The explosive growth of the artificial intelligence (AI) market has generated many millionaires. For example, a modest $3,000 investment in AI chip maker NVIDIA Just 10 years ago it would be worth almost 1.5 million dollars today.
But with a market capitalization of $3.6 trillion, it could be difficult for Nvidia to replicate those million-dollar profits over the next decade. Therefore, investors looking for that kind of life-changing returns should look for smaller companies that have more room to grow. I think these three companies… symbolic(NASDAQ: SYM), Serve robotics (NASDAQ:SERV)and Lemonade(NYSE: LMND) — could take the step.
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Symbotic produces fully autonomous robots for pallet processing in warehouses. It claims that a $50 million investment in just one of its modules (which includes its robots and software) can generate $250 million in lifetime savings over 25 years. Its main client is Walmartwhich tasked the company with automating all of its US regional distribution centers over the next decade. That deal accounted for 88% of Symbotic’s revenue in fiscal 2023 (which ended last September). Walmart is also a major investor in Symbotic.
Symbotic is overwhelmingly dependent on Walmart, but has been gaining additional major customers such as Aim, Albertsonand C&S wholesale. It’s also providing more robots to GreenBox, a new warehouse-as-a-service joint venture it launched with its big backer. SoftBank last year.
Symbotic’s revenue increased 55% in fiscal 2024, and analysts expect its revenue to continue growing at a compound annual growth rate (CAGR) of 32% over the next two years as it continues to fulfill its long-term agreement with Walmart and securing new customers. Analysts also expect it to become profitable under generally accepted accounting principles (GAAP) in 2025.
With an enterprise value of $3.1 billion, Symbotic stock still looks cheap, at 1.3 times this year’s sales. It faces some near-term macroeconomic and competitive headwinds in the warehouse automation space, but it could become a million-dollar stock in the coming years.
Serve Robotics develops autonomous sidewalk delivery robots. It was originally created as a unit of Postmates, which was acquired by Uber Technologies in 2020. Uber split from Serve in 2021, but still uses its robots to fulfill some of Uber Eats orders in Los Angeles.
Serve still generates all of its revenue from Uber and only operated 59 active robots in the Los Angeles area in the third quarter of 2024. But in 2025, it plans to deploy up to 2,000 robots for Uber Eats in Los Angeles and Dallas. Fort Worth Metropolitan Areas.
By 2024, analysts expect Serve to generate less than $2 million in revenue as it racks up a net loss of $34 million. But in 2025, they expect their revenue to rise to $13 million as they reduce their net loss to $31 million. By 2026, they expect their revenue to quadruple to nearly $60 million, while reducing their net loss to $25 million. We should take those estimates with a grain of salt, but Serve’s business could start to gain momentum as more companies use its robots to make short-distance deliveries. That growth could help it attract more customers to reduce its dependence on Uber.
With an enterprise value of $379 million, Serve doesn’t look terribly expensive at 6 times its 2026 sales. It’s still a highly speculative stock, but it could still have a lot of growth potential and has Nvidia as one of its biggest investors.
Lemonade is an online insurance company that simplifies the onboarding and claims process with its AI-powered chatbots. That simple digital approach made it popular with younger, first-time insurance buyers, and more than 70% of its customers were under 35 at the time of its IPO in 2020. It initially only offered to renters and homeowners. of housing. insurance, but now offers term life, pet health, and auto insurance policies. It ended its last quarter with 2.31 million customers, up from just over 1 million customers at the end of 2020.
By 2024, Lemonade expects its in-force premiums to increase 26%, its gross earned premiums to grow 22%-23%, and its total revenue to increase 21%-22%. It also expects its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to improve from negative $173 million in 2023 to negative $151 million-$155 million in 2024.
Lemonade hasn’t yet proven that its business model is sustainable, but it is growing much faster than its larger competitors. With an enterprise value of $2.9 billion, it trades at just 4 times next year’s sales, so it could generate millions in profits by expanding its business, reducing its losses and widening its moat.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool ranks and recommends Lemonade, Nvidia, Serve Robotics, Target, Uber Technologies, and Walmart. The Motley Fool has a disclosure policy.
3 Artificial Intelligence (AI) Stocks From Millionaire Creators was originally published by The Motley Fool
