1 AI Stock to Consider: Oddity Tech (NASDAQ: ODD)
Title: Forget Nvidia! 1 AI stock to buy that could rise 41%, according to Wall Street
If you’re looking for a stock in the realm of artificial intelligence (AI) that could offer high potential returns, Nvidia may not be your best bet anymore. While the company currently dominates the advanced AI chip market, its massive $2.2 trillion market cap makes it challenging for its share price to continue multiplying.
Investors seeking higher potential returns might want to consider smaller companies, like Oddity Tech (NASDAQ: ODD). This AI-powered firm, known for its makeup and skincare brands Il Makiage and SpoiledChild, has caught the attention of Wall Street despite a 30% decline in its share price since going public in July 2023.
Analysts are bullish on Oddity Tech, with 75% of them rating it as a ‘strong buy’ and setting an average price target of $51, 41% higher than the current share price of $36. The company’s unique business model, built on big data and machine learning, has helped it amass over 50 million customers and 2 billion data points in just five years.
Oddity Tech reported first-quarter revenue of $212 million, a 28% year-on-year increase, and achieved a 23% adjusted EBITDA margin. With a focus on more than 20% annual revenue growth and a 20% adjusted EBITDA margin long term, the company is already profitable and generating significant free cash flow.
While there are risks associated with being a small player in the competitive beauty industry and holding vast amounts of personal user data, Oddity Tech’s focus on product quality and customer loyalty sets it apart. The company’s innovative R&D arm, Oddity Labs, is also developing new brands focused on medical-grade skin treatments, which could drive further growth.
With the stock trading at just 20 times forecast earnings, investors like Ben McPoland are bullish on Oddity Tech and see potential for significant growth. As the company continues to innovate and expand its product offerings, it could be a compelling investment opportunity in the AI space.
Source: The Motley Fool UK, 2024
