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munKNEE.com tracks the stock performances of 101 artificial intelligence and related (AI&R) companies on a daily basis highlighting such information in a number of exclusive articles each week for TalkMarkets. This article focuses on the performances of the 11 such stocks that are still very much in bubble mode (i.e. above 100% YTD) as compared to the performance of the Global X Artificial Intelligence and Technology ETF (AIQ) of 91 AI&R constituents which is only up 30% YTD.To help ascertain which, if any, of these 11 stocks are possibly undervalued (or, at least, fairly valued, relatively speaking) to each other, each stock’s forward-price-to-sales ratio (PSR), enterprise value-to-earnings before interest, taxes, depreciation and amortization (EV/EBITDA) ratio and price earnings-to expected 12-month growth (PEG) ratio is provided. A definition of each ratio is at the end of the article.

Stock Performances MTD and YTD
The above information along with each company’s current market capitalization is provided below in descending order as to its stock performance month-to-date (MTD) as well as its price change YTD.  

  • Symbotic (SYM): UP 11.8% MTD; UP 213.1% YTD

    • Market Capitalization: $22B
    • PSR: 2.8 (marginally above sector mean of 2.3)
    • EV/EBITDA ratio: Negative
    • PEG ratio: No earnings
  • C3.ai (AI): DOWN 0.8% MTD; UP 128.6% YTD

    • Market Capitalization: $3B
    • PSR: 9.7 (much higher than sector mean)
    • EV/EBITDA ratio: Negative
    • PEG ratio: No earnings
  • Rekor Systems (REKR): DOWN 3.9% MTD; UP 134.2% YTD

    • Market Capitalization: $185 million
    • PSR: 4.5 (higher than sector mean)
    • EV/EBITDA ratio: Negative
    • PEG ratio: No earnings
  • Meta Platforms (META): DOWN 4.0% MTD; UP 131.2% YTD

    • Market Capitalization: $741B
    • PSR: 5.6 (higher than sector mean)
    • EV/EBITDA ratio: 10.0 (better than sector mean of 12.9)
    • PEG ratio: 1.0 (better than sector mean of 1.6)
  • Palantir (PLTR): DOWN 4.4% MTD; UP 139.3% YTD

    • Market Capitalization: $33B
    • PSR: 14.9 (much above sector mean)
    • EV/EBITDA ratio: 49.4 (much higher than sector mean)
    • PEG ratio: 1.0 (lower than sector mean)
  • Nvidia Corporation (NVDA): DOWN 7.3% MTD; UP 191.9% YTD

    • Market Capitalization: $1.0T
    • PSR: 18.4 (much above sector mean)
    • EV/EBITDA ratio: 36.7 (much higher than sector mean)
    • PEG ratio: 1.1 (lower than sector mean)
  • Super Micro Computer (SMCI): DOWN 12.7% MTD; UP 185.6% YTD

    • Market Capitalization: $13B
    • PSR: 1.3 (much better than sector mean)
    • EV/EBITDA ratio: 11.1 (better than sector mean)
    • PEG ratio: 0.7 (much lower than sector mean)
  • IonQ (IONQ): DOWN 15.4% MTD; UP 186.9% YTD

    • Market Capitalization: $2B
    • PSR: 105.0 (much above sector mean)
    • EV/EBITDA ratio: Negative
    • PEG ratio: No earnings
  • Innodata (INOD): DOWN 18.5% MTD; UP 131.6% YTD

    • Market Capitalization: $191 million
    • PSR: 2.5 (marginally higher than sector mean)
    • EV/EBITDA ratio: Negative
    • PEG ratio: No earnings
  • Digimarc Corporation (DMRC): DOWN 19.1% MTD; UP 102.7% YTD

    • Market Capitalization: $538M
    • PSR: 15.5 (much above sector mean)
    • EV/EBITDA ratio: Negative
    • PEG ratio: No earnings
  • Applied Digital Corporation (APLD): DOWN 23.9% MTD; UP 154.9% YTD

    • Market Capitalization: $505 million
    • PSR: 1.4 (much lower than sector mean) 
    • EV/EBITDA ratio: Negative
    • PEG ratio: No earnings

    • Stock Performance Summary
    The average MTD price change of the above 11 stocks is a decrease of 7.6% and they are now “only” up 164.9% YTD.

    Valuation Metric Assessment
    Of the three (3) valuation metrics considered only Super Micro Computer (SCMI) and Applied Digital Corporation (APLD) have scores that indicate that, even with their considerable price appreciations YTD, they could be undervalued and could have more room to run (please note that this is not a recommendation on my part – do your own due diligence).  Meta Platforms (META) scores well on 2 of the 3 metrics so it is open to consideration while the remaining 8 have valuation scores well in excess of the mean scores for each metric.

    Definitions

  • The price-to-sales ratio (PSR) describes how much someone must pay to buy one share of a company relative to how much that share generates in revenue for the company. and, as such, determines whether its stock is cheap or overpriced in comparison to its peers. The mean forward sector ratio is 3.45 but is considered excellent when the value falls below two (2). The mean forward PSR for AI companies is 2.3.
  • The Enterprise Value-to-Earnings Before Interest, Taxes, Depreciation, and Amortization ratio (EV/EBITDA) is one of the best metrics used by value investors to evaluate a company because it accounts for the value of all financing the company has received from both equity stakes and debt allowing investors to compare profitability between companies. A high means the company is overvalued, while a low ratio indicates it’s undervalued. The mean forward EV/EBITDA ratio for AI companies is 12.9.
  • The price/earnings to growth ratio (PEG ratio) is considered to be an indicator of a stock’s true value. A PEG lower than 1.0 is best, suggesting that a company is relatively undervalued. The AI sector median ratio is 1.6.

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