When it comes to generative artificial intelligence (AI) investment opportunities, I think the market’s heavyweights get far too much attention. Undoubtedly, firms like those in the so-called Magnificent Seven have the deep pockets to really make huge investments (and acquisitions) in the space.
Whether we’re talking about the costs of building new AI models or the infrastructure required to run them efficiently (those Nvidia (NASDAQ:NVDA) H100 chips are not cheap, folks!), the mega-cap tech companies really do have the budget to make next-generation generative AI a reality.
That said, investors ought to focus on more than just the size of a firm’s balance sheet in this stage of the AI wars. Though mega-cap tech will benefit from AI, other plays in the space may also be able to make a splash, even with less cash to invest in various initiatives.
Don’t believe me?
Just have a look at the wildly popular AI startups that have taken the world by storm. Perplexity AI is an example of one startup that came from nowhere with its intriguing chatbot platform that could disrupt the status quo in search.
Snowflake (SNOW)
The high hopes for Snowflake (NYSE:SNOW) came crashing down following the release of its latest quarterly earnings results. With a new CEO, Sridhar Ramaswamy, and a lower bar and price tag on the stock heading into future quarters, it seems like too many folks have given up prematurely on the data cloud company.
Indeed, any sudden CEO departure or retirement can raise red flags for some. But in the case of Snowflake, I don’t think a 33% plunge is at all deserved.
In fact, it seems overdone. Snowflake’s director, Mark McLaughlin, recently bought shares of SNOW on the dip, reportedly paying more than half a million in early March with an average price of $165.45. Such big-name insider buying is a good sign, at least in my books.
Undoubtedly, investors want AI to be reflected in the financial numbers and the impact to happen as soon as possible. If Nvidia can take off on the back of AI, why can’t Snowflake, given it’s one of the kings of big data?
It could take many quarters for Snowflake to get the AI shot in the arm that investors previously hoped for. However, I am a fan of the firm’s more AI-focused direction, with the assets and talent of recently acquired AI-driven search firm Neeva aboard the Snowflake train.
Palantir Technologies (PLTR)
Palantir Technologies (NYSE:PLTR) may be relatively small, with a modest $54 billion market cap, but it’s an AI company that may be every bit as powerful as firms many times its size. The recent share price performance of PLTR has been scorching, with shares up more than 194% in the past year.
Undoubtedly, PLTR stock may be overheated after nearly tripling over a pretty concise timespan. However, with plenty to gain in the generative AI race and the trust of the U.S. government, I’d argue the stock is not one to bet against as it looks to surge higher.
Recently, Palantir stock got a jolt as Wedbush Securities analyst Dan Ives hiked its price target to $35 from $30 following its showing at the AIPCon conference. Ives’ new price target entails more gains to come from the AI firm that could continue having its way with short-sellers.
My takeaway? Don’t bet against the stock, as it continues to prove the bears absolutely wrong.
The Trade Desk (TTD)
The Trade Desk (NASDAQ:TTD) is an even smaller tech firm with a $38 billion market cap at the time of writing. The company has been an ultra-volatile ride for investors lately. But as an ad tech company looks to embrace the AI age, the firm has plenty of potential catalysts to drive TTD stock back to all-time highs.
The company’s latest earnings guidance was strong, but that didn’t stop shares from viciously plunging by around 14% after peaking in late February. I view the latest dip as more of a buying opportunity than a signal to sell. Many analysts covering the stock agree, with Oppenheimer’s team of analysts looking for ad demand to accelerate from here.
At around 19.7 times price-to-sales (P/S), TTD stock is pricier than most other high-growth stocks out there, leaving it vulnerable to continued wild swings in both directions. I think analysts are right on the money with TTD. Patience and a strong stomach could be rewarded in due time.
On the date of publication, Joey Frenette held shares of Snowflake. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.