Identifying these hidden gems can be challenging. These companies don’t typically prioritize AI as their primary selling point, meaning they don’t heavily advertise AI capabilities across their product lines — a stark contrast to companies that may overuse AI terminology, slapping the label onto any basic automation function whether it applies or not.
The three AI stocks to buy outlined here exemplify this market segment, quietly innovating without fanfare.
Chegg (CHGG)
Chegg (NYSE:CHGG) may be volatile, but it’s making waves in a particularly promising sector: education and EdTech. Traditional educational institutions, even prestigious ones, face increased scrutiny and skepticism. I believe that AI and emerging remote work and learning technologies will drive the next major social revolutions. Chegg is at the forefront of integrating AI into various learning applications with its new AI-powered personalized learning assistant, built on OpenAI’s GPT API. This tool is one of the few successful AI applications in the EdTech sector.
However, pioneering new and next-gen tools can be expensive and yield unpredictable results early in their development. Chegg’s shares have fallen over 30% since the start of 2024, following an earnings report that fell short of expectations with a conservative outlook.
Nevertheless, Chegg’s management remains committed to its AI EdTech initiatives, describing the development as “ongoing and iterative.” They caution that it’s too early to forecast when revenue and margin growth will resume due to R&D costs. Despite these challenges, Chegg’s current price and valuation make it an attractive AI stock to buy for investors looking to leverage EdTech’s AI-centric future.
Reddit (RDDT)
Though inarguably overvalued, Reddit (NYSE:RDDT) has significant untapped potential driving its status among AI stocks to buy: a vast repository of user-generated content, which includes long-form writing, questions and debates. This makes Reddit an invaluable resource for third-party AI companies looking to train their models on rich, diverse data. It also lets Reddit remain agnostic as to which AI company or companies dominate the landscape — they’re selling upstream materials to those firms, much as a lithium supplier cares little about which electric vehicle company dominates the field.
This strategy has a basis in past actions. As early as 2019, certain Reddit communities (subreddits) were involved in testing early versions of GPT models, where bots trained on this technology interacted within the platform to refine the AI’s capabilities. These bots engaged in simulated conversations that mimicked real user interactions, although the quality of their responses was rudimentary compared to today’s more sophisticated AI interactions.
Is data the new oil? We’ve heard that phrase repeated constantly over the past decade. Still, it’s more apt today than before as AI technology progresses and the demand for high-quality training data increases. With their extensive and varied content, platforms like Reddit are well-positioned to benefit from this long-term trend, turning their user-generated content into a strategic asset for the burgeoning AI industry.
Getty Images (GETY)
Getty Images (NYSE:GETY) is an overlooked stock — period. The visual media company offers a wide range of stock photos and journalism photography targeting creatives, media companies and corporate marketing, design and communications. But the stock’s unique potential lies in its partnership with Nvidia, making it one of today’s overlooked AI stocks to buy.
Released in January, Getty’s Nvidia-powered generative AI image creator helps professionals and amateurs alike create customized and unique images in a simpler interface than, say, Midjourney’s Discord-centered platform. Most importantly, for the professional class, images licensed from the platform come with significant legal coverage. This helps shield users from copyright or similar lawsuits, particularly salient as OpenAI battles accusations of illegal data and info harvesting. Large-scale and corporate clients will likely want as many protections moving forward as possible, and few (if any) offer the same coverage as Getty Images.
Getty’s recent earnings report showed a small drag on both sales and income. Still, subscription rates increased by about 5% to 55.4% of the company’s net revenue — and its AI offerings will likely contribute to that stat accelerating further.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Jeremy Flint, an MBA graduate and skilled finance writer, excels in content strategy for wealth managers and investment funds. Passionate about simplifying complex market concepts, he focuses on fixed-income investing, alternative investments, economic analysis, and the oil, gas, and utilities sectors. Jeremy’s work can also be found at www.jeremyflint.work.