3 Under-the-Radar AI Stocks Wall Street Isn’t Paying Attention To…
Unless you’ve been living under a rock the past five years, I’m willing to bet you’ve heard quite a lot about AI. But most people are going to make a big mistake when it comes to investing in this incredible new technology.
In fact, 99% of Americans are about to miss the biggest potential winners of the next phase of the AI boom. They’ll be investing in the tech giants who, though they are developing AI, are far too large – or get too much media attention – to actually generate a big return for shareholders.
The best opportunities in the AI space will be companies the media overlooks and pioneers in both AI itself and the industries the technology will rely on. And the three companies I detail in this report are set to profit massively from the AI boom. But I doubt you’ve heard of any of them.
Each has a serious opportunity to become a household name thanks to the growth of AI. And if you get in today, you’ll be positioned for maximum profits from them…
So let’s break down three AI must-buys the media is ignoring that you can profit from…
Powering the AI Revolution
Believe it or not, the main problem with AI isn’t computing power. We can scale that up rather quickly and make computers with incredible processing capabilities. The problem is power itself: electricity.
AI is an absolute glutton for electricity.
A ChatGPT query uses 10 to 25 times more energy than an ordinary Google search does. Users ask ChatGPT roughly 10 million questions daily, which consumes the same amount of energy as it takes to power 180,000 American homes. And that’s just one AI service…
And generative AI will use 10 times more energy by 2026 than it did in 2023.
To meet the power needs of the AI revolution, we will need to build out our infrastructure across the board, from power generation to transportation to transmission. And Quanta Services Inc. (NYSE: PWR) is the premier player in the energy infrastructure space.
Based in Houston, Texas, Quanta is a specialty contracting company that other companies and governments hire to design, procure, build, upgrade, repair, and maintain electric infrastructure. That means power plants, power lines, transformers, stations, etc.
As our power needs grow because of the demands of AI, we will need to expand our power production and transmission capabilities. That means more business flowing Quanta’s way. It has already partnered with numerous energy companies that will need to step up their generation capacity.
PG&E, Duke Energy, ATCO, American Electric Power, and Southern Company, among others, have partnered with Quanta. And the company is already seeing some serious revenue growth from our ever-increasing power needs.
In 2023, Quanta grew its revenues by 22.3% year over year to $20.88 billion. Net income surged 51.61% to $744.69 million. And earnings per share (EPS) grew 49.8%.
That growth continued into 2024. And in the most recent quarter, Q3 2024, revenues topped $6.49 billion, up 15.52% year over year. Net income for the quarter grew 7.46% year over year to $293.19 million, and EPS grew 6%.
Quanta is the right company in the right industry at the right time. Its growth is already accelerating, and it will only grow faster as AI’s endless thirst for power increases. Add a few shares to your portfolio as soon as possible.
The AI Educator
As impressive as AI is, it’s often difficult to use. It’s capable of doing so many tasks that it can be hard for businesses to figure out just how to apply it to what they do day in and day out.
Enter EXLService Holdings (Nasdaq: EXLS), a leading data analytics company that other companies, particularly those in the healthcare, insurance, and emerging business segments, hire to develop strategies and identify weak spots in their businesses that AI can fix or improve.
The company got its start well before AI. It was focused on helping companies be more cost-efficient and make better business decisions using the reams of data the company began cataloging with the rise of the internet. Some waste is obvious, but once that waste is cut, it requires a company like EXL to dig through your data and find hidden costs that are causing a business to hemorrhage cash.
It has over 800 clients, including nine of the top 10 insurance companies in America, three of the top five U.K. insurers, and four of the top five Australian insurers, along with several healthcare companies, pharmacy benefit managers, and half of the top 15 pharmaceutical and life sciences companies. It has also diversified into sports leagues, global retailers, and banks.
And over the last three years, AI has been a serious boon to EXL’s growth. Its revenue has increased at a compound annual growth rate (CAGR) of 32% between 2020 and 2023, driven in large part by AI. EXL’s data analytics and AI segment grew from 38% of its revenue to 51%. On top of that, the company’s total addressable market (TAM) has grown 3X over the same time frame.
The desire for AI is there. EXL’s client list is expanding, with every company waking up to the incredible power of generative AI. And it has the growth to show for it…
2023 saw revenues climb 15.48%, net income grow 29% to $184.56 million, and EPS shoot up 29.33% year over year. Quarterly growth has seen similar incredible numbers…
Revenues for Q3 2024 grew 14.87% year over year to $472 million. Net income surged 20.88% to $53 million, and EPS shot up 24.19%. And the company has $325.75 million in cash versus just $99.76 million in net debt.
It’s a powerhouse in this space, and you should add a few shares to your portfolio before more companies contract it to implement AI in their businesses and the stock price jumps.
More Problems, More Power
As I mentioned before, the biggest problem facing AI technology is power. So I fully expect any companies involved in power generation or energy infrastructure to thrive as AI becomes as ubiquitous as the personal computer, the internet, and the smartphone before it.
And NRG Energy Inc. (NYSE: NRG) is a prime example. Its business is straightforward, it generates a maximum capacity of 18,000 megawatts of electricity in 25 plants across the continental United States and Canada, providing power to 6 million commercial, industrial, and wholesale customers. It operates primarily in natural gas and coal but also has a presence in the renewables space, particularly solar and wind.
Natural gas is already the cleanest fossil fuel, but NRG has also made coal cleaner. Since December 2016, the company has developed carbon capture technology capable of capturing 92.4% of the carbon dioxide released at one of its coal plants.
It’s a nice and simple play on the increased demand for energy coming down the pike as AI becomes commonplace. The development of AI infrastructure should see the company’s long-term steady growth trend accelerate.
Over the past 10 years, the company has seen its revenue grow at a CAGR of 6.87%. That accelerated to a CAGR of 23.93% over the past five years. Couple that with $1 billion in cash, and you have a company set for explosive growth in line with energy demand moving forward.
Sweetening the deal even further, NRG pays a dividend that yields 1.82% at current prices. You’ll want to pick up some shares and hang on to them over the next few years while letting that dividend grow and compound.
AI Profits Off the Beaten Path
AI has already become a media black hole. The handful of Big Tech companies developing the algorithms suck all the air out of the room. People only pay attention to big stocks like Google, Apple, and Microsoft.
But the opportunity to make the biggest gains on those stocks was 25 years ago. And 25 years from now, I think people will be kicking themselves for not buying the three stocks covered in this report today, when they were still small…
Not you, however, because you’ll have made a killing from the AI revolution by digging beneath the surface and finding the stocks set for the biggest profits from AI.