As technology company valuations continue to rise, maybe it's time to take a moment to pause and consider stocks that may have been (mostly) left behind by the recent surge in AI. Indeed, not everything needs to directly benefit from AI to be a solid investment in the long term. In this article, we look at three interesting technology companies (WIX, GDDY, and RBRK) that are embracing AI but probably won't be recognized as AI companies until the next 2-3 years.
Indeed, each company is putting money into AI efforts, but in a more cautious way than some of the big tech companies that are willing to pour billions into AI with no guarantee of return.With analysts recommending Strong Buy, use TipRanks’ comparison tool to look at WIX, GDDY, and RBRK to see which stocks have the most potential.
Wix is an Israel-based web development software company that has seen significant momentum in recent years. Even after the most recent 9% correction, WIX shares are up over 130% over the past two years. That said, WIX shares are down 55% from their peak in early 2021. As Wix continues to innovate its AI technology tools, it may not be long before investors start to view Wix as an AI-first company. Either way, the stock looks attractive in the recent selloff, and I remain bullish even if the recovery trajectory is a bit choppy.
Recently, some shocking news occurred: Piper Sandler analyst Clark Jefferies (not to be confused with investment firm Jefferies) downgraded WIX shares from a “buy” to a “hold” rating, mainly due to concerns about valuation. While Jefferies is encouraged by “AI-assisted design,” he believes it's premature to reassess growth expectations upwards.
We don't blame Jefferies for waiting for Wix and AI to roll out, but AI may move faster than analysts can keep up with raising stock target prices. AI will transform web development, as new tools make it easier to create the beautiful digital stores of your dreams.
Of course, it will take time for new AI tools like this to be effectively monetized, but Wix's new text-to-website conversational AI tool may entice analysts to upgrade sooner rather than later. Like most impressive AI innovations, this is a deep technology that will only get better with time.
What is your price target for WIX stock?
WIX stock is a “Strong Buy” according to analysts, with 15 Buy and 4 Hold designations over the past three months. The average target price for WIX shares is $187.88, indicating an upside potential of 18.1%.
GoDaddy is Wix's biggest competitor in the web development space. Like Wix, GoDaddy is betting big on the power of generative AI. And it's this power that's helped GDDY stock soar like a coiled spring over the past eight months after remaining flat for about five years. Now that the stock has nearly doubled (up 88%) over the past year, I think it's time to take another look at GDDY as investors explore the hidden potential of AI. All things considered, I'm bullish on GoDaddy.
Despite the stock nearly doubling in a year, it remains very cheap at 11.6x P/E, well below the infrastructure software industry average of over 41x. Indeed, GoDaddy has a track record as a registrar, web host, and run-of-the-mill web builder. As the company's Airo AI service (which helps users get started quickly) evolves, I think there's room for the valuation multiple to expand.
Airo is more than just an AI-powered website builder. It can automate a variety of time-consuming tasks that small businesses must undertake to get their name out there. From Airo-assisted social media content generation to creating digital ads, Airo has shown it can save businesses time and money. GoDaddy reportedly expects its generative AI tools to save small business owners $4,000 and 300 work hours this year.
If Airo is the AI product that delivers those kinds of savings, I have no doubt that GoDaddy customers would be happy to pay for the toolset. Either way, GDDY's P/E multiple doesn't fully represent Airo's value. Baird's Vikram Kesavabhotla sees “further progress in Airo” as a potential catalyst for stock appreciation later this year. In my view, he's not wrong.
What is your price target for GDDY stock?
According to analysts, GDDY stock is a “Strong Buy,” with 10 Buy and 3 Hold designations over the past three months. The average target price for GDDY stock is $148.60, indicating an upside potential of 6.4%.
Rubrik is a data management and cybersecurity company that went public in April 2024. It has undoubtedly struggled since peaking in late April. Currently, shares are down about 22%, and with shares nearing all-time lows of just over $28 per share, investors may be wondering if it's worth investing in this mid-sized ($5.5 billion) AI-powered cybersecurity company. Following strong Q1 results, I'm bullish even if investors are not impressed.
With its Ruby AI assistant, Rubrik could not only help businesses avoid intrusions, but also mitigate the damage if one does occur, which can actually cause quite a bit of panic when a cyber attack does occur.
For many businesses who don't anticipate it, it can be hard to know what to do when time is of the essence. Without a doubt, having an AI assistant like Ruby by your side can provide peace of mind that doesn't cost a penny. can Buy now when cyber threats become real and things get bad. Rubrik stands out as an AI-first cybersecurity company in an industry crowded with companies just starting to adopt AI.
Given the strong demand for Rubrik's software, we think it makes sense to keep an eye on the stock now, at a price-to-sales multiple of 7.7x — not a steep price for a company that grew sales 38% last quarter.
What is your target price for RBRK stock?
RBRK shares are rated a “Strong Buy” by analysts, with 13 unanimous Buy ratings over the past three months. The average target price for RBRK shares is $46.08, indicating an upside potential of 50.3%.
summary
These three AI innovators don't currently enjoy the respect that investors deserve. It may take a few quarters (or even years) for their AI products to be reflected in current stock prices, but I believe they are well deserving of a “Strong Buy” rating from the analyst community. Of the three, analysts see RBRK stock with an impressive 50.3% upside potential.
Disclosure
