If you’re putting together a list of overlooked AI stocks, I wouldn’t try to sneak Nvidia (NASDAQ:NVDA) on it. Even investor neophytes know about CEO Jensen Huang’s obsession with artificial intelligence (AI) and generative AI at the enterprise level.
On Sept. 20, Nvidia announced it was expanding its collaboration with Infosys (NYSE:INFY). The partnership will see Nvidia train 50,000 Infosys employees to use its AI Enterprise technology; Infosys employees will then turn around to help customers integrate generative AI into their businesses.
“Infosys is transforming into an AI-first company to better provide AI-based services to our clients worldwide. Our clients are also looking at complex AI use cases that can drive significant business value across their entire value chain,” said Nandan Nilekani, co-founder and chairman of Infosys.
You also can scratch Infosys off your list of overlooked AI stocks.
For me, the names to make my list will be businesses you wouldn’t normally associate with AI technology but leverage its use to accelerate revenue growth.
Here are my three picks for overlooked AI stocks.
Lantheus Holdings (LNTH)
Lantheus Holdings (NASDAQ:LNTH) develops, manufactures, and commercializes diagnostic and therapeutic products.
The company’s top-selling product is Pylarify, a prostate cancer diagnostic imaging agent. In the latest quarter, Pylarify’s revenues were $210.5 million, 62% higher than a year earlier. Its other big product is Definity. It is an ultrasound contrast agent used to improve echocardiograms, which are ultrasounds for the heart. Its sales in Q2 2023 were $70.5 million, 13% higher than Q2 2022.
However, this is an article about AI, so let’s get to it.
The company launched Pylarify AI in November 2021.
“PYLARIFY AI is the first and only FDA-cleared medical device software that offers a standardized platform for quantifying PSMA PET/CT images,” Lantheus CEO Mary Anne Heino said in 2021. “We believe that PYLARIFY AI could enhance the efficient integration of PSMA PET/CT into clinical practice and will be a vital tool to support the adoption of PYLARIFY.”
PSMA stands for prostate-specific membrane antigen. PSMA is a protein found in prostate cancer cells. PET stands for positron emission tomography. Medical practitioners use this imaging to get the best view of prostate cancer in the body.
Pylarify AI enables doctors to more efficiently determine which patients are at the highest risk of prostate cancer progressing. My dad got prostate cancer twice. The second time, it killed him, so I’m all for anything that helps keep patients healthier.
As the company gets more familiar with AI, you can be sure it will leverage the technology further.
Morningstar (MORN)
If you’re familiar with Morningstar (NASDAQ:MORN) and its wide array of financial analysis and data, it’s not hard to imagine AI helping it serve its customers better.
The Chicago Sun-Times published an article in May about Morningstar’s new AI chatbot, Mo. The company was worried that its efforts to create a chatbot that could answer financial questions for subscribers would go awry as others have in the early days of generative AI.
Utilizing Microsoft’s (NASDAQ:MSFT) Azure OpenAI, Morningstar has worked to ensure the service only has access to the appropriate financial data to provide an answer. It does not give actual investment advice.
Morningstar Chief Technology Officer James Rhodes said, “The content is bucketed and stored in a Morningstar database so that we can steer the model toward the right bucket of published Morningstar content that’s most responsive to the prompt,” Sun-Times contributor David Roeder reported.
The company’s stance on AI is that it allows people to do more high-value work as a result of more efficiently getting answers to questions you would otherwise have to search through Google to find what you need.
Consider Mo a time saver.
Recently, Morningstar rolled out Enterprise Analytics Platforms and application programming interface (API) for Mo. That allows financial advisors to use the chatbot to develop their own generative AI apps.
Again, the more efficiently an advisor can use chatbots like Mo, the more time they have to meet with clients personally.
It’s a winning proposition.
Trupanion (TRUP)
Trupanion (NASDAQ:TRUP) provides online medical insurance for cats and dogs across North America. Founded in 2000, it has more than 1.68 million pets covered under its insurance plans, paying over $2 billion in vet invoices.
The company’s use of AI is straightforward. It uses the technology to automate the vet invoicing process. Over 60% of all vet invoices are processed on its web-based portal without human interaction.
“Trupanion, through Vet Direct Pay, is the first and only pet insurer that can pay a bill directly to the veterinary hospital at time of checkout,” Trupanion Vice President of Claims Jacquie Mero said in the release.
People pay approximately 25% of their human healthcare claims through paper checks. As someone who owns a bunch of animals and has fostered many more, it makes sense for pet owners to receive the same service from their pet insurer as their healthcare insurer.
How does it do it?
“Using a series of Machine Learning (ML) models trained on millions of claims processed by Trupanion team members, this proprietary technology covers a wide variety of claiming scenarios, ensuring accurate and efficient processing,” stated the company’s Aug. 9 press release announcing advancements in its Vet Direct Pay.
One number that jumps out at me from its Q2 2023 press release is the average pet acquisition cost (PAC). In the second quarter, it was $236, down from $247 in Q1 2023 and $309 in Q2 2022.
While it continues on its pathway to profitability, it’s a lot closer today than it was a year ago. If you’re an aggressive investor, you’ll want to look closer.
On the date of publication, Will Ashworth did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
