common stockholders came in at $150.12 million and $0.87 per share, up 48.9% and 61.1% from the prior year’s quarter, respectively.
The company provided guidance for the third quarter of 2024, forecasting revenue between $1.08 billion and $1.09 billion, reflecting a 5% to 6% year-over-year growth. Moreover, the company has raised its non-GAAP operating income forecast for fiscal year 2024 to $650 million - $675 million, up from the previous range of $585 million - $635 million. TWLO expects organic revenue growth of 6% to 7% for the full year.
Analysts expect TWLO’s revenue for the third quarter (ending September 2024) to increase 5.8% year-over-year to $1.09 billion, and its EPS for the same quarter is expected to grow by 47.6% from the prior year period to $0.86.
TWLO’s stock has surged 14.1% over the past three months to close the last trading session at $60.50.
TWLO’s solid outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
It has an A grade for Growth and a B for Value and Sentiment. Within the A-rated Software - SAAS industry, TWLO is ranked #10 among 18 stocks.
Click here to access additional ratings for TWLO (Quality, Stability, and Momentum).
UiPath Inc. (PATH)
PATH provides an end-to-end automation platform that offers a diverse range of robotic process automation (RPA) solutions in the U.S., Romania, the United Kingdom, and the Netherlands. It provides a suite of interrelated software to build, manage, run, engage, measure, and govern automation within the organization.
On July 2, PATH launched new features in its platform, which infuse GenAI deeply into the UiPath Business Automation Platform™ to help businesses achieve greater outcomes with AI and automation. UiPath Autopilot offers various advantages for developers and testers with the help of GenAI and natural language processing (NLP).
The new features allow organizations to build better, faster, and more comprehensive automation.
During the second that ended July 31, 2024, PATH’s total revenue increased 10.1% year-over-year to $316.25 million. Its non-GAAP gross profit rose 6.6% from the year-ago value to $263.18 million.
The company’s non-GAAP net income stood at $23.76 million and $0.04 per share, respectively. Furthermore, as of July 31, 2024, the company's non-GAAP adjusted free cash flow amounted to $149.78 million, reflecting an increase of 25.6% year-over-year.
According to the company’s financial outlook for the third quarter of 2025, PATH expects revenue in the range of $345 million to $350 million. Its non-GAAP operating income is projected to be approximately $27 million.
For the fiscal full year, PATH's revenue is forecasted to be between $1.42 billion and $1.43 billion, while its non-GAAP operating income is anticipated to be nearly $170 million.
Analysts expect PATH’s revenue for the third quarter (ending October 2024) to increase 6.7% year-over-year to $347.64 million. For the fiscal year (ending January 2025), its revenue is expected to grow 8.7% year-over-year to $1.42 billion. Further, the company topped the consensus revenue estimates in all trailing four quarters, which is remarkable.
Over the past month, the stock has gained 2.8% to close the last trading session at $12.30.
PATH’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall grade of B, translating to a Buy in our proprietary rating system.
PATH has a B grade for Quality and Growth. Out of 18 stocks in the Software - SAAS industry, it is ranked #8.
To see the other ratings of PATH for Value, Momentum, Stability, and Sentiment, click here.
Shutterstock, Inc. (SSTK)
SSTK offers a platform to connect brands and businesses to high-quality content internationally. It provides image services, including photographs, vectors, and illustrations, used in visual communications, such as websites, digital and print marketing materials, corporate communications, books, and publications.
On July 30, SSTK introduced its generative 3D API, offering a fast and ethical way to produce realistic 3D models with AI for enterprises. The generative API, built on the multimodal NVIDIA Edify generative AI architecture, has been trained exclusively on Shutterstock content. With this, studios and developers can revolutionize their pipelines and generate realistic 3D Models in Minutes.
On July 22, SSTK completed its previously announced acquisition of Envato Pty Ltd., a leader in digital creative assets and templates. The strategic acquisition aligns well with SSTK’s operations as Envato elements complement SSTK's existing offering and will expand the company's reach within faster-growing audiences.
For the second quarter that ended June 30, 2024, SSTK’s revenue grew 5.4% year-over-year to $220.05 million. Its income from operations improved 137.1% from the prior-year quarter to $20.67 million. Also, the company’s adjusted net income amounted to $35.90 million or $1 per common share, while its adjusted EBITDA increased by 3.4% from the year-ago value to $62.07 million.
As per the company’s 2024 guidance, SSTK expects revenue between $927 million and $936 million, reflecting growth of 6% - 7% year-over-year. Its adjusted net income per share is set to range from $4.18 to $4.32, and its adjusted EBITDA is projected to be between $245 million and $248 million.
Street expects SSTK’s revenue for the fourth quarter (ending December 2024) to grow 17.6% from the prior year to $255.53 million. The company’s EPS for the same period is expected to increase 51.8% year-over-year to $1.09. Also, it has surpassed the consensus EPS estimates in each of the trailing four quarters.
However, the stock has plunged marginally over the past month to close the last trading session at $35.65.
SSTK’s stance is apparent in its POWR Ratings. It has a B grade for Value and is ranked #6 out of 26 stocks in the Internet - Services industry.
In addition to the POWR Ratings I’ve just highlighted, you can see SSTK’s ratings for Growth, Quality, Stability, Momentum, and Sentiment here.
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TWLO shares were trading at $62.54 per share on Thursday afternoon, up $2.04 (+3.37%). Year-to-date, TWLO has declined -17.57%, versus a 21.11% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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