The AI hype train just keeps on rolling. Major semiconductor firms, cloud giants, and software companies have captured headlines over the past year with their AI advancements. However, while these big tech names grab the spotlight, some smaller niche AI players fly under Wall Street’s radar. These quiet achievers have significant upside potential, despite not making as much noise.
Let’s take Nvidia (NASDAQ:NVDA), for example. There’s no denying its AI leadership, but the stock has already soared to more than $661 per share on optimistic analyst targets before fourth-quarter earnings. Don’t get me wrong, Nvidia is by far an S-tier company, but I don’t foresee triple-digit returns from today’s prices. It is trading at 8.4-times 2033 estimated sales right now. History shows that semiconductor/cyclical software companies take it too far during peak hype, so Nvidia is trading on pure momentum right now.
Instead, I’ve got my eye on three lesser-known AI stocks I believe could supercharge portfolios in 2024 and beyond.
Data Storage Corporation (DTST)
I initially recommended Data Storage Corporation (NASDAQ:DTST) back in August when the stock was trading around $2.70 per share. Fast forward just five months, and shares have climbed more than 40% to around $3.90 apiece. However, I believe the party is only getting started for this overlooked cloud storage and cybersecurity player.
Data Storage Corporation provides disaster recovery, data protection, and cloud solutions to businesses spanning the healthcare, financial services, education, and other sectors. Revenue jumped 35.5% year-over-year last quarter to $6 million, handily beating estimates by nearly 20%. More importantly, the company has been profitable the past three quarters, with earnings per share in the black topping 2 cents, proving financial sustainability.
Cash flow is healthy with this company, too. Data Storage Corporation holds over $11.5 million in cash against just $822,000 in debt, giving it ample resources to fund expansion. The company’s market cap sits at a tiny $26.6 million, meaning there’s still plenty of time to get in early.
I’m banking on Data Storage Corporation’s mix of cloud, cybersecurity, and AI to drive growth as businesses increasingly shift operations to the cloud while boosting security against rising data breaches. The global cloud storage market is expected to reach $472 billion in 2030. Thus, I think DTST stock is an undiscovered gem that could balloon if it continues executing well. I see plenty of open runway ahead for this company.
Bandwidth Inc (BAND)
While not a pure-play AI stock, Bandwidth Inc. (NASDAQ:BAND) incorporates AI technology into its cloud-based call and text messaging platforms for enterprises. This communication platform-as-a-service provider is still flying under Wall Street’s radar, but I anticipate that changing soon.
The company’s revenue is projected to grow 14.4% in 2024 to $675 million. Its earnings per share are also forecast to double from 64 cents to $1.31 this year. Yet, BAND stock still trades at just 11-times forward 2024 earnings. This seems like an opportunity to scoop up shares at a discount before stronger growth resumes.
The stock has hugged the $10 level for over a year now, and has recently climbed to around $14 per share. But with momentum potentially returning, I think BAND stock could reach $30 by 2025, aligned with Gurufocus’ estimated fair value range.
VerifyMe (VRME)
VerifyMe (NASDAQ:VRME) utilizes advanced authentication technology to help brands prevent counterfeiting and fraud. The company’s revenue grew 7.5% last quarter to $5.6 million – a bullish signal that growth is returning after declines during the pandemic.
VerifyMe offers invisible inks, blockchain, serialization, and other tools to protect physical and digital goods across the pharmaceuticals, luxury items, electronics, and other sectors. As counterfeiting rises globally, VerifyMe’s solutions become more critical. Yet, few companies are targeting this space today.
Revenue is expected to climb 33% in 2023 and increase by high single digits annually going forward. Despite the growth, shares trade at just 0.4-times forward sales. Notably, VRME stock has traded sideways for months now, around $1 per share, but with profitability improving, I think we could see this forgotten stock come back to life.
Currently, institutions only hold about 20% of the stock. This leaves room for hedge funds and other larger investors to build positions. As VRME stock continues gaining traction with high-profile global brands, I anticipate Wall Street taking greater notice.
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On the date of publication, Omor Ibne Ehsan 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.