“The times, they are a-changin’,” sang Bob Dylan — and change is in full swing following last month’s election. While President Trump has yet to take office, stock markets have surged in anticipation of a more pro-business White House. The gains are broad-based, with every Wall Street analyst eager to explain why their area of expertise is poised to benefit.
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Wedbush analyst Daniel Ives is no exception – and being a tech expert, he’s quick to highlight how AI will continue to be the right play for stock investors.
“We believe tech stocks will be up another 25% in 2025 on the shoulders of the AI Revolution and $2 trillion+ of incremental AI cap-ex over the next 3 years… We believe the Softbank $100 billion AI announcement in Mar-a-Lago by CEO Masayoshi Son is just the beginning of more global AI investments in the US which is a bullish backdrop for the broader tech and AI landscape,” Ives opined.
As the AI revolution continues apace, Ives puts his broad picture into specifics and pulls the trigger on two AI-driven tech stocks. And he’s not alone in his enthusiasm – both stocks have earned ‘Strong Buy’ ratings from the analyst consensus, according to the TipRanks database. Let’s take a closer look at them, and find out what makes them such compelling choices.
Innodata, Inc. (INOD)
The first stock we’ll look at is Innodata, a company that started as an IT services provider back in the 1980s and has since transformed into a key player in the AI industry. Today, Innodata bills itself as a data engineering firm dedicated to creating advanced solutions for data analytics and management. Its business strategy hinges on the belief that AI – particularly generative AI – will empower customers to extract greater value from their IT and data management operations.
Innodata works with generative and applied AI technologies, using them to develop an advanced data annotation platform. The company describes it as a ‘no-code training solution’ for AI that backs up a platform capable of delivering better data insights for better customer experiences. Supporting its data work, Innodata has created an AI data marketplace, a resource designed to offer data at scale to train and build the next generation of advanced AI systems.
The company’s work with AI, and its proven ability to successfully combine AI with traditional IT and data services, has created a high level of demand. Innodata can count some of the tech industry’s biggest names among its customer base, including giants such as Google, Microsoft, Apple, and Amazon. Among its other customers are such well-known names as Boeing, Sony, X, and Deloitte.
Innodata’s AI work led to a solid set of results in 3Q24. Revenue came to $52.2 million, up an impressive 135% year-over-year and beating the forecast by $16 million. The company’s earnings, reported as a non-GAAP EPS of 51 cents, were 38 cents better than had been expected. The company set its full-year 2024 revenue guidance at 88% to 92% year-over-year growth.
In his write-up on Innodata, Wedbush’s Ives is unambiguously positive on the company’s position and prospects.
“We believe Innodata’s expertise in data annotation and AI over its decades of experience will lead the company to be a leader in this developing space… Innodata is currently the technology partner of choice for data quality, scale, and agility with 5 of the ‘Magnificent 7’ under contracts and 2 more deals expected later this year. Addressing the generative AI IT services TAM, Innodata is actively competing in what we believe will be a $200 billion TAM by 2029. With a veteran leadership team and over 35 years of experience, we believe Innodata has the potential to become a leader in this AI IT services sector,” Ives opined.
“With its unique position, Innodata has a unique SME domain specialization while actively looking further into existing data science, computational linguistics, programming, law and regulation, medicine, and allied health, sciences, and finance spaces,” the analyst added.
Ives’ bullish stance supports his initial Outperform (i.e. Buy) rating on INOD shares, and his price target, set at $48, suggests a ~21% upside for the next 12 months. (To watch Ives’ track record, click here)
Overall, there are 3 recent analyst reviews on record for INOD, and they are all positive – making the Strong Buy consensus rating unanimous. The stock is selling for $39.76, and its $46.33 average price target implies a one-year upside potential of 16.5%. (See INOD stock forecast)
OneStream, Inc. (OS)
Next in line is OneStream, an enterprise software firm that’s been serving the finance sector since 2012. Originally focused on providing essential financial tools, the company has stepped up its game, integrating advanced AI technology and expertise into its platform. The outcome is a suite of applied AI solutions, purpose-built to streamline and elevate financial operations.
OneStream’s unified platform harnesses AI to automate essential tasks, enabling precise reporting and more efficient decision-making. With the finance industry in constant flux, its adaptive AI tools are designed to address evolving challenges. The company serves over 1,500 clients, generating $540 million in annual recurring revenue. Its customer portfolio features prominent names like UPS, Costco, and Toyota.
The company went public earlier this year, in an IPO that raised $490 million in gross proceeds. A total of 24.5 million shares were made available, at $20 each.
Last month, OneStream announced its earnings results from 3Q24. The company’s revenue in the quarter was up 21% year-over-year to reach $129 million and beat the forecast by $5 million. The bottom line, reported as a non-GAAP operating income, came to $5.5 million.
Daniel Ives sees a promising future for OneStream, noting: “With a wide set of AI-powered capabilities designed to assist enterprises in accelerating financial processes, OneStream is well-positioned to capitalize on elevated demand for solutions that assist executives with balancing reporting past performances and driving strategic business value with an uncertain macroenvironment to navigate making it necessary to embed AI for more informed decisions and faster planning.”
Looking ahead, Ives maintains a bullish outlook on OneStream’s growth potential, saying, “The company estimates to capitalize on a $50 billion TAM for finance and operations, including a $10 billion market opportunity for core finance solution legacy replacements, with an expansive broader market opportunity for AI/ML and we believe that the company is well-positioned to capitalize on this expanding market with its constantly-innovating product portfolio generating more demand across industries.”
Quantifying his stance, Ives gives OS shares an Outperform (i.e. Buy), with a price target of $40 that shows his confidence in a 35% one-year upside.
All in all, this relatively new stock has picked up 10 recent analyst reviews, with a 9-to-1 split favoring Buy over Hold, supporting the Strong Buy consensus rating. The shares are priced at $29.62, and their $37 average price target implies that the stock will gain ~25% by this time next year. (See OS stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
