But there’s still a ton of cheap AI-focused companies trading on the stock market. The trick is identifying the small guys before they take off. So which companies are quietly building groundbreaking AI tech in the background?

Consider these two lesser-known tech innovators with promising products in the pipeline.

Tempus AI

Tempus AI (NASDAQ:TEM) is an American health technology company specialising in AI-enabled precision medicine. It aims to make diagnostics and personalised treatment decisions more data-driven and efficient.

This kind of tech is critically important to patients suffering from terminal diseases like cancer. Just ask founder Eric Lefkofsky, who started the company after his wife was diagnosed with breast cancer.

The company combines AI and data analytics to provide precision medicine services for oncology, cardiology, radiology, and psychiatric disorders. Beyond just diagnostic, it also focuses on personalised care pathways.

At $75 a share, it doesn’t look particularly cheap, but it’s down almost 30% from its 52-week high. And like many rapidly expanding tech start-ups, it’s yet to turn a profit. That makes it hard to value, which is risky. If it keeps racking up debt without turning a profit, it could go bankrupt. 

That said, revenue has exploded from $188m to $1.11bn in just five years. So it’s doing something right.

Encouragingly, major US investment firm ARK Invest is optimistic about the company’s prospects. Both its Genomic Revolution ETF and ARK Innovation ETF hold the stock, with weightings of 9.78% and 4.82%, respectively.

Serve Robotics

Serve Robotics (NASDAQ:SERV) builds autonomous sidewalk delivery robots. Yes, those cute four-wheeled robot boxes that are the postmen of the future. I’m not sure it’s the future I want, but here we are – so may as well capitalise on the progress.

The robots use Nvidia’s latest AI combined with groundbreaking Ouster REV7 LiDAR sensors to calculate and navigate optimal delivery routes. They’re designed to handle real-world urban sidewalk environments, navigating potholes, curbs, uneven sidewalks, and pedestrian traffic safely.

Not only that, their average delivery time is comparable to or faster than human couriers. As I sit here wondering where my pizza delivery is, it’s safe to say these robots will be in high demand.

Following a commercial partnership with the Uber Eats platform, the company aims to expand deployment of up to 2,000 robots by the end of 2025.

A key risk, of course, is that a robot goes rogue, injures somebody, and the company gets hit with a massive lawsuit.

The bottom line

Tempus’s AI tech looks highly promising, as it continues to expand the boundaries of personalised healthcare. By coupling high-throughput genomics and molecular data with powerful AI tools, it aims to transform patient care globally.

Meanwhile, Serve Robotics exemplifies a practical, scalable application of AI to provide an everyday service.

To me, they both look like compelling AI stocks to consider before they become massive household names. And that’s not all – there are many other eye-catching AI stocks to consider on the market these days.

The post Hunting cheap AI shares to buy? Consider these 2 promising start-ups appeared first on The Twelfth Magpie.

Nowadays, he helps run Lingotto Innovation, a growth-focused strategy that similarly attempts to find massive stock market winners. In May, Anderson and co-manager Morgan Samet spoke to Barron’s. In this interview, they highlighted three stocks they’re very excited about over the next decade.

EVs

Let’s start with the most familiar, BYD (OTC:BYDD.F). This is the Chinese hybrid and electric vehicle (EV) maker that’s now outselling Tesla. Last year, BYD’s revenue grew 29%, toping $100bn for the first time ($107bn). Its affordable EVs are selling like hotcakes worldwide, and I’ve been seeing more of its cars on UK roads.

Anderson highlights BYD’s “deep commitment to science” as a competitive advantage. The firm designs and manufactures its own batteries. Indeed, as the world’s second-largest player, it sells EV batteries to others, generating a sizeable revenue stream beyond cars.

The stock’s up nearly 400% in five years, giving the business a chunky market-cap of $135bn. However, the forward price-to-earnings ratio of 17.5 looks reasonable, especially compared to Tesla’s 175.

Naturally, the global EV market’s extremely competitive, which adds risk. And the US and EU are likely to keep tariffs high to protect their own car industries from cheap Chinese imports. I’m less interested here.

Driverless trucks

To my mind, the next stock has a lot more explosive potential. This is Aurora Innovation (NASDAQ: AUR), a leading autonomous trucking company.

Uber-backed Aurora is working with industry heavyweights like Continental, Toyota, and Volvo Trucks. So it’s not trying to replace traditional trucking companies, but integrate its autonomous software/hardware systems into vehicles.

Now, the challenges here are obvious. “Trucks go faster, they carry heavier materials, there is more regulation, and companies operate across state lines“, Samet points out in the article. One motorway accident could be devastating for all involved, including Aurora shareholders.

However, the ability to operate driverless would deliver massive savings for the industry. In May, Aurora launched autonomous truck runs between Dallas and Houston, a route that has now surpassed 20,000 miles.

Priced at $5.70, the stock’s down 41% since going public in 2021.

AI diagnostics

The third stock’s Tempus AI (NASDAQ: TEM). The company uses artificial intelligence (AI) and a vast library of clinical data to help physicians make personalised treatment decisions for patients, particularly those with cancer.

The company does genomic sequencing tests, while its Tempus One tool functions as a generative AI clinical assistant. Over 50% of US oncologists are now connected to Tempus.

For me, this is the most interesting because it’s only slightly larger than Aurora with a $12.5bn market-cap, but is far more advanced commercially. While Aurora isn’t forecast to generate $1bn+ in revenue until 2029, Tempus is on course for $1.3bn this year.

The main risk is that Tempus is still loss-making. But it’s nearing profitability while growing strongly (20%+ revenue growth forecast till at least 2028).

Undoubtedly, these two last picks are high-risk, high-reward. For adventurous investors though, I think Tempus may be worth exploring further.

The post 3 stocks that could be huge market winners, says this ex-FTSE 100 fund manager appeared first on The Twelfth Magpie.

Searching for big potential AI winners

The investing theme of 2024 was undoubtedly artificial intelligence (AI). This revolutionary technology has captured the public’s imagination in ways not seen since the birth of the internet.

Nvidia has been the standout winner so far, with its stock up 742% following the release of ChatGPT in November 2022. Shares of AI software firm Palantir Technologies have done even better — up nearly 1,000% over the same period!

However, there are likely to be more big AI winners as the technology improves and is applied to other areas. Tempus AI (NASDAQ: TEM) might just be one of those.

Using AI to transform cancer care

Google-backed Tempus owns the world’s largest library of clinical and genomic data, including over 6m patient records. It specialises in using AI and data analytics to advance precision medicine, particularly in oncology, by making sense of these massive unstructured datasets.

Physicians and researchers can use its AI-driven insights to personalise patient care and speed up drug development. The firm’s mission is “to help make sure patients are on the right drug at the right time“.

Scottish Mortgage Investment Trust is incredibly bullish on the company. Its portfolio director recently wrote: “Tempus sits at the intersection of two exciting trends — genomic profiling and artificial intelligence-driven health data…Looking forward, we maintain a high conviction in its ability to offer extreme long-term returns, by using AI to transform cancer care.”

Financial performance

The firm is growing strongly. In Q3, revenue increased by 33% year on year to $181m. For the full year, management expects approximately $700m in revenue, which would represent 32% growth.

Founder and CEO Eric Lefkofsky commented: “The overall business performed well in the quarter, as demonstrated by accelerating volume growth in our genomics business and accelerating revenue growth in our data and services business.” 

However, Tempus is not yet profitable, and recorded a net loss of $75.8m in Q3. Investing in a loss-making business would certainly add risk for me.

Also, the firm announced the acquisition of Ambry Genetics, a leader in genetic testing. This was for $375m in cash ($300m of this financed via debt) and $225m in shares. It expects Ambry to generate over $300m in revenue and generate more than $40m in EBITDA for 2024.

Debt adds further risk, even though Tempus should still have around $350m in cash following this acquisition.

The next amazing revolution

Looking ahead, analysts reckon the global market size of AI in oncology could grow from $891m in 2022 to $10.7bn in 2032. Tempus is a leader in this area, working with over 200 healthcare companies, including AstraZeneca and GSK.

In early 2024, Nvidia CEO Jensen Huang said: “Where do I think the next amazing revolution is going to come? There’s no question that digital biology is going to be it.”

Digital biology is the fusion of AI, big data, and healthcare. Therefore, Tempus looks well-positioned for strong long-term growth.

The share price has crashed 50% since Donald Trump nominated Robert F Kennedy Jr to become health secretary. That looks like a massive overreaction to me, and I’m considering taking advantage of the dip.

The post 1 artificial intelligence (AI) growth stock I’m considering buying in early 2025 appeared first on The Twelfth Magpie.

Founded in 2015, its revenue is rising sharply and it’s backed by Google. Should I snap up this stock in case it becomes the next Nvidia?

Personalised cancer diagnosis

This is how Tempus AI describes its mission: “Our goal is to embed AI, including generative AI, throughout every aspect of diagnostics to enable physicians and researchers to make personalised, data-driven decisions that improve patient care.”

The firm’s technology analyses medical data to make sure patients are on the right therapy at the right time. Cancer is its predominant focus.

The company’s CEO is Eric Lefkofsky, who co-founded Groupon back in the day. Following his wife’s cancer diagnosis, he was perplexed at how little personal data informed her treatment. So he founded Tempus, meaning there’s a real purpose underpinning the company, which I like.

It raised $410m going public and other blue-chip backers include Softbank and Scottish Mortgage Investment Trust.

How fast is it growing?

The company generates revenue through genomics diagnostics tests and by charging pharmaceutical companies that want access to its vast library of clinical oncology insights. Revenue from its direct AI applications is so far minimal.

Around 95% of the world’s top 20 pharma firms have used its products. And it now has partnerships with over 200 healthcare companies, including AstraZeneca and GSK.

I’m fascinated by the potential of its Tempus One product. This is an AI-powered clinical assistant trained on vast amounts of genomic data that provides insights to physicians directly at their fingertips. It allows for real-time decision-making at the point of care.

The company is growing rapidly, as we can see below.

Losses

However, the firm is also still loss-making, which adds risk to the investment case. Last year, it reported a net loss of $214m, down from $289m the year before.

While it expects to generate positive EBITDA in 2025, its IPO prospectus also mentions that it might need to tap investors for more cash in future. So I’d expect the stock price to be highly volatile.

In fact, we’ve already got a taste of this. After flying to $40 from its IPO price of $37, the share price fell to $23 before rebounding to $32.

This gives the company a market cap of $4.8bn and puts the stock on a price-to-sales (P/S) multiple of around eight. That looks quite pricey, despite the impressive rate of growth.

Tempted by Tempus?

I’m careful not to get too excited about any stock with an ‘AI’ after its name. There’s a growing collection of these now – C3.ai, SoundHound AI, and now Tempus AI. It’s all the rage.

Overall though, I think there’s a lot to like here. The firm puts its combined addressable markets above $200bn. And while it’s best to take such estimates with a grain of salt, growth is really strong right now.

However, it’s far too early to tell if this is the next big AI winner. Nvidia’s chips form the building blocks of AI infrastructure, whereas Tempus’s business model is promising yet still unproven.

Therefore, as things stand, I reckon there are safer growth stocks to buy today.

The post Is this Google-backed AI growth stock the next Nvidia? appeared first on The Twelfth Magpie.