Let’s look at the most recent trends and advancements in the AI industry and investigate penny stock prospects before diving into the list of the most popular AI penny stocks under $1.
Into the AI Market:
The stock market is rapidly catching on to the apparent artificial intelligence trend during the last year or two. Many businesses are incorporating Artificial Intelligence technologies into their core business models to save costs, improve performance, and flourish in both current markets and emerging ones. Once, venture entrepreneur Marc Andreessen observed that “software is eating the world” by automating entire industries. It is anticipated that artificial intelligence will similarly change software. According to recent research by MIT, the United States is unequally adopting artificial intelligence, with the majority of its application occurring in big businesses and sectors like manufacturing and healthcare.
As per Grand View Research, the global artificial intelligence industry was estimated to be worth $196.63 billion in 2023, and it is predicted to grow at a CAGR of 36.6% between 2024 and 2030.
OpenAI, a private AI startup, has rapidly evolved into a prominent player in this booming market, with its valuation tripling to almost $80 billion in less than ten months following an agreement with Thrive Capital. The AI startup is recognized globally for its cutting-edge AI models, such as ChatGPT, which received a significant 1.806 billion visits in April 2024 as per SimilarWeb, DALL-E, an image-generating model, and Whisper AI for speech recognition. To lead the way in AI technology, OpenAI unveiled GPT-4o, a new AI model, in May 2024. It can engage with text and graphics and have realistic voice conversations. Macquarie’s Fred Havemeyer commended GPT-4o for its “emotional intelligence.” OpenAI’s approach to the AI revolution is unique because it collaborates with tech titans rather than competing against them. OpenAI represents a generation of AI companies linked with the giants due to the computer capacity as well as the massive financing necessary to advance artificial intelligence learning. According to CNBC Disruptor 50 companies, artificial intelligence plays a crucial role in over half of their revenue, with 34 of them describing AI as critically important to more than half of their revenue. 13 companies claimed that generative AI, specifically, is key to the majority of sales. Chairman of Sinovation Ventures, Kai-Fu Lee, expressed his belief that OpenAI would soar to the exceptional heights that a few mega-cap businesses with solid business models can achieve. “OpenAI will likely be a trillion-dollar company in the not-too-distant future.” ”This is by far the most advanced and most amazing technology, compared to anything, by a factor of 10,” Lee stated.
Constant study and development led by major tech companies is propelling the adoption of technological advances in industries such as automotive, healthcare, retail, finance, and manufacturing, as per the aforementioned Grand View Research. For instance, back in 2014, DeepMind, the UK artificial intelligence company acquired by Google reportedly for $500 million, merged with Google AI’s Brain team to form Google DeepMind in April 2023.
The DeepMind group contributed to the creation of Gemini, Google’s most sophisticated artificial intelligence model, in December 2023. Google’s Gemini has a large language AI model that comes in three sizes: Gemini Nano, Gemini Pro, and Gemini Ultra. Gemini’s inherent multimodal features set it apart from competitors, and Google’s stock price increased as a result of the Gemini launch. Analysts welcomed the Gemini release with relief in that setting. It was described as “a flex of years of AI muscle development” by KeyBanc Capital Markets, and according to Roth MKM, “negative AI sentiment toward Google will fade quickly leading to an uptick in its valuation multiple.”
The revenue and profit growth for Google is expected to increase by 9.6% and 11.6% per annum, respectively. It is anticipated that EPS will increase by 13.6% annually. In three years, a return on equity of 22.6% is anticipated. Based on recommendations from 45 analysts, the consensus analyst rating for the company is a strong buy. Based on analysts’ 12-month price goals for Google over the last three months, the average target is $192.17, with a high estimate of $205 and a low estimate of $165.
Due to its investment in AI, Google is seeing positive results. The business’s most recent quarterly results were better than anticipated, with revenue reaching $80.54 billion, up 15% year over year. Google also saw a 28% increase in revenue for its Google Cloud business, reaching $9.57 billion, similar to Microsoft Corporation.
Other tech behemoths, including Microsoft, with a 2023 annual revenue of $211.92 billion, and Nvidian, with an annual revenue of $60.92 billion, are also exhibiting these trends. For TTM, the YoY growth rates are around 11.64% and 30.93%, respectively. The latter became the world’s most valuable company with a market cap of $3.1 trillion purely due to the demand for its chips in artificial intelligence applications.
In March, the business revealed the Blackwell platform, which contains the GB200 super chip, the most powerful chip capable of training AI models with over a trillion parameters. Parameters are characteristics that are used to train large language models (LLM) of artificial intelligence systems. For instance, OpenAI, a company financed by Microsoft Corporation, uses more than 1.7 trillion parameters in its most recent GPT-4 model, one of the most efficient LLMs.
Microsoft is investing in its own AI company and contributing billions to OpenAI. In April, Microsoft invested $1.5 billion in Abu Dhabi’s G42. In its fiscal Q3 earnings announcement, the company reported a 17% increase in revenue to $61.86 billion, exceeding the consensus forecast of $60.88 billion. The 21% growth in the Intelligent Cloud category, which also includes some of the company’s AI solutions, was one of the factors driving the revenue gain.
Many exchange-traded funds (ETFs) that concentrate on artificial intelligence stocks offer exposure to businesses developing AI technologies. Global X Robotics & Artificial Intelligence ETF and Global X Artificial Intelligence & Technology ETF are two notable exchange-traded funds. Over the last year, the S&P 500 index has surpassed the Global X Artificial Intelligence & Technology ETF, giving 24% returns as opposed to BOTZ’s 7%. In contrast, the Global X Artificial Intelligence & Technology ETF has returned nearly 28%, almost 4% above the S&P500 Index.
Luckily, the AI industry is still evolving, and several companies can introduce investors to the market. Artificial intelligence (AI) in its various forms will be the most significant field of technology in 2024, according to a recent global study of chief technology officers and IT directors by IEEE, one of the world’s most notable technical professional organizations. It reveals that AI and its variants, such as machine learning (ML) and natural language processing, dominated the technological forecast, with 65% of executives citing it as one of the top three most significant tech fields for 2024.
Hence, investors who are willing to take on greater risk might explore the AI sector by focusing on smaller businesses and attempting to find the best AI penny stocks available right now. It can be argued that the benefits might also be several times greater than those of NVIDIA Corporation, Amazon, or Microsoft Corporation, despite the increased risk.
So let’s look at the 10 Most Popular AI Penny Stocks Under $1.
Methodology:
In this article, we first used a stock screener, Finviz, to list down all AI stocks trading under $1 (as of the writing of this article) with a high average trading volume of 500k to 10M. From the resultant dataset, we chose 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of 920 hedge funds in Q1 2024 to gauge hedge fund sentiment for stocks. We have used the stock’s Revenue Growth Rate (year-over-year) as a tie-breaker in case two or more stocks have the same number of hedge funds invested.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
10. Nauticus Robotics, Inc. (NASDAQ:KITT)
Number of Hedge Fund Investors: 1
Among the most popular AI penny stocks under $1 is Nauticus Robotics, Inc. (NASDAQ:KITT) which offers marine robotic systems and develops ocean robots controlled by an AI-powered cloud software platform that provides a sliding-scale spectrum of autonomous operations. The corporate office of Nauticus Robotics, Inc. is located in Webster, Texas.
In May, Nauticus Robotics, Inc. disclosed its Q1 2024 financial results. Revenue for the first quarter of Nauticus was $0.5 million, down from $2.8 million in the same period last year and $1.1 million in the previous year. In 2023, the revenue growth rate dropped by 42.23% on an annual basis. As of June 7, 2024, Nauticus Robotics, Inc.’s price per share is $0.16.
The diluted EPS declined from $0.99 TTM to -$1.24 in 2022 to -$0.60 in 2023. The yearly revenue decreased by -1.78%, while the EPS improved by 51.61% between 2022 and 2023. This implies that the company’s financial performance improved over the specified period. Nauticus reported a $0.4 million net income for the first quarter or $0.01 per basic earnings per share. This contrasts with a $14.1 million net loss from 2023 over the same period and a $39.5 million net loss from the previous quarter, showing that Nauticus is moving in the direction of profitability.
“We have successfully deployed Aquanaut Mark 2 in the Gulf of Mexico and tested the platform at depths greater than 1300 meters,” said John W. Gibson, Jr., Nauticus’ CEO and President. “We should generate daily revenue from the Aquanaut Mark 2 vehicle beginning in Q3 2024 and have a strong queue of new opportunities developing. To maximize margins, we remain committed to keeping G&A expenses low, which can be seen in our results this quarter.
1 out of the 920 hedge funds polled by Insider Monkey during this year’s first quarter had held a stake in Nauticus Robotics, Inc. (NASDAQ:KITT).
9. Ontrak, Inc. (NASDAQ:OTRK)
Number of Hedge Fund Investors: 1
One of the most popular AI penny stocks under $1 is Ontrak, Inc., an artificial intelligence-powered, telehealth-enabled, and virtualized healthcare company that offers in-person services to third-party payors in the United States.
The next phase of AI-enabled behavioral healthcare was disclosed by Ontrak Health in March with the launch of the Ontrak Advanced Engagement System.
Ontrak, Inc. (NASDAQ:OTRK) released its Q1 earnings in May. The company reported revenue of $2.7 million, a 6% year-over-year increase driven primarily by a 15% rise in total average enrolled members in the first quarter of 2024 compared to the same quarter in 2023. This data points to a positive trend in the business’s expansion, with an increase in revenue and clientele during the given period.
Insider Monkey monitored that 1 hedge fund out of the 920 hedge funds held a position in Ontrak, Inc. (NASDAQ:OTRK) as of the end of the first quarter of 2024. Sander Gerber’s Hudson Bay Capital Management is the only stakeholder in the company, with 100,000 shares worth $50,660.
8. Rubicon Technologies, Inc. (NYSE:RBT)
Number of Hedge Fund Investors: 1
Rubicon Technologies, Inc. (NYSE:RBT) is one of the most popular AI penny stocks under $1. The Lexington, Kentucky-based company develops AI-enabled technology and offers expert waste and recycling solutions. The business declared in March that its Technical Advisory Services (“TAS”) service had officially launched. With customized zero waste and circular economy solutions, TAS enables clients to meet their sustainability goals.
As of the end of the first quarter of 2024, 1 hedge fund out of the 920 funds reported having stake in Rubicon Technologies, Inc. (NYSE:RBT).
In August, Rubicon Technologies posted Q1 results. Sales in the quarter declined by about 8.3% to $166.1 million, down from $181.1 million in the same quarter of 2023. On the positive side, annual revenue in 2023 jumped about 3.39% year over year to $697.58 million, suggesting a relatively positive outlook yearly. Investors with an optimistic outlook would consider Rubicon Technologies, Inc. to be reasonably priced at a share price of $0.17, considering its growth potential as a AI stock and therefore an appealing prospect for investment.
7. WiMi Hologram Cloud Inc. (NASDAQ:WIMI)
Number of Hedge Fund Investors: 2
WiMi Hologram Cloud Inc. (NASDAQ:WIMI) is among the most popular AI penny stocks under $1, is a leading global Hologram Augmented Reality (“AR”) technology provider based in China. WiMi, seizing the exclusive potential of artificial intelligence, employs a large language model, sophisticated AI vision technologies, and natural language processing, to precisely reduce the intricacy of virtual space and gradually realize cross-industry and cross-scene applications. Years of research and development have gone into creating WiMi AI Assistant, an artificial intelligence assistant that uses an innovative transformer algorithm.
In March, the company announced that a new artificial intelligence information management platform based on data mining algorithms was developed to solve the constraints of existing big data mining tools and products. It is user-friendly and allows for efficient calculation and rapid integration in a distributed environment during data mining operations.
2 hedge funds, in line with the 2 funds from the previous quarter, made investments in WiMi Hologram Cloud Inc. (NASDAQ:WIMI)i, according to Insider Monkey’s first-quarter database. This shows that hedge funds continue to have a favorable opinion of the company. With 608,272 shares worth $215,328, James E. Flynn’s Deerfield Management held the largest stake in the company.
However, WiMi Hologram Cloud Inc.’s revenue growth rate YoY in 2023 was -14.21%, following a -26.93% fall in 2022. Despite this decline, the business’s recent advancements in AI technology, like the introduction of its WiMi AI Assistant, are compelling investors to invest in this cheap AI penny stock.
6. Wearable Devices Ltd. (NASDAQ:WLDS)
Number of Hedge Fund Investors: 2
Founded in Israel, Wearable Devices Ltd. (NASDAQ:WLDS) is a technology growth company that specializes in wearables with touchless sensing capabilities powered by artificial intelligence (“AI”). The company’s breakthrough product, the Mudra Band for Apple Watch, combines artificial intelligence (AI) and algorithms into a useful, fashionable wristband that enables users to communicate with linked devices without touching them by employing innovative sensors that pick up on minute movements of the finger and wrist.
Wearable Devices Ltd. (NASDAQ:WLDS)’s bull case is built around its cutting-edge AI-powered touchless sensing wearables, which feature the ability to transform the XR sector. We believe that the company’s partnership with Qualcomm Technologies, Inc. to enhance XR experiences using Mudra Neural Technology marks an important step in flourishing not only the company but also revolutionizing the industry. Furthermore, WLDS’s financial statistics for 2023 show excellent growth, with a revenue of $82,000 representing an 82.22% year over year increase, preparing the company for further progress in 2024. The stock’s recent percentage growth of more than 12% over the last six months is also a positive indicator.
Wearable Devices Ltd. was owned by 2 of the 920 hedge funds in Q1 2024 tracked by Insider Monkey, indicating that investors are hoping for profits.
The bear case, on the other hand, is based on the stock’s percentage decline, which was more than 11% last year and more than 83% the year before.
5. Jet.AI Inc. (NASDAQ:JTAI)
Number of Hedge Fund Investors: 3
Among the most popular AI Penny Stocks under $1, Jet.AI Inc. (NASDAQ:JTAI) is primarily involved in the development and operation of private aviation platforms. The company runs CharterGPT, a booking website that serves as a prospecting and quotation tool for private jet travel with its own aircraft and third-party carriers. Additionally, it offers DynoFlight, a software application programming interface (API) that enables aircraft operators to track and estimate emissions and buy carbon offset credits.
Between 2021 and August 4, 2023, the stock saw strong growth, peaking at $11.23 per share. Still, there has been more than a 58% decrease over the years, as well as a drop in the revenue growth rate of 44.13% YoY. However, efforts have been made to recover and grow the company. For example, Jet.AI unveiled in January the release of Reroute AI Software, which allows over 5,000 Part 135 charter operators in the US to automatically repurpose vacant flight legs.
The company stated that operators using Reroute AI have the opportunity to increase revenues without making any new investments by cleverly modifying idle flight legs and repurposing them as new charter flights. Filling an otherwise empty jet reduces fuel consumption, which helps generate new income.
“Unlike others in the private aviation space, the team at Jet.AI decided to stop trying to tackle the ‘empty leg’ problem and instead aimed to solve a ‘reroute the leg problem,” said Mike Winston, Executive Chairman and Founder of Jet.AI. “This small shift in perspective made all the difference. With Reroute AI, we focused on the abundance of commercially viable options outside of the brittle approach of forcing customers into fitting their travel plans into the unused routes of other customers. We found that a little route adjustment went a long way.”
Insider Monkey disclosed 3 funds that owned Jet.AI Inc. (NASDAQ:JTAI) hedge funds in Q1 2024. Keith M. Rosenbloom’s Cruiser Capital Advisors is the largest stakeholder in the company.
4. Global Mofy Metaverse Limited (NASDAQ:GMM)
Number of Hedge Fund Investors: 5
On the fourth spot in the list of 10 Most Popular AI Penny Stocks Under $1 is Global Mofy Metaverse Limited (NASDAQ:GMM), a provider of technology solutions that produces virtual content and creates digital assets for usage in the broader digital entertainment market. The company uses its patented “Mofy Lab” technology platform, which combines interactive 3D and artificial intelligence (“AI”) technology, to generate high-definition virtual copies of a wide range of physical world things in 3D, including characters, objects, settings, and more.
Global Mofy Metaverse Limited announced in April that its wholly-owned subsidiary, Gauss AI, has collaborated with Heartdub, a physical simulation technology pioneer based in the United States, to create GAUSSPEED, a generative video AI platform powered by NVIDIA Omniverse technology.
Mr. Haogang Yang, CEO of Global Mofy Metaverse, stated:
“As technology reshapes the entire filmmaking production process and entertainment experience, content creators face extensive challenges. Optimizing traditional workflows in digital entertainment through technological innovation to drive industry advancement is a shared goal among global film production companies, which represents a major opportunity and market expansion for us. Our strategic partnership with Heartdub gives us a competitive advantage, where we execute on a shared vision and leverage our combined resources and technologies, along with leaders like NVIDIA, to transform filmmaking, while creating meaningful near and long-term value for all of our shareholders.”
There are 5 hedge funds in our database for Global Mofy Metaverse Limited (NASDAQ:GMM) during the first quarter of 2024.
The robust development prospects of Global Mofy Metaverse, which are being driven by the growing demand for high-quality digital assets in the digital entertainment industry, provide a bull case for the company. The business has an advantage in the creation of digital assets and virtual content because of its exclusive Mofy Lab technology platform. GMM is positioned to benefit from the AI revolution and the emerging Metaverse as indicated by the revenue growth rate of 56% year over year.
3. 2U, Inc. (NASDAQ:TWOU)
Number of Hedge Fund Investors: 10
2U, Inc. (NASDAQ:TWOU), a US-based online learning platform company with global operations and AI integration, reported a 17% drop in total revenue in Q1 2024 to $198.4 million from $238.50 million in the same period the year before. The company attributed this decline to portfolio management activities, which caused some of the programs that were running in 2023 to cease operations in 2024. 2U’s diluted EPS is -$3.90 TTM. Despite a decrease, it is a jump over -$3.93 in 2023 and -$4.17 in 2022. Between 2022 and 2023, the revenue growth rate dropped by -1.78%, from $963.08 million to $945.95 million. On June 6, 2024, the stock price closed at $0.31 per share.
10 out of the 920 hedge funds in Insider Monkey’s database had stock in 2U, Inc. (NASDAQ:TWOU). Mudrick Capital Management is the largest stakeholder in the company, with 1151.92 million shares worth $72,13 million.
One of the most popular AI penny stocks, 2U, has an average volume of 1.82M as of the day of writing this piece, with high growth potential because its stock price has climbed in the last few days, even though it has declined in previous years and over the years.
In general, we think that the market for AI stocks is rising, and although penny stocks are generally risky, they can provide large rewards.
2. LivePerson, Inc. (NASDAQ:LPSN)
Number of Hedge Fund Investors: 11
On May 8, LivePerson, Inc.’s first-quarter results saw a 20.9% drop in total revenue to $85.1 million from $107.66 million in the same period the previous year, mostly due to the loss of clients and the closure of non-core business lines, as claimed by the company. The revenue growth rate has also decreased -21.91% year over year to $401.98 million in 2023. The stock closed at $0.70 per share on June 6, 2024. Although in the past month, the stock percentage return has surged up 19%, it has decreased more than 80% over the past year.
Artisan Small Cap Fund, in its Q4 2021 investor letter, mentioned LivePerson, Inc. (NASDAQ: LPSN) and discussed its stance on the firm.
Here is what Artisan Small Cap Fund has to say about LivePerson, Inc. in its Q4 2021 investor letter:
“LivePerson is a leading provider of mobile and online messaging solutions. We believe customer service and sales centers are shifting from voice to digital communications, and LivePerson is well equipped to lead this shift. Its LiveEngage cloud-based platform allows brands to engage with customers across digital channels at scale, more efficiently and more effectively. The market opportunity is substantial and goes well beyond digital conversations in service contexts and into areas such as sales, marketing and possibly social media monitoring. A key part of our thesis when we began our investment campaign in 2018 was the arrival of Alex Spinelli as the company’s CTO. Mr. Spinelli came from Amazon, where he was one of the architects and leaders of Alexa. In addition, Mr. Spinelli brought several well-respected technologists to LivePerson with him. Unfortunately, Mr. Spinelli announced his departure from LivePerson in Q3. In addition to this development, our profit cycle thesis has been stalled as the company makes a round of investments into its sales force which will weigh on margins over the near term. We believe Mr. Spinelli’s replacement, Andrew Hamel, carries the credentials to continue leading LivePerson’s technology efforts. Mr. Spinelli worked for Mr. Hamel at Amazon, and the investments in the sales force have the potential to allow the company to scale its business more rapidly. Still, we are in a holding pattern until we gain conviction that the profit cycle we originally invested in can continue to flourish with these changes.”
Of the 920 funds in Insider Monkey’s database, 11 hedge funds had stakes in LivePerson, Inc. (NASDAQ: LPSN). Cynthia Paul’s Lynrock Lake is the largest stakeholder in the company, with 145.96 million shares worth $60.21 million.
Revenue growth dropped in this quarter and prior year, with a declining EPS suggesting that the company is currently unprofitable. Investing in such a stock involves higher risk, but the company may still have room to develop given the unexpected surge over the past month. A forward P/E ratio of 19.30 reveals that investors are willing to pay for the company’s estimated future earnings because they believe the company is underearning now and will probably rise back up. Overall, its average volume is 3.61M with 11 hedge funds invested in this stock which makes it one of the Most Popular AI Penny Stocks Under $1.
1. Augmedix, Inc. (NADAQ:AUGX)
Number of Hedge Fund Investors: 27
One of the most popular AI penny stocks under $1 is Augmedix, Inc. (NADAQ:AUGX), a San-Francisco-based healthcare technology company that provides medical documentation products and live clinical support services to the top healthcare systems in the United States using ambient AI technology.
The Augmedix Go smartphone app, which supports more than 50 medical specialties, and uses ambient AI technology to understand natural conversations between physicians and patients and produces thorough draft medical notes in real-time. “The Augmedix Go note reads like a clinician wrote it,” claimed Mary Kate Case, PA-C, heart and vascular care. “Other AI products I have used sound like a machine producing the note.”
In Q1 2024, Augmedix, disclosed its total revenue of $13.5 million, an incredible 40% increase from the same quarter in the previous year, where the overall sales were $9.6 million.
Manny Krakaris, Augmedix CEO, commented on the remarkable growth of the company:
“Augmedix delivered in-line first quarter performance, with 40% revenue growth, 143% net revenue retention, and 47.1% gross margins,” “We are confident about our positioning within the medical documentation market, and expect to report continued growth throughout the rest of the year. It is now clear, however, that health systems are proceeding methodically while they develop a better understanding of the capabilities of AI products.”
“We are seeing an increasing amount of interest with new and existing customers that are evaluating our AI products, Augmedix Go and Augmedix Go Assist, including active discussions for large deployments. In particular, the recently introduced ER version is resonating with health systems as it is the first fully-automated, generative AI-powered medical documentation product for acute care. Augmedix Go Assist is quickly becoming a compelling solution given its attractive mix of price and efficiency. Meanwhile, following a successful pilot, our strategic partner HCA Healthcare is planning to expand Augmedix Go to additional emergency departments within its health system.”
Overall, Augmedix’s annual revenue has also increased every year. Revenue surged from $22.17 million in 2021 to $30.93 million in 2022 and then $44.85 million in 2023. Thus, investors are hoping to gain profits, making it the most popular AI penny stock under $1.
Meanwhile, elite funds are piling into this stock as well, with hedge fund positions increasing from 26 in Q4 2023 to 27 in Q1 2024 with a collective stake of $122.124 million, giving us a clear hint that investors are bullish on Augmentix’s stock. Krystal Biotech Inc. is the largest stakeholder in the company, with 1,508,250 shares worth $268.36 million.
While we acknowledge the potential of Augmedix as an AI play, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AUGX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. 10 Most Popular AI Penny Stocks Under $1 is originally published on Insider Monkey. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
