We recently published a list of 12 Best Artificial Intelligence Stocks To Invest In Under $10. In this article, we are going to take a look at where Fastly Inc. (NYSE:FSLY) stands against the other best artificial intelligence stocks to invest in under $10.
The tech market is poised for an explosive growth phase as the AI revolution accelerates. Dan Ives, Global Head of Technology Research at Wedbush Securities, recently appeared on CNBC on November 25 to discuss the current state of the tech market, predicting that it will be “on fire” as the AI revolution enters its next phase, marking the beginning of what he considers a fourth industrial revolution. Ives emphasized that the software segment of AI is now critical, with expectations that AI software companies will lead this growth. Ives believes that the consumption model in enterprise AI, driven by advancements from major chipmakers, will lead to underestimated growth rates of 15% to 20% for these software companies.
Ives also addressed the impact of bond yields and currency strength on the tech trade, noting that while these factors could present headwinds, they are already factored into market guidance. He expressed confidence in a strong demand perspective that could propel the NASDAQ to 20,000 in the next two years, with aspirations for it to reach 25,000 thereafter. Furthermore, he sees potential benefits from deregulation in the tech industry, suggesting that it could facilitate significant M&A activity. Ives remains bullish on the tech sector as it adapts to evolving market conditions driven by AI advancements.
Earlier, on November 22, Jeff Richards, Notable Capital managing partner, joined CNBC’s ‘Closing Bell’ to discuss the tech trade and the tailwinds for the software sector as well. He noted that while growth rates for software companies have decelerated compared to 2 or 3 years ago when many public companies were growing over 50%, growth is resurgent now. Richards pointed out that the peak multiples for software stocks were significantly higher in late 2021, but current valuations are more attractive, especially as AI begins to play a critical role in driving growth.
Richards emphasized that AI is not just a future prospect but is actively influencing the market now, with private companies reporting that 60% to 70% of their recent bookings are AI or AI-related. He mentioned that the infrastructure build-out for AI is comparable to historical investments in physical infrastructure, with major tech companies collectively spending around $300 billion annually. This investment is expected to lead to significant advancements in both the enterprise and consumer software sectors.
He also highlighted the global nature of this evolution, noting that major tech players from MAG7 are not only serving US customers but are also expanding their reach into international markets. This global perspective is crucial as these companies leverage their cash flow to invest in AI infrastructure, which Richards believes will shape the future of technology.
Richards remains optimistic about the technology sector’s trajectory, as does Ives, particularly as it adapts to the growing influence of AI and its applications across various industries.
A technician pointing at a projection of the company’s geolocation software.
Our Methodology
We sifted through Finviz and internet lists to compile a list of top AI stocks trading below $10. We then selected the 12 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
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).
Fastly Inc. (NYSE:FSLY)
Share Price as of November 27: $7.95
Number of Hedge Fund Holders: 14
Fastly Inc. (NYSE:FSLY) operates an edge cloud platform that helps businesses deliver digital experiences faster and more securely. It offers services like content delivery networks, security solutions, and video streaming, serving industries such as technology, media, and finance. Its edge cloud platform uses AI and machine learning to optimize content delivery, security, and performance.
The company reported strong third-quarter 2024 results, with notable progress in diversifying its revenue base, growing its quarterly revenue by 7.35% as compared to the year-ago period. Furthermore, it achieved a 20% growth in revenue outside of its top 10 customers, demonstrating reduced reliance on a few large accounts.
A major highlight for the company was the advancement of its AI accelerator, an AI proxy designed to enhance performance and reduce costs for applications utilizing LLMs. It expanded LLM support to include Google Gemini, in addition to OpenAI. The AI accelerator is expected to be generally available by the end of the year.
By leveraging the power of the company’s platform, the AI accelerator can dramatically reduce latency for tasks like answering queries, which typically take several seconds on traditional cloud platforms. This is achieved by optimizing request routing and utilizing the edge network. Additionally, the accelerator helps lower the overall cost of AI solutions by reducing the reliance on central cloud infrastructure and enabling efficient use of edge resources.
The company’s innovative AI accelerator is poised to revolutionize the AI landscape. By significantly reducing latency and costs associated with AI applications, this cutting-edge technology positions Fastly Inc. (NYSE:FSLY) as a leader in AI innovation.
Overall, FSLY ranks 5th on our list of best artificial intelligence stocks to invest in under $10. While we acknowledge the growth potential of FSLY, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FSLY 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. This article is originally published at Insider Monkey.
