These three stocks are still in their infancy and offer early-stage growth opportunities.
Investors are embracing artificial intelligence (AI) as the next big thing. This stands out from other hyped trends and fads because it has an incredible real-world impact that is already changing the way we shop, do business, and more.
There are multiple ways to invest in the future of AI. Invest in stocks that have already proven to be AI powerhouses. Amazon or Nvidiaor an exchange-traded fund (ETF) focused on AI. Global X Robotics & Artificial Intelligence ETF. Or you could find an emerging niche AI ​​stock with the potential to go parabolic. Oddity Tech (odd number 0.77%), Pagaya Technologies (PGY 3.29%)and trade desk (TTD 1.50%) Three things fit this bill.
1. Weirdness: AI in an unexpected industry
Although you might not guess it from the name, Oddity sells makeup and skincare under the brands Il Makiage and SpoiledChild. We use AI and other technologies in a variety of ways to transform the traditional way people purchase these products.
The company uses machine learning to power its PowerMatch system, which allows shoppers to identify precise colors and skincare regimens with their smartphone cameras. His Oddity Labs division of the company, which develops skin care, uses his AI for molecular discovery to develop formulations that meet customer needs.
These features give you an edge over competitors who use standard sales methods. Its model is all-digital, direct-to-consumer only, data-centric, and vertically stacked compared to competitors that sell wholesale, sell offline, and have a horizontal structure. The company believes there is a $600 billion global market in the beauty and wellness category, and it's growing much faster than other beauty companies.
The company has reported strong revenue growth, with a 57% year-over-year increase in 2023, beating guidance. Even better, it has been profitable since going public last year. Gross profit margin for 2023 was 70.4%, and earnings per share (EPS) were $1.31, exceeding expectations. Management aims for revenue to increase by 23% and EPS to reach approximately $1.52 in 2024.
As consumers become more confident and go digital, Oddity has a huge opportunity to capture even more market share and is preparing to launch new brands in other beauty and wellness categories to expand the market. We are promoting. This is likely to increase rapidly over the next few years.
2. Pagaya: A better financial future with AI
Pagaya operates a two-sided platform that approves loans and helps financial companies make better credit decisions using AI. Works with the following top names. visa, SoFi technologyand Ally Financialand recently signed an agreement with US Bancorp.
This is a tough business, given the current backdrop of high interest rates. Creditors are becoming more cautious in this environment, as defaults increase and fewer loans are approved. Despite this, Pagaya's business is growing.
Another aspect of this model is that we sell our loans as asset-backed securities (ABS) to institutional investors, making us the top consumer loan ABS issuer in the U.S. in 2023. The company works with over 100 of his funding partners and receives all funds upfront. Last year, it raised $6.6 billion.
Fourth quarter 2023 network volume increased 33% year-over-year, beating expectations, and revenue increased 13% to $218 million. Fees less production costs (FRLPC), the company's key revenue metric, rose 42% to $76 million.
This model could be a game changer and could lead to more partners switching to Payaya's platform in the coming years. Management said the company has a strong pipeline of potential customers and its goal is to sign on two to four major lending partners each year.
Pagaya is a recent initial public offering (IPO) stock that is just beginning to disrupt a massive industry. It could explode in the next few years.
3. The Trade Desk: AI in one of the most popular growth industries
Trade Desk works with advertisers to place ads. AI is a key part of delivering the right ads to the right audience. Traditionally, advertisers have used limited metrics and evidence to see where their ideal audience or customers are consuming their content, but the ability to use a data-centric approach will streamline the process. Speed ​​up and get instant results with pinpoint accuracy.
The Trade Desk has been around for a few years, going public in 2016, but in some ways it's just getting started. Advertising, especially the industry driven by AI, is now an incredible growth industry. And advertisers have been negatively impacted by inflation, so now they're on the rebound and the outlook is incredible.
Advertising has also moved to digital, with all types of content now available all online, including social media, periodicals, and ad-supported streaming networks. Advertising outside of digital channels is also transacting digitally, and The Trade Desk is well-positioned to benefit from this change. The company is eyeing a huge market with global advertising spending reaching his $830 billion, making it especially appropriate at this time of year.
Trade Desk's revenue grew 23% year-over-year in 2023, and EPS increased from $0.11 last year to $0.32 this year. We have maintained an impressive customer retention rate of 95% over the past 10 years and are well positioned to benefit from changes in advertising and create shareholder value in the coming years.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool's board of directors. Ally is an advertising partner of The Motley Fool's Ascent. Jennifer Saibil works at SoFi Technologies. The Motley Fool has positions in and recommends Amazon, Nvidia, The Trade Desk, US Bancorp, and Visa. The Motley Fool recommends Pagaya Technologies. The Motley Fool has a disclosure policy.