2 Artificial Intelligence (AI) Stocks Trading Under $30 That Could Supercharge Your Portfolio

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The artificial intelligence (AI) industry is expanding, and there are attractive opportunities outside of semiconductor stocks like Nvidia.

Semiconductor Dev Nvidia It has added $2.6 trillion to its market capitalization since the start of 2023, eroding most of the value so far from the artificial intelligence (AI) industry.

However, professional investor Cathy Wood believes that software companies will eventually generate $8 in revenue for every $1 spent on chips like Nvidia's, which could create plenty of opportunities for investors.

C3.ai (AI -1.21%) And Lemonade (LMND -0.24%) Long before the hype caught on last year, AI was developing software. Shares of both companies trade at less than $30. Here's how they can supercharge your stock portfolio in the long run.

1. C3.ai

C3.ai was the world's first enterprise AI company when it was founded in 2009. It now has a portfolio of over 40 ready-made and customized AI applications used by businesses across 19 different industries, helping them leverage the benefits of the technology. without making it above the ground.

Dow is a chemical manufacturing company that uses C3.ai's applications for predictive maintenance. AI monitors Dow's equipment to calculate the probability of failure, allowing engineers to remedy any problems before they become critical. Dow says C3.ai has reduced its downtime by 20%, which directly affects production volume, revenue and profitability.

Similarly, Georgia Pacific (which produces paper, packaging, and construction materials) has launched C3.ai's Reliability Platform to monitor more than 200 major production assets, with plans to expand the partnership further. . Georgia Pacific has already seen a 5% increase in equipment efficiency, and management says employees now spend 80% of their time solving problems rather than finding them.

C3.ai sells its applications directly to businesses, but it also sells them through its extensive partnership network that includes all major cloud platforms such as Microsoft Azure and Amazon Web Services. Those partners offer C3.ai applications to their customers to give them more AI options, and C3.ai benefits from access to a much larger pool of businesses.

In the fourth quarter of the most recent fiscal year 2024 (ended April 30), C3.ai had 487 user engagements, a whopping 70% increase over the year-ago period, leading AI to the corporate world. highlighted the rapidly growing demand for The company's revenue hit an all-time high of $86.6 million during the quarter, up 20 percent, its fastest growth in nearly two years. According to management forecasts, revenue growth could touch another 23 percent in the first quarter of the next fiscal year 2025 (ending July 31).

C3.ai trades at $28.55 per share as of the close on June 27, an 82% discount to its all-time high since 2020's tech frenzy. His valuation was completely unreasonable at the time, but the company has since grown steadily, with more customers and a growing product portfolio. Now may be the best time to buy.

2. Lemonade

Lemonade has developed AI since it was founded in 2015 with the goal of disrupting the insurance industry, which is dominated by large companies. Lemonade uses AI throughout its business. It autonomously writes quotes, pays claims, calculates premiums, and even identifies areas where the company is underperforming.

Lemonade's AI chatbot, Maya, can write quotes for potential customers in less than 90 seconds through the company's website. Its AI bot, Jim, can pay claims within three minutes without human assistance. This fast-paced, tech-centric approach to the service has helped Lemonade attract more than 2 million users to date, and it is successfully reaching the younger age group in the 19 to 34 age bracket. which are historically underinsured.

Internally, Lemonade's Lifetime Value (LTV) AI models use a wealth of data to calculate a customer's likelihood of making a claim, switching insurers, and purchasing multiple policies, to ensure that Receives highly accurate premiums.

In addition, those models help reduce costs. The company's loss-adjusted expense (LAE) ratio — which measures the cost of handling claims — is 7.6%, compared to 10% for the industry as a whole. In fact, Lemonade's insurance book grew 22 percent over the past year while the company cut its workforce by 11 percent, highlighting the power of AI.

During the first quarter of 2024 (ended March 31), Lemonade's inforce premiums (the total value of all active policies) hit a record high of $794 million, a 21.5 percent increase over the year-ago period. represents the Its gross loss ratio (the percentage of its premiums paid as claims) also fell eight percentage points to 79% and is now in the ballpark of the company's long-term target of 75%.

These metrics resulted in a record $119.1 million in revenue during the first quarter, up 25% from the year-ago period. Lemonade is still generating low losses, but they are shrinking, and management expects the company to be cash flow positive by the end of this year. However, pulling back spending could slow revenue growth and delay expansion beyond its current five segments: renters, homeowners, life, pet, and car insurance.

Even so, reaching profitability would be an important milestone that could give investors confidence in Lemonade's ability to run a thriving, sustainable business for the long term. Its stock closed at $16.46 on June 27, an 89% discount to its all-time high. Like C3.ai, Lemonade was caught up in the tech frenzy during 2021, and its price skyrocketed to unsustainable heights. Then, with the company's clear upside, a sharp decline can be a great opportunity to buy the stock.

John Mackey, former CEO of Whole Foods Market, is a member of the board of directors of The Motley Fool, an Amazon subsidiary. Anthony DiPizio has no position in any stocks. The Motley Fool has positions and recommends Amazon, Lemonade, Microsoft, and Nvidia. The Motley Fool recommends C3.ai and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a Disclosure Policy.

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