We recently compiled a list of the 10 Worst Artificial Intelligence Stocks Under $50 According to Short Sellers. In this article, we are going to take a look at where Asana, Inc. (NYSE:ASAN) stands against the other AI stocks under $50.
The US artificial intelligence (Al) market size was pegged at US$123.07 billion in 2023, which should be able to compound at ~19.3% over 2024 to 2034 to touch US$851.46 billion, according to Precedence Research. While North America held over ~36.90% of the market share in 2023, the Asia Pacific market is anticipated to expand at the fastest CAGR of ~19.8% between 2024 and 2034.
The increased demand for automated and technologically advanced hardware and software products throughout end-use verticals, along with favorable government policies, continues to encourage the industries in North America to adopt Al. Over the past few years, significant investments by the tech giants in R&D fuelled technological advancements in various industries. Rapid penetration of digital technologies and the internet continue to contribute to the strong outlook for the global artificial intelligence market.
Latest Trends and Themes About Al
The 2 most important trends that stood out in 2023 were generative Al and electrification and renewables. As per McKinsey, the former saw a spike of ~700% in Google searches from 2022 to 2023, together with a strong increase in job postings and investments. This highlights the pace of technological innovation. Between 2023 and 2024, the size of the prompts that large language models (LLMs) can process, also known as “context windows,” rose from 100,000 to 2 million tokens. Electrification and renewables were another trend that saw the highest investment and interest scores.
Even though several trends saw lower investment and hiring in 2023, experts believe that the long-term outlook remains strong. The continued focus on innovation by the enterprises and elevated interest in harnessing such technologies continue to demonstrate strong future growth prospects.
Innovation has widely been accepted in 3 trends, that form part of the “Al revolution” group. These include generative Al, Applied Al, and Industrializing machine learning. While Gen Al helps in creating new content from unstructured data (like text and images), applied Al helps in leveraging ML models for analytical and predictive tasks. Finally, industrializing machine learning ramps up and derisks the development of machine learning solutions. McKinsey reported that Applied Al and industrializing machine learning, aided by strong interest in gen Al, saw significant uptick in innovation. This was reflected in the surge in publications and patents between 2022 to 2023.
At the same time, electrification and renewable energy technologies are capturing strong interest, demonstrated by the news mentions and web searches. Their popularity stems from a surge in global renewable capacity, critical roles in global decarbonization efforts, and heightened requirements of energy security amid geopolitical tensions and energy crises.
Potential for Artificial Intelligence- Applied Al, Industrializing Machine Learning, and More
The impact of analytical Al technologies, such as applications of machine learning (ML), computer vision, and natural language processing (NLP), has been growing throughout sectors. McKinsey research believes that Al applications have the potential to unlock an economic value of $11 trillion – $18 trillion annually.
The Regulators and policymakers continue to take note of Al’s increasing impact. For example, the European Parliament passed the unified EU Artificial Intelligence Act. Regarding real-life uses, Saudi Aramco was able to develop an Al hub to efficiently analyze over 5 billion data points per day from wellheads in the oil and gas fields.
Industrializing machine learning (ML), widely known as machine learning operations (MLOps), refers to the process of scaling and maintaining ML applications within enterprises. MLOps remain critical in developing, deploying, and maintaining gen Al solutions. This will enable ML algorithms to be dispatched quickly and effectively. Some sectors which are adopting industrialized ML practices are energy and materials and technology, media, and telecommunications.
Our methodology
To list the 10 Worst Artificial Intelligence Stocks Under $50 According to Short Sellers, we added 20 AI tickers to the Finviz screener and sorted them by short interest. Next, we narrowed our list of stocks by selecting the ones having high short interest and share prices below $50. Finally, the stocks were ranked in ascending order of their short interest.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of a computer monitor with an open work management platform software.
Asana, Inc. (NYSE:ASAN)
Share Price as of September 20: $11.92
Short % of Float (As of August 30): 11.50%
Number of Hedge Fund Holders: 23
Asana, Inc. (NYSE:ASAN) operates a work management platform, focused on individuals, team leads, and executives in the US and internationally. The company launched Asana AI, bringing powerful generative AI features such as smart status updates, smart summaries, and smart chat.
Bears believe that the company’s stock price is expected to be impacted mainly due to concerns around elevated customer budget scrutiny along with elongated sales cycles delaying deal execution. Additionally, increased economic uncertainty and shifts in market dynamics might weigh over Asana, Inc. (NYSE:ASAN)’s performance moving forward. Next, Asana, Inc. (NYSE:ASAN)’s net revenue retention declined below 100%. This means that its customers are spending less on its products. The company noted that a large number of customers have been renewing with lower commitments. Therefore, growth reacceleration might be a matter of concern in the near term. Additionally, there are concerns about the departure of its CFO Tim Wan.
That being said, Wall Street analysts remain optimistic about the company’s future growth prospects amidst its transition to the enterprise market and the development of Asana AI. Additionally, Asana, Inc. (NYSE:ASAN) continues to prepare to pursue FedRAMP certification which will help the company expand into government agencies and regulated industries. While Asana, Inc. (NYSE:ASAN) focuses on expanding its enterprise tiers with high-value functionality for strong growth, it expects revenue from Asana AI Studio in the early quarters of the upcoming year.
Asana, Inc. (NYSE:ASAN) continues to enjoy a strong renewal base, and it is confident about the deal conversions for 4Q 2024. Finally, the company’s focus on the enterprise market and AI development should act as primary tailwinds. Asana, Inc. (NYSE:ASAN) focuses on improving the post-sales experience and streamlining its sales processes. These measures, along with leveraging AI products, should drive long-term growth.
As per Wall Street analysts, the shares of Asana, Inc. (NYSE:ASAN) have an average price target of $13.83. Asana, Inc. (NYSE:ASAN) was a popular stock among hedge funds at the end of Q2 2024 with hedge fund positions coming at 23, according to Insider Monkey’s database.
Overall ASAN ranks 7th on our list of the worst AI stocks to buy under $50. While we acknowledge the potential of ASAN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than ASAN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.