Imagine you could talk to one of the most brilliant minds of all time: Alan Turing. The genius who cracked the Enigma code and helped end World War II. The same visionary who proposed a novel concept: the “Turing test.”
The test was simple: Can machines imitate human thought?
The world laughed. Machines – think? Not possible.
But Alan Turing was on the right track. Seventy years later, artificial intelligence is everywhere.
It’s in your phone, recognizing your face and listening to your voice. It’s in your apps, optimizing your routes and personalizing your playlists. It’s on your computer, suggesting your searches and chatting with you.
AI is not just a “thing”… it’s becoming everything.
And the most amazing example of this is ChatGPT – the conversational AI platform built by OpenAI. Since December 2022, it has stunned the world with its incredible capabilities.
ChatGPT can do just about anything you can imagine: answer any question, explain any topic, help with any task, write any content, give any advice, create any music, crack any joke – even ace any exam. It is the ultimate proof that machines can think. And it all started with Alan Turing and his test.
The platform’s incredible abilities have taken the world by storm. In just 40 days, ChatGPT amassed over 10 million daily active users – making it the fastest-growing tech platform ever. By comparison, Instagram – previously considered one of the fastest-growing tech platforms – took 355 days to hit 10 million users, or about 9X as long.
If you’ve seen it in action, you’re likely wildly impressed by ChatGPT. And you should be. I am, too.
But make no mistake. ChatGPT is just the start.
This decades-in-the-making AI Revolution has only just begun. And over the next few years, it will only accelerate in its proliferation, dramatically impacting how we eat, play, travel, work…
It will change everything about everything.
That’s because these machine learning (ML) and natural language processing (NLP) models are entirely informed by data.
Basically, the more data these models have, the more they can learn, the better they get, and the more capable AI becomes.
And AI models are about to be flooded with unfathomable amounts of data.
Indeed, the global volume and granularity of data is exploding right now, mostly because every object in the world is becoming a data-producing device.
Over the past 20 years, we have seen a significant shift toward the “Smart World.” Just about every device out there generates large amounts of data – phone usage data, in-car driving data, consumer preference data, fitness and activity data.
As we’ve sprinted into this “Smart World,” the amount and speed of data that AI algorithms have access to has exploded, making them more capable than ever.
And guess what? The world isn’t going to take any steps back in terms of this AI pivot. Instead, this transition will accelerate.
In 2020, the world produced about 47 zettabytes of data. But that number is expected to grow by more than 45X to 2,142 zettabytes of data by 2035.
And as the volume of data produced soars more than 45X over the next few years, machine learning and natural language processing models will get 45X better (more or less), and AI machines will get 45X smarter (more or less).
Eventually – and inevitably – the world will be run by hyper-efficient and hyper-intelligent AI.
And we’re not alone in thinking this. Gartner predicts that 69% of routine office work will be fully automated by 2024, while the World Economic Forum has said that robots will handle 52% of current work tasks by 2025.
Folks, the AI Revolution is coming – and it’s going to be one of the biggest revolutions you’ve seen in your lifetime.
Needless to say, you need to be invested in this emerging technological megatrend that promises to change the world forever.
You could play it safe and go with the blue-chip tech giants. All are making inroads with AI and represent low-risk, low-reward plays on the AI Revolution. I’m talking about Microsoft (MSFT), Alphabet (GOOG, GOOGL), Amazon (AMZN), Adobe (ADBE), and Apple (AAPL).
But that’s not how we do things at Hypergrowth Investing. We don’t like “safe” – we like “best.” And in this report, we’ll dig deep to find the five top ways to play the AI Revolution.
Let’s get started…
AI Stock to Buy #1: An Autonomous Vehicle Stock With Massive Potential
Imagine driving without ever touching the wheel and getting from Point A to Point B without any stress or hassle. Imagine living in a world where cars are smart enough to navigate themselves safely and efficiently. This is not science fiction. This is the future of transportation.
And it’s powered by AI.
Artificial intelligence is the key to unlocking the potential of autonomous vehicles (AVs). AVs use AI algorithms to analyze data from sensors and cameras and then make split-second decisions that keep passengers and pedestrians safe. AI is what enables cars to see, think, and act on their own.
When it comes to autonomous driving, AI is not just a buzzword. It’s a reality. Right now, AVs are operating in cities across the United States, delivering goods, transporting people, and saving lives. Major automakers are investing billions of dollars in AV technology – and are planning to launch self-driving models in the next few years. Tech giants are filing patents and acquiring startups in the AV space, and regulators are creating policies and standards to support the adoption of AVs.
There is a huge opportunity for investors to join in the wave of innovation and disruption. AV stocks on the market are undervalued, overlooked, and ready to soar as the demand for self-driving solutions grows.
In my paid services, we have identified some of the best AV stocks for you to buy now – before they take off in 2023 and beyond.
And in this report we want to tell you about one of them.
Innoviz (INVZ) is a leading developer of light detection and ranging (lidar) sensors. The company is sitting on $212 million in cash on the balance sheet, with basically zero revenues and annual cash burn of about $100 million. Revenues are expected to start ramp up in 2023, with a big step up expected in 2024.
The company is worth about $440 million.
As an Israeli company in an industry awash with U.S. startups, Innoviz is unique. The company was founded by former members of the exclusive “Unit 81” – the most elite technology unit in the Israeli Defense Forces – and 25% of its research and development team are Unit 81 alumni.
But what really sets Innoviz apart is its unique solid-state technology.
Specifically, Innoviz is leveraging what are called micro-electro-mechanical system (MEMS) mirrors. These MEMs essentially take all the moving parts of a traditional lidar system and condense them into one unit (hence “solid-state”).
Traditional lidar systems need mirrors to reflect the laser pulses they send out. The status quo in lidar today is to move those mirrors in a constant motion. But doing so requires a motor, which is often bulky and expensive.
Innoviz is throwing out that motor in favor of tiny mirrors whose tilt angle varies when an electric stimulus is applied. These MEMs mirrors are much cheaper and smaller than motors.
Thus, by throwing out the motor, Innoviz is hoping to make a new generation of solid-state lidar systems that are cheaper and smaller than what is currently offered in the market. Innoviz is targeting its next-gen lidar sensors to be around $500, which would be the lowest cost in the industry by a wide margin (our best estimate for the lowest cost today is around $1,000).
In other words, the company has leveraged MEMS technology to create a new class of highly competent lidar that is also economically viable in autos. BMW (BMWYY) and Volkswagen (VWAGY) already have signed major contracts with Innoviz. Deployment of the technology should start next year.
We think self-driving stocks will have a banner showing in 2023 and ‘24. And considering its unique technology, big contract wins, clear visibility to huge revenue growth, and very discounted valuation, Innoviz is one of the best-positioned self-driving stocks in the market.
AI Stock to Buy #2: A Misunderstood AI-Based Tech Stock
Many of the most successful stocks on Wall Street in the past decade followed an eerily similar pattern.
- They had a huge initial public offering that attracted a lot of attention.
- Then they plunged after the IPO because of some exaggerated fear, usually based on investors not understanding how the new company made money.
- Then they bounced back as Wall Street realized that the fear was unfounded and that the company had a strong and unique business model.
This happened with Meta (META). The social media giant formerly known as Facebook went public in 2012, and its stock rose at first. But then it dropped more than 50% as investors worried about the future of its digital ad business. Despite those worries, that business kept growing fast, and the company’s stock skyrocketed thousands of percent from those low levels.
This also happened with Twilio (TWLO). The cloud communications provider went public in 2016, and its stock soared. But then it crashed when one of its biggest customers – Uber (UBER) – left. Investors feared that other customers would do the same, but they didn’t. As management kept saying, Twilio’s platform ecosystem was very sticky. And when the numbers started to show that Twilio was right every quarter, the stock soared thousands of percent.
Roku (ROKU), Block (SQ), and Snap (SNAP) all followed a similar pattern.
Wall Street often makes mistakes when it comes to disruptive tech companies that are new to the public market. That leads to big overreactions – which create opportunities for huge gains.
We think that’s happening right now with a very special stock.
We’re talking about Upstart (UPST).
Upstart is a cloud-based AI lending platform that’s attempting to revolutionize the entire world of credit by replacing the manual, human-driven process with an automated, AI-driven one.
At the core of this mission, Upstart has developed an AI algorithm to price credit risk. In essence, the company has developed a new way to judge a person’s creditworthiness – their “FICO” score, if you will – using AI data analysis.
If Upstart can automate the credit underwriting and approval process with AI software, it can cut out a lot of “middleman costs” from the process and make lending cheaper and faster for everyone. That’s a large value proposition.
And the big driving factor there is Upstart’s AI system.
Upstart has continuously upgraded, trained, and refined its system for over eight years. The models target fee optimization, income fraud, acquisition targeting, loan stacking, prepayment prediction, identity fraud, and time-delimited default prediction. They incorporate more than 1,500 variables and draw conclusions from an ever-growing transaction database informed by 21.6 million repayment events.
Upstart was once one of the hottest stocks in the market. It’s now one of the coldest. A recent earnings report underscored that AI models are unproven in a slowing economy with rising interest rates. Investors worry those models will break. Consequently, the stock has collapsed.
But here’s the thing: For those with either good or decent credit profiles, historical data seems to prove beyond any reasonable doubt that Upstart’s AI models are better at pricing risk than legacy versions. And for folks with poor credit, Upstart’s AI models appear to be just as good as legacy methods.
If that data continues to hold true, then Upstart’s approach could turn into the foundation of modern credit underwriting. The stock is incredibly cheap at just 11X forward sales for 30%-plus revenue growth.
The company is highly profitable, emphasizing this ultra-rare combination of growth and profitability.
Let’s not overthink this one. Not too long ago, Upstart was a $400 stock. If management executes and validates the strength of its AI credit pricing models in a tough economic environment, the stock could easily fly back to its elevated 2021 levels.
Upstart is an innovative and disruptive company with a lot of potential. The only problem? The company is “too new” for an old-school Wall Street. We believe investors are massively misunderstanding the company’s models. This misunderstanding should be resolved with a few good quarters. If a positive resolution does arrive, Upstart stock will fly higher!
AI Stock to Buy #3: One of the Best AI Stocks to Buy for Geopolitical Uncertainty
Our view is that cybersecurity stocks are a smart way to profit from the ongoing geopolitical crisis in Europe. This is because modern warfare is not only about physical combat; it’s also about digital attacks in the cloud. Indeed, the cyberwarfare between Russia and Ukraine has been intense and relentless.
The hacker group “Anonymous” has targeted many Russian assets, such as President Vladimir Putin’s yacht, state media, internet providers, TV networks, electric vehicle chargers, Belarusian banks and railways, and more. They have exposed sensitive information, shared intelligence, and played the Ukrainian anthem on Russian television.
Russia responded by hacking Ukrainian cameras and shutting down some Ukrainian websites.
Nvidia (NVDA) and Toyota (TM) were also hacked (supposedly unrelated to the conflict). But we doubt that. These are two major companies from the United States and Japan, which have imposed harsh sanctions on Russia. It seems like a clear act of revenge.
It seems the Cyber War is here. And it will only get worse.
Russia is angry about the sanctions the U.S. has imposed, but they have few options to fight back.
They can’t hurt us economically because their economy is tiny in comparison.
They can’t hurt us militarily because their army is weaker than that of the U.S. and our allies.
So they resort to cyberattacks, which are cheap and effective ways to cause damage and disruption.
Russia’s proven itself to be quite capable at cyberwarfare, and the odds are high that Putin leans into his country’s strengths. Of course, this also allows him the plausible deniability that he can’t get with missiles and AK-74M rifles.
Therefore, Russia will likely escalate this conflict into global cyberwarfare. And in that scenario, the U.S., its allied nations, and all major corporations in those countries are going to spend enormous sums of money on fortifying cybersecurity.
The investment implication, of course, is to buy cybersecurity stocks today… before this “gold rush.”
And we have a bead on the single highest-upside-potential cybersecurity stock in the market. It is a tiny $30 million company that has just developed a brand-new networking security solution, infusing artificial intelligence to create one of the industry’s best available defenses.
The stock is very risky. But if this product is what management cracks it up to be, then the stock could absolutely soar from current levels.
The company we’re talking about is Intrusion (INTZ).
Intrusion is a small cybersecurity firm that was founded in the 1980s and has remained a niche provider of networking security solutions to U.S. government customers. Over the past few years, about 85% of its revenues have come from U.S. government sales.
However, in late 2020, Intrusion announced the launch of a brand-new product called Shield. It is purported to be an AI-powered networking security solution that automatically and immediately stops cyber threats.
The company claims that this solution will set a new gold standard for cybersecurity at the national level. In late 2020, on hope of those claims, Intrusion stock up-listed on the Nasdaq and rose about 10-fold over the course of a few months.
However, since then, Intrusion has struggled to illustrate commercial traction for its Shield product, which some industry insiders have called smoke and mirrors. Amid a lack of Shield industrial progress, Intrusion stock has given back all its late 2020 gains — and then some.
Shield changed its management team and made some significant modifications to its board of directors last year, and those changes were quite positive. They included bringing in a new, well-established cybersecurity executive to be the CEO. Tony Scott is the former chief technology officer of General Motors (GM) and former chief information officer at Disney (DIS), Microsoft (MSFT), and VMware (VMW).
Intrusion is hoping that its new management team will successfully commercialize Shield in a big “up” market for the cybersecurity industry.
In summary, Intrusion is a rare opportunity to invest in a disruptive product, a visionary leader, and a compelling valuation in one of the most lucrative industries in the world. Cybersecurity is not going away anytime soon. In fact, it’s only going to become more important and more profitable as technology evolves and threats multiply.
If Shield is a legitimate product with value-additive commercial applications, then Intrusion could easily grow its revenue base to north of $500 million within a few years. On 30% operating margins and after a 20% tax rate, that would lead to about $120 million in net profits. A 20X multiple on that implies a long-term valuation target of around $2 billion.
As the Russian-Ukrainian conflict likely evolves into global cyberwarfare, cybersecurity stocks are positioned to enter a “golden era” of supercharged growth. There are a lot of solid stocks out there to buy and play this boom. However, per our analysis, none offers higher upside potential than Intrusion.
AI Stock to Buy #4: A “DeFi Meets AI” Token That Should Be on Your Radar
OK, this one isn’t a “stock”… but we still think you’ll want to investigate it further.
Cryptocurrencies are not for the faint of heart. They are volatile, unpredictable, and sometimes downright scary. In the past year, they have lost half of their value or more. Many investors have panicked and sold their coins, thinking that the crypto boom is over.
They are wrong.
Cryptocurrencies are here to stay… and they are going to skyrocket over the next decade.
ARK Invest CEO Cathie Wood, one of the top innovation investment experts in the world, has done the math, and she believes that, by 2030, Bitcoin (BTC-USD) could be worth over $1 million, and Ethereum (ETH-USD) could be worth over $180,000. That’s a staggering increase from today’s prices (around $27,000 and $1,740, respectively, as I write this).
Wood is so certain because she understands the power of decentralization and innovation. Cryptocurrencies are not just digital money. They are…
- A new way of organizing society and economy, based on trust, transparency, and efficiency
- Enabled by blockchain technology, a revolutionary invention that allows people to exchange value without intermediaries or censorship
- Constantly evolving and improving, thanks to artificial intelligence, which Wood is also passionate about.
That’s why we are excited to introduce you to a crypto project that combines blockchain and AI in a unique and groundbreaking way. It’s one of the most ambitious and innovative crypto projects we’ve ever seen, and it has the potential to change the world as we know it. It’s called Fetch.ai (FET-USD).
Fetch.ai is born of the convergence of cryptos and AI. To that end, the project’s goal is (unsurprisingly) to democratize access to AI technologies.
It accomplishes this through the creation of a decentralized machine-learning platform. In it, devices, algorithms, software programs, and data sets can independently “talk” to each other through the blockchain.
Specifically, Fetch.ai has created its own blockchain where developers can create “autonomous economic agents.” These are just small, self-operating software programs that automate tasks for the developer. For example, these agents could be coded to buy a specific volume of a good for a specific retailer if the price for that good drops to a certain level.
The novelty of the platform is that the data inputs (the price of a good) and outputs (the process of buying the good) for these autonomous economic agents are both executed through the Fetch.ai blockchain. Here, the FET token is the primary medium of exchange for transaction fees. Its blockchain users are rewarded in tokens for providing validation services for these transactions.
Fetch.ai, based in the Netherlands, was founded in 2017, and the platform went live in 2020. As I write this, the market capitalization of the token is just $301 million.
We love the uniqueness of this opportunity. In our research, we have yet to come across a blockchain project that has so thoughtfully merged crypto economics with AI to democratize automation technology. It’s a truly unique concept.
We also see huge value-adds for the core platform. AI technologies are difficult to develop, inform, improve, launch, and scale. Yet, they’ll be mission-critical by 2030. Therefore, over the next decade, companies will have to figure out a way to democratize AI. Fetch.ai does that through the creation of shared data networks and autonomous economic agents, which can dynamically tap into those networks.
The team is very promising here, as we’re seeing lots of Cambridge and Oxford DNA — impressive for such a small startup.
Cryptos are the future, but the crypto market is awfully crowded. Therefore, the best thing to do right now in the markets is to buy the dip — but only in high-quality and super-unique cryptos. Fetch.ai falls in both buckets, with huge upside potential once the project’s developers successfully scale their blockchain AI technologies. This is one of the most exciting cryptos we’ve researched in recent memory.
AI Stock to Buy #5: A Beaten-Down AI Stock in the Intelligence Economy
Data is the new currency of the business world. That’s because it can help businesses:
- Improve their products, marketing, and customer service
- Optimize their operations, automate their workflows, and innovate their solutions
- Reduce their risks, forecast their results, and understand their customers
A 2020 Forrester Consulting survey showed that data-driven organizations are 58% more likely to surpass their revenue goals than non-data-driven ones. And a 2021 Gartner survey revealed that in 75% of large organizations, the role of chief data officer is as essential as IT, business operations, HR, and finance.
Welcome to the Intelligence Economy – a new era where enterprises leverage Big Data to achieve better business outcomes.
And in this era, it’s survival of the fittest – so if you don’t embrace data-driven decision making now, you’ll be left behind by competitors that do.
The Intelligence Economy is here to stay. And by 2030, every business in the world will be a data-driven one.
But… a recent New Vantage survey found that only 31% of companies have adopted data-driven decision making.
This gap between the current state of the business market (less than one-third adoption of Big Data software) and the future state of the business market (100% adoption) indicates huge growth opportunities for the Intelligence Economy in the next decade.
Especially for the companies that are at the heart of the Intelligence Economy – the AI firms that develop Big Data analytics software. They are set for massive revenue growth in the 2020s.
The time to invest in these often still-small AI/Big Data stocks is now because they won’t be small for long.
One of the most impressive companies in the space today is Palantir (PLTR). The company is designing AI-powered analytics solutions that allow customers to find, track, and analyze quite literally any feature about anything on the planet.
It’s like Batman’s supercomputer we see in the movies.
It’s very advanced technology.
And it got so advanced because, for years, Palantir was a government-sponsored research project. Long story short, the government pumped tons of money into Palantir to create this Batcomputer-like tech, succeeded in doing so, and now Palantir is selling that tech to both government agencies and commercial enterprises.
Palantir is not only a great company but also a solid investment opportunity. But there’s one problem: at a valuation approaching $20 billion, Palantir is already priced to take over the world.
The “easy money” has already been made.
And that’s why we are so bullish on BigBear.ai (BBAI).
The Columbia, Maryland-based company has developed an end-to-end data analytics platform that utilizes AI and machine learning algorithms to help power data-driven decision making for both government organizations and commercial enterprises alike. Much like Palantir, the company got its start by selling to U.S. government organizations, and after successfully doing so, has expanded into the commercial market.
Our bullishness on BigBear.ai boils down to five things.
The technology. We’re thoroughly impressed. Its platform is no joke. The AI and machine learning capabilities seem robust, and the solutions are pervasive. But don’t trust us – trust the results. With BigBear.ai, a U.S. intelligence agency saved on over 100 years of labor costs and made 100X more discoveries than the last 50 years of manual analysis combined. Meanwhile, a large public transportation firm was able to improve maritime vessel transit mileage by more than 1,000 miles per ship on certain routes.
This company’s tech is legit. It works. And it’s delivering mind-blowing results for clients.
The pricing. One of the shortcomings of Palantir is that – because the platform is so high-performance and is sold as an all-in-one offering – the tech is prohibitively expensive. By comparison, BigBear.ai’s tech is much cheaper, and that’s a result of the fact that BigBear.ai breaks down its platform into various “mini-solutions” and sells access to each of them.
We think BigBear.ai will find great success in penetrating markets that Palantir has yet to penetrate due to high costs.
The team. Like the tech, the team here is no joke. The company has about 550 employees, around 92% of whom have a security clearance of some sort and about 30% of whom have advanced degrees, including seven PhDs. Of note, the CEO is an MIT PhD who was formerly a big wig at both the U.S. Department of Defense and the Department of Homeland Security.
This is the sort of the team that you’d expect to be behind a world-class AI software for government organizations.
The growth trajectory. Revenues have grown at a 25% compounded annual growth rate since 2016. With 83% of 2021 projected revenues in the backlog, revenue growth is expected to accelerate in 2021 to 31%.
In other words, BigBear.ai was already growing fast – and now, it’s growing even faster.
The valuation. At a market cap of just $323 million, BigBear.ai is trading at 1.25X sales. By comparison, Palantir is trading at 8.75X sales – a 7X higher valuation than BigBear.ai.
All in all, we really like this company, this team, and this stock – and believe buying shares at its ultra-low valuation today could be like buying shares of Palantir when it was less than 5% of the size of its current self.
That’s why, if you’re bullish on the Intelligence Economy, you should consider taking a position in BigBear.ai today.
The AI revolution is in full swing now, and it’s only going to become more pronounced from here.
Artificial intelligence has been in use for years, but there were no widely applicable solutions until the introduction of ChatGPT.
OpenAI’s focused AI system has completely changed the game, showing the world what AI is capable of. It’s good. It’s really freakin’ good. But regardless of what headlines you may read online, ChatGPT is not gaining sentience and taking over the world … we’re still a long way from having true general AI, which is the kind of artificial intelligence you see in the movies.
General AI is the stuff we see in science fiction movies. Think Jarvis from Iron Man or HAL 9000 from 2001: A Space Odyssey. Those systems are cool, and they’re what we all think about when we think of artificial intelligence. Naturally, then, investors get excited when a company says it is making a general artificial intelligence system like those we’ve seen in movies.
But if you hear a firm make that pitch, run the other way.
Those are startups that will promise the moon but never deliver. They’ll be powered by investor “hopium” until they find themselves in the stock market graveyard.
Avoid those stocks.
Buy companies that have realistic goals and realistic pathways to huge success. Find the ones that are developing world-class narrow AI to do one thing very efficiently. Those are the stocks that will soar thousands of percent over the next few years and establish defensible monopolies in certain sectors of the global economy.
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Editor, Hypergrowth Investing