If you're like me, you don't remember much from your high school geometry class. However, I still recall a few things -- including the intriguing curve called the parabola.
We don't encounter the good old parabola often in life as adults. But investors might have an opportunity to see geometry in action with a select group of stocks. These three artificial intelligence (AI) stocks (listed in descending order by market cap) could go parabolic with a rapid increase in price over a short period.
1. UiPath
So far in 2024, the trajectory of UiPath's (PATH 3.13%) stock looks more like the left side of a parabola, which slopes downward. Shares of the robotic process automation (RPA) software company have fallen by a double-digit percentage.
NYSE: PATH
Key Data Points
This decline doesn't reflect any major problems for UiPath, though. The company reported record revenue of $405 million in its quarter ending Jan. 31, up 31% year over year.
UiPath also achieved its first quarter of profitability based on generally accepted accounting principles (GAAP) since going public in April 2021.
Cathie Wood's ARK Invest projects that AI software could become a $14 trillion market by 2030, up from under $1 trillion in 2022. UiPath should be in a great position to profit from this tremendous growth.
Everest Group ranked the company's business automation platform as the highest in capabilities, market impact, and vision.
UiPath's relatively low market cap of around $11 billion also gives it plenty of room to grow. ARK Invest views the company as part of "AI's sleeper wave" -- i.e., promising AI companies that aren't as widely followed as the megacap giants. It thinks UiPath's ease of use and scalability give it a competitive advantage in the AI automation market.
2. BigBear.ai Holdings
AI-powered decision-intelligence software company BigBear.ai Holdings (BBAI 5.27%) has already gone parabolic earlier this year, more than doubling by early March. However, the stock has since given up all of those gains and then some.
NYSE: BBAI
Key Data Points
Some on Wall Street think BigBear.ai is poised for a big rebound. The average 12-month price target for the stock reflects an upside potential of 124%. One analyst predicts the share price could more than triple within the next 12 months.
This optimism isn't based on the latest financial performance. The company's revenue sank 21.4% year over year in the first quarter of 2024. BigBear.ai posted a net loss of $125.1 million in the quarter.
However, the company has picked up momentum with recent contracts, including an $8.3 million extension to an agreement with the U.S. Army. It also recently closed its acquisition of vision AI leader Pangiam.
3. Stem
Stem (STEM 9.98%) is the smallest company on this list with a market cap of a little over $200 million. It's also the worst performer of the group this year, plunging nearly 70%.
The provider of battery systems and smart-energy AI software reported a 62% year-over-year revenue decline in the first quarter and a sharply deteriorating bottom line.
NYSE: STEM
Key Data Points
Can Stem turn things around? Several analysts think so. The average 12-month price target for the stock is almost 240% above its current share price. The most optimistic analyst surveyed by LSEG, owner of the London Stock Exchange, believes the stock could skyrocket by more than 8.5 times.
Stem canceled some of its less-profitable contracts to focus on others with higher margins. The company expects these moves to improve profitability. Its recent introduction of the PowerTrack Asset Performance Management suite for managing storage, solar, and hybrid energy portfolios could also drive accelerated growth.
There's no guarantee that this stock (or UIPath or BigBear.ai, for that matter) will go parabolic. But the global market for energy storage systems is projected to nearly double by 2031 to $506.5 billion, according to Statista. If Stem can capitalize on this huge opportunity, it could return to its winning ways from a few years ago.
