10 Best AI Stocks under $50

Published on May 17, 2021 at 8:55 am by Ma’k Almario in Hedge Funds, News

In this article, we will take a look at the 10 best AI stocks under $50. You can skip our detailed analysis of the Artificial Intelligence sector’s outlook and go directly to the 5 Best AI Stocks under $50.

While the Covid-19 pandemic has taken a toll on many sectors worldwide, the Artificial Intelligence (AI) industry continued to thrive despite the downturn amid rising sales, adoption of AI technology across businesses, and growing demand for the use of technology in easing COVID-19’s propagation. In a survey from consulting firm Deloitte in 2020, 68% of the respondents invested more than $20 million in Artificial Intelligence. Roughly 81% of the respondents posted a positive return on AI investments in 2 years.

Artificial Intelligence is one of the world’s fastest-growing markets, with an estimated annual revenue growth of over 17% year over year in 2021. In 2020, annual revenue was forecast to hit $37.9 billion with a five-year CAGR of 18.4%.

Tech Giants Investing in Artificial Intelligence

The artificial intelligence industry continues to grow, with digital behemoths like Facebook, Inc. Common Stock (NASDAQ:FB) and Microsoft Corporation (NASDAQ:MSFT) leading the charge in AI investments. In an article published by consulting firm McKinsey, in 2016, tech companies invested $20 billion to $30 billion on AI, 90% of which went to research and development and 10% to acquisitions. By 2025, Markets and Markets estimates that the demand for artificial intelligence is expected to hit $191 billion.

As the demand continues to expand, some of the biggest tech companies, such as Facebook, Inc. Common Stock (NASDAQ: FB), started investing in the industry. In 2019, Facebook, Inc. Common Stock (NASDAQ: FB) and the Technical University of Munich (TUM) teamed up to promote the autonomous AI ethics research center. The Institute has received a $7.5 million five-year grant from Facebook, Inc. Common Stock (NASDAQ: FB) to help advance the growing field of ethical studies on emerging technologies and investigate fundamental problems surrounding the use and effect of AI. In the fiscal year 2020, Facebook, Inc. Common Stock (NASDAQ: FB) reported total revenue of $21.4 million. Shares of FB jumped 47% over the last twelve months. However, on May 10, Citigroup analyst Jason Bazinet downgraded Facebook, Inc. Common Stock (NASDAQ: FB) to Neutral and set a price target of $320 per share. Citigroup affirmed that companies that depend on digital ads should practice caution. The analyst said that although advertising expenditures are expected to continue to shift online, growth is expected to decline.

Another notable stock that invested in AI is tech giant Microsoft Corporation (NASDAQ:MSFT). In 2019, Microsoft Corporation (NASDAQ:MSFT) invested $1 billion in Tesla Inc (NASDAQ: TSLA)’s founder Elon Musk’s OpenAI. The collaboration is a multi-year partnership that aims to produce artificial general intelligence (AGI) that can do duties that AI cannot do on supercomputing technologies. In 2020, Microsoft Corporation’s (NASDAQ:MSFT) revenue came in at $143 billion. Shares of MSFT increased 32% over the last twelve months. On April 28, Morgan Stanley kept its Overweight rating on Microsoft and raised its price target to $300 a share.

The Rise of the Artificial Intelligence Industry

But not everyone can buy expensive stocks like Tesla Inc (NASDAQ: TSLA), Microsoft Corporation’s (NASDAQ:MSFT), Facebook, Inc. Common Stock (NASDAQ: FB) and Alphabet Inc Class A (NASDAQ: GOOGL). If you are looking to gain exposure to the AI market by investing in cheap stocks, this article mentions a plethora of options.

Many startups are hopping on the artificial intelligence trend and attracting attention from several investors around the world. According to data from StockApps.com, in the fourth quarter of 2020, the total amount of funds accumulated by AI startups reached $73.4 billion, up $15 billion from the first quarter of 2020.

A notable company in the AI market that has raised $1.35 billion in its initial public offering is self-driving truck startup TuSimple Holdings Inc (NASDAQ:TSP). The company sold 33.8 million shares of its Class A common stock for $40 each. The corporation is currently worth an estimated $8.5 billion. TuSimple Holdings Inc (NASDAQ:TSP) was founded in 2015 and went public in April 2021. The company allows long-haul and heavy-duty logistics to reduce shipping costs, improve protection, and lower greenhouse emissions with its commercial-ready trucking solution that includes lidar, radar, cameras, and AI vehicle control. Shares of TSP jumped 5% over the last five days. On May 12, Credit Suisse analysts initiated Coverage on TuSimple Holdings Inc (NASDAQ:TSP) with an Outperform rating and announced a price target of $62.

Another notable AI startup is UiPath, Inc. (NYSE:PATH). The company raised $1.34 billion in its IPO with over 23 million shares at $56 each sold. UiPath, Inc. (NYSE:PATH) was founded in 2005 and went public in April 2021. The company focuses on preventing human interference by automating repetitive functions. Shares of PATH jumped 1.26% over the last five days.

Sonos, Inc. (NASDAQ: SONO)

Sonos, Inc (NASDAQ:SONO) is one of the best AI stocks under $50. Shares of SONO jumped 245% over the last twelve months. Sonos, Inc.’s (NASDAQ:SONO) revenue in the third quarter of 2020 came in at $339.8 million. The company set a sales target of $2.25 billion by the fiscal year 2024.

Photo by Andrea De Santis on Unsplash

The hedge fund industry is also using advanced AI applications in its efforts to offset losses. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

With this context in mind, here is our list of the 10 best AI stocks under $50.

Best AI Stocks under $50

10. Lantern Pharma Inc. (NASDAQ: LTRN)

Number of Hedge Fund Holders: 1
Share Price as of May 12, 2021: $14.68 per share
Total Value of Hedge Fund Holdings: $499,000

We start our list of the best AI stocks under $50 with Lantern Pharma Inc. (NASDAQ:LTRN). The company is a clinical-stage biopharmaceutical firm that uses artificial intelligence to revolutionize medicine development. In April 2021, the company broke records surpassing 4.6 billion datapoints with its patented artificial intelligence platform, RADR. RADR can recognize genomically distinct cancer subtypes, offer mechanistic insight into drug-tumor interactions, and identify patient populations that may lead to new medications.

Lantern Pharma Inc. (NASDAQ:LTRN) posted cash and cash equivalents of $19.2 million in the fourth quarter of 2020. Shares of LTRN decreased 23% over the last twelve months.

There was 1 hedge fund that reported owning stakes in Lantern Pharma Inc. (NASDAQ:LTRN) at the end of the fourth quarter. The total value of this stake at the end of Q4 is $499,000.

9. ShotSpotter, Inc. (NASDAQ: SSTI)

Number of Hedge Fund Holders: 8
Share Price as of May 12, 2021: $38.67 per share
Total Value of Hedge Fund Holdings: $39,032,000

ShotSpotter, Inc. (NASDAQ:SSTI) ranks 9th on the list of best AI stocks under $50. The California-based gunshot detection company uses artificial intelligence to analyze search missions and strategies to stop violence. ShotSpotted is used in over 100 cities around the US, including North Chicago, Monroe, Kankakee, and Ferguson. One of the most recent AI platforms of the company is ShotSpotter InvestigateTM. The platform is an advanced case management solution designed specifically for investigators and forensic managers.

ShotSpotter, Inc. (NASDAQ:SSTI) revenue in the first quarter of 2021 came in at $15.0 million, up from $10.5 million in the same period of 2020. Shares of SSTI surged 86% over the last twelve months. On May 12, Craig-Hallum raised the price target for ShotSpotter to $45 and upgraded the stock to Buy.

There were 8 hedge funds that reported owning stakes in ShotSpotter, Inc. (NASDAQ:SSTI) at the end of the fourth quarter, down from 10 funds a quarter earlier. The total value of these stakes at the end of Q4 is $39.0 million.

8. Veritone, Inc. (NASDAQ: VERI)

Number of Hedge Fund Holders: 65
Share Price as of May 12, 2021: $17.69 per share
Total Value of Hedge Fund Holdings: $65,561,000

Ranking 8th in our list of the 10 best AI stocks under $50 is Veritone, Inc. (NASDAQ:VERI), a California-based artificial intelligence tech company that operates aiWARE, a platform that transforms audio, video, and other data sources into actionable knowledge by orchestrating an evolving ecosystem of machine learning models. The platform has over 2,000 customers, including police agencies, state and local district attorney offices, and media conglomerates. On May 5, Roth Capital maintained Buy rating on Veritone and raised the price target to $50.

Veritone, Inc. (NASDAQ:VERI) has a market cap of $578 million. Veritone, Inc.’s revenue in the first quarter of 2021 came in at $18.3 million. Shares of VERI surged 152% over the past twelve months. This stock is a decent option for those who want to invest in AI stocks buy cannot buy expensive names like Tesla Inc (NASDAQ: TSLA), Microsoft Corporation’s (NASDAQ:MSFT), Facebook, Inc. Common Stock (NASDAQ: FB) and Alphabet Inc Class A (NASDAQ: GOOGL).

There were 12 hedge funds reported owning stakes in Veritone, Inc. (NASDAQ:VERI) at the end of the fourth quarter. The total value of these stakes at the end of Q4 is $65.5 million.

7. eGain Corporation (NASDAQ: EGAN)

Number of Hedge Fund Holders: 15
Share Price as of May 12, 2021: $10.26 per share
Total Value of Hedge Fund Holdings: $26,090,000

California-based cloud software company eGain Corporation (NASDAQ:EGAN) ranks 7th in the list of 10 best AI stocks under $50. The company uses artificial intelligence to address consumer inquiries, direct operations, and make decisions in their knowledge management software. eGain has over 900 users, mainly in the United States. In April 2021, The Goodyear Tire & Rubber Company (NASDAQ: GT) chose eGain Corporation’s platform to represent their virtual customer service.

Unlike Tesla Inc (NASDAQ: TSLA), Microsoft Corporation’s (NASDAQ:MSFT), Facebook, Inc. Common Stock (NASDAQ: FB) and Alphabet Inc Class A (NASDAQ: GOOGL), EGAN is an affordable AI stock currently hovering $10.

eGain Corporation (NASDAQ:EGAN) has a market cap of $318 million. The company’s total revenue in the first quarter of 2021 came in at $19.2 million. Shares of EGAN jumped 8% over the last twelve months. On May 12, Needham analyst Ryan MacDonald maintained a Buy rating on eGain Corporation and set a $12 price target.

There were 15 hedge funds reported owning stakes in eGain Corporation (NASDAQ:EGAN) at the end of the fourth quarter. The total value of these stakes at the end of Q4 is $26 million.

6. Bentley Systems, Incorporated (NASDAQ: BSY)

Number of Hedge Fund Holders: 19
Share Price as of May 12, 2021: $49.32 per share
Total Value of Hedge Fund Holdings: $82,011,000

Pennsylvania-based software development company Bentley Systems, Incorporated (NASDAQ:BSY) ranks 6th in our list of the 10 best AI stocks under $50. In 2018, Bentley Systems, Incorporated acquired Alworx, the artificial intelligence company that provides sensor technologies and services for the industrial, aerospace, and defense sector. In 2021, Bentley Systems, Incorporated (NASDAQ:BSY) entered a partnership with motor company Hyundai to build an intelligent modeling framework for steel and concrete structures based on artificial intelligence.

Bentley Systems, Incorporated (NASDAQ:BSY) has a market cap of $13.5 billion. The company’s GAAP operating income in the first quarter of 2021 came in at $55.6 million. Shares of BSY surged 21% over the past twelve months. On April 13, Keybanc kept its Overweight rating in Bentley Systems and raised its price target to $54.

There were 19 hedge funds reported owning stakes in Bentley Systems, Incorporated (NASDAQ:BSY) at the end of the fourth quarter. The total value of these stakes at the end of Q4 is $82 million.

Artisan Partners Limited Partnership mentioned that Bentley Systems, Incorporated (NASDAQ:BSY) is the world’s leading supplier of infrastructure planning tools for designing highways, bridges, tunnels, train systems, and other public works projects in its Q4 2020 investor letter:

“We started new investment campaigns in Bentley Systems. Bentley Systems is the leading provider of infrastructure engineering software used to design roads, bridges, tunnels, rail systems and other public works. We believe there is a meaningful opportunity for infrastructure spend on IT over the next decade given an increased focus on improving the productivity and efficiency of design, build and maintenance. In addition, infrastructure is one of the least digitized verticals of the economy, and there are significant opportunities for software to increase its share of spending. We believe this opportunity is particularly compelling in the Asia Pacific region (China, India), which is expected to represent the bulk of global infrastructure spending over the next couple of decades as the region grows to nearly half of global GDP and population over this timeframe.”

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