Three Underrated AI Stocks Worth Considering

As artificial intelligence (AI) continues to reshape industries and unlock vast economic potential, investors are exploring lesser-known stocks in this dynamic field. Research by IDC suggests that AI spending will contribute a remarkable $19.9 trillion to the global economy by 2030. Amidst this AI boom, smart investors are seeking rare opportunities beyond the mainstream names, discovering hidden gems that are strategically aligned to benefit from this technological advancement.

In this article, we will examine three companies that are quietly making significant strides in the AI sector, each utilizing a distinct strategy to tap into this transformative technology.

Pioneering AI Power Solutions

Navitas Semiconductor (NVTS) is leading the charge in delivering cutting-edge power solutions essential for energy-efficient AI data centers. Their gallium nitride (GaN) and silicon carbide (SiC) power semiconductors demonstrate substantial efficiency gains compared to traditional silicon-based chips.

Recently, Navitas introduced the revolutionary "IntelliWeave" digital control technology, which allows power supplies in AI data centers to achieve over 99% efficiency. This advancement is particularly crucial as data centers strive to reduce power usage while addressing the demanding computational needs of AI applications.

Even though Navitas is currently unprofitable, it is experiencing robust revenue growth. In the second quarter of 2024, the company reported revenues of $20.5 million, reflecting a 13% increase from the prior year. With a promising pipeline of over 60 data center client projects and the launch of new products geared towards AI applications, Navitas is well-equipped to take advantage of the escalating investments in AI infrastructure.

Constructing the AI Backbone

Applied Digital (APLD) is rapidly enhancing its high-performance computing infrastructure to satisfy the skyrocketing demand for AI processing capabilities. The company specializes in designing, building, and operating next-gen data centers that cater to AI and machine learning workloads.

Applied Digital's cloud services segment is thriving, recently augmented by the addition of two new graphics processing unit (GPU) clusters in the last quarter. This successful expansion led to a revenue generation of $25.9 million in this segment alone.

The company is also making headway on its inaugural high-performance computing facility in North Dakota, aiming for a capacity of 100 MW, with future plans to expand that figure to 400 MW. Applied Digital is currently in the planning phase for two additional buildings at this site, further enhancing its capacity to meet the growing need for AI computational resources.

A recent private placement of $160 million, which saw backing from notable entities like Nvidia and prominent real estate developer Related Companies, highlights the potential opportunity that Applied Digital presents in the AI infrastructure arena. While the company did report a net loss in its fiscal Q1 2025, concluding on August 31, revenues surged by 67% year-on-year, reaching $60.7 million, primarily due to growth in its cloud services.

Transitioning from Bitcoin to AI

Iris Energy (IREN) is capitalizing on its experience in Bitcoin mining infrastructure to meet the increasing demand for AI computation. The company has begun expanding into AI cloud services, generating revenues of $3.1 million in its fiscal year 2024 through a variety of customers in both reserved and on-demand sectors.

The shift toward AI is still in its early stages for Iris Energy, but the company holds considerable potential to repurpose its extensive data center infrastructure and renewable energy sources for AI-related applications. Current evaluations are underway for AI data center opportunities at its 1.4 GW site located in West Texas, with this assessment being managed by Morgan Stanley.

Despite the challenges posed by the fluctuating Bitcoin mining sector, Iris Energy reported improved fiscal results for FY 2024, which concluded on June 30. The company achieved an impressive EBITDA of $19.6 million, a significant recovery from a loss of $123.2 million the previous year. Their Bitcoin mining revenue reached a new high of $184.1 million, up from $75.5 million in the prior fiscal year.

Considering the Risks

While the aforementioned companies provide intriguing exposure to the AI surge, they also carry substantial risks. All three are currently unprofitable and operate in highly competitive markets, with their success largely dependent on the sustained growth and adoption of AI technologies.

For investors willing to embrace greater risk in exchange for potentially lucrative opportunities in the AI space, Navitas Semiconductor, Applied Digital, and Iris Energy present unique perspectives on the ongoing AI revolution that are not widely recognized. As the AI landscape evolves, these lesser-known companies might emerge as notable beneficiaries of the ongoing technological shift.

AI, Stocks, Growth