This AI leader could have an easier time delivering exceptional growth going forward than Nvidia will.
American technology pioneer and futurist Ray Kurzweil predicts "Artificial intelligence will reach human levels by around 2029." And he foresees an "intelligence explosion" where AI surpasses all human capabilities by 2045.
Not everyone agrees with Kurzweil. However, even if he's wrong about the timing yet right about the direction of artificial intelligence (AI), the long-term opportunity for investors is enormous.
AI stocks are already setting the pace for the broader market. But some will be bigger winners than others going forward. Here's my pick for the best AI stock to buy right now.
Paving the path to AI-powered process automation
UiPath (PATH -1.68%) was founded in Bucharest, Romania nearly two decades ago. The company focused on developing robotic-process automation (RPA) software and computer-vision technology. Its vision has expanded "to enable automation across all knowledge work to accelerate human achievement." Unsurprisingly, AI is critical to how UiPath is achieving this vision.
Today, UiPath's platform integrates AI extensively. Customers can rapidly automate existing and new processes, including extracting information from documents, completing forms, reading emails, and much more. The company's Clipboard AI, which automates copying and pasting to a form or app, was named one of Time's Best Inventions of 2023.
UiPath has over 10,800 customers worldwide, including financial services leader FiServ and audio-streaming service provider Spotify. Its partner network includes consulting giants Accenture, Cognizant, and Deloitte.
Why I like UiPath over other AI stocks
Why is UiPath my favorite AI stock to buy right now instead of powerhouses such as Nvidia and Microsoft? Size is a key consideration. With market caps measured in the trillions of dollars, Nvidia and Microsoft face a more difficult task to continue delivering strong growth. UiPath's market cap stands below $13 billion -- a sweet spot that's not too small but not too big.
Of course, other AI stocks offer size advantages too. For example, Soundhound AI's (SOUN 4.01%) market cap is under $2 billion. But while Soundhound has a sky-high, price-to-sales ratio of 29.4, UiPath trades at only 9.8 times sales. That multiple is even more attractive considering UiPath's revenue jumped 31% year over year in the fourth quarter of fiscal 2024.
Also, many small AI stocks are unprofitable (including Soundhound AI). UiPath, though, posted a profit in its latest quarter.
UiPath appears to be poised for sustained long-term growth. A recent study found that 70% of corporate executives believe that AI-driven automation is "either very important or critical in fulfilling their organization's strategic objectives." UiPath isn't the only company targeting this fast-growing market. However, I agree with Ark Invest's assessment that UiPath's technology is superior to its rivals' platforms, giving it a key competitive advantage.
What's not to like about UiPath?
Granted, UiPath isn't perfect. There's no guarantee the company will be able to sustain consistent profitability. Its stock would likely be hit hard during an economic downturn. The growth in UiPath's number of customers is slower than I'd like to see. Much of the company's revenue comes from a relatively small group of customers.
Still, UiPath is an AI leader on the rise. It's delivering strong growth. Its valuation isn't prohibitive. For investors looking for a great AI stock to buy right now, I think UiPath is it.
Keith Speights has positions in Microsoft. The Motley Fool has positions in and recommends Accenture Plc, Microsoft, Nvidia, Spotify Technology, and UiPath. The Motley Fool recommends Cognizant Technology Solutions and recommends the following options: long January 2025 $290 calls on Accenture Plc, long January 2026 $395 calls on Microsoft, short January 2025 $310 calls on Accenture Plc, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
