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Alphabet’s Google recently introduced its latest artificial intelligence model, Gemini, which the company claims is its most advanced AI yet. This new model has been integrated into Google’s conversational AI assistant Bard, which initially received criticism for underperforming. With the powerful Gemini now in play, there is optimism that Bard could become a highly useful AI tool.
Bard has previously demonstrated its ability to outperform both humans and other AI models in stock picking. Now, with the addition of Gemini, Bard may be able to identify even better stock opportunities. However, it is important to exercise caution and avoid attributing mystical predictive abilities to these AI models. It is essential to remember that no model, artificial or otherwise, can accurately foresee every market fluctuation.
Nonetheless, advanced AI models have the capability to quickly process vast amounts of data, potentially uncovering promising investment opportunities that humans may overlook. Instead of seeing Bard’s stock suggestions as absolute truth, it is advisable to use them as a starting point for further research. Combining human judgment and instinct with the machine’s superior data processing abilities is key to achieving optimal results.
One stock that Bard has highlighted is Fastly, a global edge cloud platform provider. Fastly’s offerings, which include content delivery and application security services, have gained significant traction as businesses increasingly digitize their operations. While many cloud stocks trade at high premiums, Fastly’s stock price has significantly dropped to around $20 from its peak of $126 per share in 2020. Despite the decline, Fastly still trades at 5-times forward sales due to ongoing unprofitability.
Industry peers often command double-digit sales multiples, but analysts predict that Fastly will approach breakeven profitability this year, with substantial earnings growth expected. Based on these projections, analysts estimate that Fastly’s forward price-earnings ratio will be below 10-times in five years, accompanied by a sub-2-times forward price-sales multiple. Considering this growth outlook, there is reasonable agreement with Bard’s bullish stance on Fastly. However, achieving four-digit percentage returns would likely require a decade or more of sustained growth.
Another stock recommended by Bard is Bill Holdings, a provider of cloud-based financial operations software for small and medium-sized businesses. Bill’s offerings include accounts payable/receivable automation and security services catering to the e-commerce and fintech sectors. Unlike Fastly, Bill is currently profitable and is expected to experience earnings growth in line with its revenue growth rate. The company’s balance sheet appears healthy, with a significant cash reserve of $2.65 billion against $1.91 billion in debt.
Bill’s valuation is not as stretched, with shares trading at 11-times forward earnings. Therefore, the potential for multiples to expand tenfold is unlikely. Instead, Bill’s upside is more likely to come from successful execution of its growth strategy and margin expansion over time. While a positive buy call from Bard is justified, expecting quadruple-digit returns in the near future would require a radical change in Bill’s growth trajectory or profitability.
Lastly, Bard has presented ThredUp as a speculative play with the potential for exponential upside. ThredUp operates an online resale marketplace for used clothing and accessories. In the current inflationary climate, ThredUp provides a favorable option for price-conscious shoppers, leading to impressive year-over-year revenue growth of 21% in the last quarter. Margins have also improved significantly, indicating that ThredUp may achieve profitability by 2027 to 2028.
ThredUp’s current price-to-sales multiple of 0.7 reflects its lack of profitability. As a result, there is still substantial upside potential if the company can execute its plans effectively. Given the continued consumer interest in thrift and resale, ThredUp benefits from favorable industry dynamics alongside operational progress. However, despite these promising factors, it is unlikely that four-digit percentage returns can be realized in the near term. A more reasonable expectation would be 200% to 300% upside over the next five or more years, assuming a solid execution of strategic plans.
In conclusion, while Google’s advanced AI model, Gemini, integrated into Bard, offers enhanced stock predictions, it is crucial to approach these recommendations with a balanced perspective. Utilizing Bard’s suggestions as a starting point for further research, combining human intuition and the machine’s data processing capabilities is key to achieving favorable investment outcomes. Stocks like Fastly, Bill Holdings, and ThredUp present interesting opportunities, but it is essential to manage expectations and evaluate long-term growth potential alongside current valuations.
