Low share prices aren't necessarily a bad sign, so let's take a look at two affordable tech stocks poised to thrive amid the AI boom.
A low stock price isn't necessarily a bad thing. It's like a clearance sale at your favorite store.
Just because a stock is cheap doesn't mean it's a dud. Sometimes it could be that the company had a tough quarter or the market is panicking regardless of financial performance. In some cases, the long-term opportunity facing a small company isn't being recognized by Wall Street. For smart investors, a low stock price can be an opportunity to buy a solid company at a discount.
This means you could be in for a big win while others flee. Remember, buy low and sell high, not follow the crowd. With that in mind, here are the top two tech stocks with extremely low share prices.
Both stocks are actually big bets on the ongoing artificial intelligence (AI) boom, so buying a few shares of these cheap stocks today could pay off in the long run — and the shares are really affordable.
SoundHound AI: $3.93 per share
AI-powered voice control expert SoundHound AI (Seong 6.62%) Though it's had its ups and downs recently, the company's long-term potential remains promising: This small company that specializes in voice AI and conversational intelligence technology is positioned to thrive as demand for these services grows.
There's a lot to be optimistic about. The company has a backlog of long-term contracts worth $682 million, providing a clear path to future revenue. If you overlook this key metric, SoundHound AI seems pretty expensive given its $50.8 million in past revenue. In the long run, that would be a mistake.
Additionally, strategic moves like paying down long-term debt and acquiring key assets from online ordering platform Allset demonstrate SoundHound AI's commitment to growth and innovation. And let's not forget that its order backlog is growing exponentially; first quarter figures are over 80% above the same period last year. In other words, SoundHound AI has established a solid and growing portfolio of long-term contracts that will translate into real revenue streams in the coming years.
With a cash reserve of $180 million and no debt, SoundHound AI is poised to seize new opportunities. While the company is not yet profitable and its valuation ratio appears high, a large (and growing) backlog and a series of strategic initiatives suggest a bright future. At just $3.93 per share, SoundHound AI offers a compelling investment opportunity for those willing to take a bet on this innovative AI company.
UiPath: $12.96 per share
Robotic Process Automation (RPA) Specialist UI Pass (path 2.16%) The company has had a tough year, with its shares dropping 48% in 2024. Despite this negative sentiment on Wall Street, the company remains a major player in RPA and is integrating AI technology into its services.
RPA is a software technology that automates repetitive, routine tasks typically performed by humans, improving efficiency and accuracy. Despite the name, it rarely involves actual robots. UiPath is not strictly an AI company, but it uses AI to enhance software capabilities such as data mining and understanding legal documents.
UiPath's stock price recently plummeted, largely due to a mixed first-quarter earnings report. While revenue and sales beat analyst expectations, the company's annual renewal run rate (ARR) hit the low end of guidance at $1.51 billion. Additionally, UiPath lowered its full-year ARR forecast to $1.66 billion from $1.73 billion, a poor indicator of the automation expert's contract-based recurring revenue flow.
The sudden resignation of CEO Rob Ensslin and his replacement by co-founder Daniel Dines further spooked investors, sending the stock plummeting 34% in one day. While leadership changes are rarely good news, it's fine for the founders to take control again.
But the selloff seems overdone. UiPath's long-term outlook remains strong, with the global RPA market expected to grow from $3 billion in 2023 to $31 billion by 2030. With $1.35 billion in past revenue, UiPath is well positioned to grab a significant share of this expanding market. With UiPath's 45% share of the RPA market's current revenue opportunity, I'm talking about an established leader in this fast-growing industry.
UiPath's fundamentals are sound. The company boasts a strong cash reserve of $1.9 billion with no debt, allowing management to make strategic investments and acquisitions to accelerate revenue growth. Additionally, free cash flow for Q1 2024 grew 39% year over year to $101.3 million. UiPath is cash-rich by the digital truckload.
Given its current low valuation and large market opportunity, UiPath offers a compelling investment opportunity. For investors who can tolerate some volatility initially, the potential for long-term gains makes UiPath a tech stock worth considering today.
