Though the artificial intelligence craze (AI) is slowing somewhat, there’s no doubt that advanced computing and AI-style offerings will continue driving innovation and market gains for years. But, though top AI stocks gather the most media and market attention, overlooked AI stocks are slowly building a foundation for rapid future growth.
Finding these overlooked AI stocks tends to be tricky. They aren’t as “AI first” as most popular companies tend to be, i.e., they won’t plaster AI labels and jargon across their entire product or service line, whether or not the designation truly applies – just look at Amazon’s (NASDAQ:AMZN) ongoing “Just Walk Out” AI-meets-outsourced staff debacle.
These three stocks represent the wider overlooked AI market, and their quiet innovation today could set the stage for a massive upside tomorrow.
Reddit (RDDT)
Though inarguably overvalued today, Reddit (NYSE:RDDT) has latent and overlooked AI potential from an unexpected place: training and feeder information. A robust source of “real people” writing long-form content, asking questions, and debating topics, Reddit could easily (and will likely) offer third-party AI companies an opportunity to train their models on the depths of data. This potential also makes Reddit agnostic to any specific AI stock’s performance – they’re selling picks and shovels to the gold miners.
The move isn’t without precedent. As long ago as 2019, subreddits testing early-gen GPT models saw bots built on the tech interacting with one another to flesh out kinks, test processes and refine GPT to its current state. Trained on Reddit feeder data, the subreddits mimicked standard user back-and-forth, though some of the outputs pale compared to today’s comparatively common-sense responses.
For ages, we’ve heard about data being the new oil or other commodity of choice. Still, AI’s emergence and increased focus on improving training data make sites and companies like Reddit prime feeding grounds set to capitalize on the long-term trend.
Parsons (PSN)
Overlooked AI stock Parsons (NYSE:PSN) is a small(ish) defense tech company with a wide range of products in intelligence and security. The company boasts a range of achievements in ballistic missile site development, rocketry hardware and nuclear site management, and a considerable involvement in infrastructure development through numerous nationwide bridge projects. This diversification aligns Parsons with ongoing national revitalization efforts, initiatives that will likely spike after the Baltimore bridge collapse.
The vast and varied projects under Parsons demand extensive technical data management and oversight, areas where AI is set to make a substantial impact. Parsons leads with internally managed AI data solutions and pushes the boundaries with its AI-enabled drone applications.
Beyond defense applications, Parsons is broadening the scope of its AI-driven drone solutions to include infrastructure inspection tools. These tools are revolutionizing the evaluation of existing and ongoing infrastructure projects like bridges, roadways, and water treatment facilities, making Parsons a key player in deploying AI to challenging or hazardous areas that need robust and in-depth safety assessments.
AeroVironment (AVAV)
Like Parsons, AeroVironment (NASDAQ:AVAV) is a defense sector stock with considerable overlooked AI potential that retail investors often skip despite Cathie Wood’s substantial holdings. The company primarily focuses on drone tech, with its Raven UAS widely used by the US military and its global partners. However, the company’s peripheral products reveal significant AI capabilities that emerged well before the recent surge in AI trends.
In 2021, AeroVironment made a strategic move by acquiring Progeny Systems Corporation’s Intelligent Systems Group, introducing a new division centered around AI-powered visual detection tools. These tools, pivotal for future warfare, enhance AeroVironment’s ability to identify specific objects, conduct change detection assessments and understand “pattern of life” activities. All of these are central to effective drone surveillance and targeting and notable since drone warfare increasingly takes center stage in modern conflicts.
With this acquisition and its foray into AI-driven intelligent robotics, AeroVironment positions itself near the top of overlooked AI stocks. Likewise, its solid foundation with core clients in the U.S. federal government and allied nations ensures its sustainability and long-term potential.
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.
