With artificial intelligence protocols requiring a ridiculous amount of computing capacity, the demand surge for graphics processing units (GPUs) naturally boosted Nvidia (NASDAQ:NVDA) but it also leaves the million-dollar question: what investment will be the next Nvidia?
To be sure, no one’s questioning the long-term viability of NVDA. Since the start of the year, shares have soared well over 200%. However, because NVDA now trades at over 110x trailing earnings, many investors understandably seek less-hyped AI stocks to buy.
To find out what company could be the next Nvidia, I’m going to explore a range of data points, including analyst assessments and options dynamics. But be warned: these ideas are wildly speculative. If you’re okay with that, below are the AI stocks to buy.
PowerFleet (PWFL)
An interesting but lesser-known entity among AI stocks to buy, PowerFleet (NASDAQ:PWFL) could be the next Nvidia if digital intelligence moves beyond just answering inquiries from Internet users. Headquartered in Woodcliff Lake, New Jersey, PowerFleet is a global provider of wireless Internet of Thing (IoT) and machine-to-machine (M2M) solutions for securing, controlling, tracking and managing high-value enterprise assets.
Per its public profile, these assets include industrial trucks, tractor trailers, intermodal shipping containers, cargo and vehicle and truck fleets. In recent years, the company has introduced new technologies such as Vista, an in-vehicle AI protocol that proactively manages risky driving situations across fleets.
While it’s difficult to make accurate insights based on its underlying derivatives activity, PWFL’s implied volatility (IV) curve swings higher alongside rising strike prices. This may suggest heightened anticipation of upside among options traders. Enticingly, Wall Street analysts peg PWFL as a unanimous strong buy with a $6.67 price target, implying 199% upside potential.
Codexis (CDXS)
Based in Redwood City, California, Codexis (NASDAQ:CDXS) is a protein engineering company that develops enzymes for pharmaceutical, food and medical applications. According to its website, the company utilizes machine learning tools to design, screen and analyze libraries of thousands of enzyme variants in high throughput, sequencing each variant and correlating its sequence with its performance.
While the science entices, the problem is market sentiment. Basically, few investors appreciate the marriage between ML and biotechnology-related solutions. Since the start of the year, CDXS lost just over 55% of equity value. In the past 365 days, it gave up just under 71%. Therefore, it’s not one of the AI stocks to buy lightly.
Still, it could be the next Nvidia in the applied sciences industry. Financially, Codexis prints a three-year revenue growth rate (per-share basis) of 20.5%. Still, it only trades at 1.52x sales, below 89.46% of its biotech peers. And while its IV curve indicates risk mitigation, options traders seem bullish. Lastly, analysts peg CDXS as a strong buy with an $8.17 price target, implying 289% upside.
Cepton (CPTN)
A wildly risky candidate for the next Nvidia, Cepton (NASDAQ:CPTN) is a leading provider of lidar-based solutions for automotive, smart cities, smart spaces and smart industrial applications. Given the rapidly burgeoning utility of AI and ML protocols, Cepton warrants attention among those looking to speculate with pocket change. However, the emphasis must be on pocket change.
Since the beginning of this year, CPTN fell more than 65%. In the trailing one-year period, shares gave up nearly 72% of equity value. Since Cepton’s public market debut, it’s lost 95% of value, posing serious concerns. Oh yeah, it goes without saying that CPTN is also a literal penny stock.
About the only good thing in its financials is the growth narrative. Featuring a three-year top line expansion of 21.1%, this metric beats out 86.78% of the company’s rivals. However, it gets ugly from there, with negative margins and an overall distressed enterprise.
That said, analysts peg CPTN as a strong buy with a $2.35 price target, implying nearly 411% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.