We recently compiled a list of the 11 Best AI Penny Stocks to Invest in Now and in this article we will talk about one of our top picks.
Penny stocks can be very rewarding for investors who can tolerate a higher level of risk, but they do require meticulous research to identify the intrinsic value of the company and the hidden potential for growth opportunities. At Insider Monkey, we analyze thousands of companies through the prism of the hedge fund sentiment toward them, including stocks that are trading at very cheap prices. One stock that captured our attention among the best AI penny stocks to invest in now is Grab Holdings Ltd (NASDAQ:GRAB).
Grab Holdings Ltd (NASDAQ:GRAB) saw 37 hedge funds from our database holding its shares as of the end of March. This number was unchanged over the quarter, but the total value of shares held by these funds increased to $613 million from $561 million between January and March. The growth in the aggregate value of hedge funds’ positions can be attributed to a number of investors increasing their exposure to the company.
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As of the end of March, the top shareholder of Grab Holdings Ltd (NASDAQ:GRAB) among the hedge funds in our database is Chase Coleman’s Tiger Global Management, which raised its position by 31% to 66.80 million shares. Other bullish investors include Ken Griffin’s Citadel Investment Group and Cliff Asness’ AQR Capital Management, which boosted their stakes by 232% and 308%, respectively, to 21.77 million shares and 13.06 million shares.
What To Know About Grab Holdings
Singapore-based Grab Holdings Ltd (NASDAQ:GRAB) provides delivery, mobility and digital financial services in Southeast Asia. The company has operations in eight countries, including Singapore, Thailand, Vietnam, Cambodia, Indonesia, the Philippines, Malaysia, and Myanmar. In 2018, Grab acquired the Southeast Asian operations of Uber Technologies Inc (NYSE:UBER).
For the latest quarter, Grab Holdings Ltd (NASDAQ:GRAB) reported revenue of $653 million, a 29% year-on-year increase on a constant currency basis. At the same time, the company’s first-quarter net loss narrowed down to $0.03 from $0.06 recorded a year-earlier. Even though the revenue managed to beat the estimates by $14.5 million, the net loss missed the expectations by $0.02.
On a segment basis, Grab Holdings recorded robust revenue growth across all three segments. Mobility saw an increase of 30% on the year to $247 million, while deliveries and financial services revenue grew by 24% to $350 million and by 56% to $55 million.
Following the results, several analysts reiterated their bullish stance on the stock. Barclays reiterated its ‘Overweight’ rating and raised the price target to $4.70 from $4.30, while analysts at Benchmark reiterated their ‘Buy’ rating and $6.00 price target.
Trading at 5.74 times its sales implies that Grab Holdings Ltd (NASDAQ:GRAB) is not cheap (by comparison for Uber Technologies Inc (NYSE:UBER) this ratio stands at 3.51). However, the company operates in emerging markets where the demand for its services (and its market share) will continue to improve. Moreover, it managed to narrow down its operating loss by $129 million to $75 million during the first quarter. It also posted a record EBITDA of $62 million and upped its 2024 EBITDA guidance to $250 million – $270 million range from $180 million – $200 million forecasted earlier.
Grab Holdings As an Under-the-Radar AI Play
Grab Holdings Ltd (NASDAQ:GRAB) commitment to applying artificial intelligence technology into its Core Business is what makes it one of the best AI penny stocks to invest in now. Between 2018 and 2019, the company invested $250 million on AI technology and is already reaping rewards. During the fourth-quarter earnings call, CEO Anthony Tan mentioned that Grab had built its own marketing tool powered by large language models (LLM) which allowed it to reduce content generation to just 90 minutes from 99 hours, while also improving the quality of content.
Moreover, Grab Holdings Ltd (NASDAQ:GRAB) is leveraging AI to help its customers get better food recommendations and its delivery drivers rely on Grab Maps, which uses AI to help them to easier identify the destination.
To further advance its AI presence, Grab Holdings Ltd (NASDAQ:GRAB) has recently announced a partnership with Microsoft Corporation (NASDAQ:MSFT)-backed OpenAI. Both companies will develop advanced AI solutions aimed at enriching the experience for Grab’s users, partners, and employees. Initially, Grab and OpenAI plan to focus on Accessibility, customer support, and mapping.
All in all, Grab Holdings Ltd (NASDAQ:GRAB) is definitely a stock that deserves a closer look for more risk-tolerant investors. If you want to explore other AI stocks under $5 that smart money is bullish on, check out our free report on the 11 Best AI Penny Stocks to Invest in Now.
If you are looking for an AI stock that is as promising as Microsoft but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Disclosure: None. This article is originally published at Insider Monkey.
