Navigating the AI Landscape:
The stock market has been abuzz with the rapid rise of artificial intelligence over the past couple of years. Companies are increasingly integrating AI technologies into their business models to cut costs, boost performance, and thrive in both existing and emerging markets. Marc Andreessen famously remarked that “software is eating the world,” suggesting that automation would transform entire industries. AI is poised to do the same for software. According to MIT research, the U.S. is adopting AI unevenly, with significant usage concentrated in large enterprises and sectors like manufacturing and healthcare.
Grand View Research estimates that the global AI industry was valued at $196.63 billion in 2023, with a forecasted growth rate of 36.6% CAGR from 2024 to 2030.
OpenAI, a leading AI startup, has surged in value to nearly $80 billion within ten months of its partnership with Thrive Capital. Known for its advanced AI models like ChatGPT, which saw 1.806 billion visits in April 2024, and GPT-4o, which boasts capabilities in text, graphics, and realistic voice interactions. OpenAI’s unique approach involves collaborating with tech giants rather than competing, positioning it as a trailblazer in AI innovation.
Analysis Methodology:
We used the stock screener Finviz to identify AI stocks trading under $1 with high average trading volumes (500k to 10M). From this list, we selected the top 10 stocks based on hedge fund interest, using Insider Monkey’s database of 920 hedge funds as of Q1 2024. We used the Revenue Growth Rate (year-over-year) as a tie-breaker when necessary.
Why focus on stocks favored by hedge funds? Our research indicates that following the top stock picks of leading hedge funds can yield superior market performance. Our quarterly newsletter’s strategy has returned 275% since May 2014, significantly outperforming its benchmark.
2U, Inc. (NASDAQ)
Number of Hedge Fund Investors: 10
2U, Inc., an online learning platform with a global presence and AI integration, experienced a 17% revenue drop in Q1 2024, with total revenue falling to $198.4 million from $238.5 million year-over-year. This decline was attributed to changes in portfolio management, resulting in some programs ceasing operations. The company’s diluted EPS is -$3.90 TTM, a slight improvement from -$3.93 in 2023 and -$4.17 in 2022. Revenue growth fell by -1.78% from $963.08 million in 2022 to $945.95 million in 2023. As of June 6, 2024, the stock price stood at $0.31 per share.
Among the 920 hedge funds tracked by Insider Monkey, 10 hold shares in 2U, Inc. The largest stakeholder is Mudrick Capital Management, with 1151.92 million shares valued at $72.13 million.
Despite recent declines, 2U remains a notable AI penny stock with potential, having seen its stock price increase recently. While penny stocks carry inherent risks, they also offer significant reward potential.
Overall, 2U ranks 3rd among our list of the top AI penny stocks under $1. For a broader view, check out our list of the most popular AI penny stocks. If you’re seeking a promising AI stock with higher growth potential and trading below five times its earnings, consider exploring our report on affordable AI stocks.
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