According to a new L.E.K. Consulting report, investor sentiment today heavily ties a company’s enterprise value to how well they develop and execute their artificial intelligence (AI) strategies for growth. The report reveals that a company that executes its AI transformation well can expect a valuation gain of up to 19%.
On the contrary, a poor, or poorly executed, AI transformation can lead to a 9% loss of value. This is according to an L.E.K. analysis based on S&P 500 profit and loss data and results of an L.E.K. survey of executives. It is to be noted that the 28% change is the average shift in a company’s value due to its use of AI, while the impact could be even bigger for some.
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“The old ways of delivering on strategy and innovation will no longer satisfy investor expectations because AI advancements have raised the bar on what’s possible. AI strategies require targeted investment and careful implementation. Doing it right will lead to growth. But if a company swings and misses with AI, fails to swing enough or swings too much — or not at all — the value destruction could be significant.”
-L.E.K. Managing Director and Head of the Digital Transformation practice Darren Perry.
The key, however, lies in implementing a framework with which companies can bridge the AI gap toward success. They can do this by creating and implementing an AI transformation strategy that builds value.
“Winning companies will strategically deploy AI across all potential value-creation levers. In our experience, too many companies are just focusing on AI’s potential related to productivity gains. To maximize upside potential — and ultimately avoid value erosion — leaders must plan and execute AI holistically so the strategy encompasses performance, competition and unique opportunities.”
-Darren Perry.
According to the report, companies must discover their true differentiators and use AI to augment them further. For instance, Shopify used AI-powered features to enhance the product exploration experience for merchants and customers. As a result, the company saw a 15% jump in sales.
Likewise, AI can help companies find new revenue streams by synthesizing data to create new insights, develop new business models to monetize data and even lead to unique opportunities.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. The hedge fund data is as of Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
12. BigBear.ai Holdings, Inc. (NYSE:BBAI)
Number of Hedge Fund Holders: 13
BigBear.ai Holdings, Inc. (NYSE:BBAI) is an artificial intelligence specialist that provides decision intelligence solutions. On March 10, the company announced that the U.S. Department of Defense (DoD) has awarded the company a 3.5-year, $13.2M sole source contract to support the Chairman of the Joint Chiefs of Staff’s (CJCS) Directorate for Force Management (J-35). Under the contract, BigBear.ai will be responsible for the delivery and maintenance of the DoD Joint Staff J-35’s ORION Decision Support Platform (DSP).
This platform provides automated force management capabilities and data analytics to the DoD’s Joint Planning and Execution Community (JPEC). Leveraging BigBear.ai’s deep subject matter expertise and advanced technical skills, the DoD will be able to enhance ORION DSP’s scalability, adaptability, and analytical capabilities to deliver modern, AI-powered solutions. The contract has been awarded through the Tradewinds Marketplace, the DoD’s premier platform for AI/ML procurement, making it BigBear.ai’s second award through the contract vehicle.
“We are honored to support the Chairman of the Joint Chiefs of Staff’s Office. Winning this contract demonstrates BigBear.ai’s ability to deliver modern, AI-powered solutions that enable data-driven decision-making at the highest levels of defense leadership. ORION DSP plays a pivotal role in optimizing force structure, and we look forward to bringing our expertise in AI, data analytics, and software development to ensure mission success.”
-Kevin McAleenan, CEO of BigBear.ai.
11. Synaptics Incorporated (NASDAQ:SYNA)
Number of Hedge Fund Holders: 27
Synaptics Incorporated (NASDAQ:SYNA) is a global developer and fabless supplier of premium mixed-signal semiconductor solutions that enable interaction with connected devices and data. On March 10, the company announced that it has extended its esteemed Synaptics AstraTM AI-Native platform with the SR-Series high-performance adaptive microcontroller units (MCUs) for scalable context-aware Edge AI. The Synaptics Astra AI-Native platform is a compute solution designed for Edge AI that focuses on building intelligent IoT devices. The new series features three power tiers, namely performance (100 GOPS), efficiency, and ultra-low-power (ULP) always-on (AON), built on Arm® architecture.
The enhancements are designed for multimodal consumer, enterprise, and industrial Internet of Things (IoT) workloads with accelerators and adaptive vision, audio, and voice algorithms. The compact MCUs help minimize system cost, power, and footprint while allowing seamless integration into a wide range of devices, such as battery-operated security cameras, sensors, and more.
“We believe we are at an inflection point in Edge AI where embedded developers have a unique opportunity to redefine human-machine interaction through multimodal processing and contextual awareness. Unlocking this potential requires a new class of embedded compute silicon. As part of our Astra family, the SR-Series extends our Edge AI processing roadmap with intelligence optimized for various power levels. It allows the development of cognitive IoT devices that seamlessly adapt to their surroundings, from ultra-low-power always-on sensing to high-performance edge inference.”
-Vikram Gupta, Senior Vice President and General Manager of IoT Processors, Chief Product Officer at Synaptics.