With more AI companies going public now, let’s find out some more about two 21st century AI companies and if now is the perfect time for you to start investing into this powerful sector.
1. Mohawk Group
Mohawk Group is a small firm worth under $1 billion. The company is an early user of AI for online retail. The company’s system is named Artificial Intelligence Mohawk E-commerce Engine or AIMEE for short. And it is using this software to find investment opportunities. Some of these seem bizarre to me. But that’s the great thing about AI. The robot does not care about our emotions or bias. It makes choices only based on the data it is given.
Following AIMEE, the company bought Aussie Health, a firm that makes Enema Coffee. And it’s bought Spiralizer, a company that makes devices that slices food. It also owns Truweo with its Posture Correction device. Why is the company buying this weird selection of consumer companies? Their AI is relying on search data from Amazon, online reviews, the amount of third-party partners, and various other data that tells the AI where to invest.
What makes the company even more exciting is that they also license the AIMEE platform to any third-party seller who wishes to subscribe to it.
And while AI is not without problems, this data-driven strategy might give Mohawk the leg up over its competitors. Already the firm has reached profitability in its recent quarter. And Mohawk expanded its top line by 62% y/y in Q4. Despite this profitability, Wall Street is only giving this AI superstar a small multiple of 2.5 times sales right now.
Upstart is a company giving small loans to people in the range of $1,000 to $50,000 dollars. The firm runs no credit checks to do this. Instead, Upstart uses AI to analyze roughly 1,600 data points to determine your risk. And if approved for a loan, 99% of loans are given within 24 hours.
Upstart does not loan the money itself. Instead relying on banking partners. That, right now, includes Cross River Bank, which originated two-thirds of the company’s loans in 2020.
So far, business has been good. Over $9 billion in small loans have already been given on Upstart. And 71% of those are completely automated. That means no human was involved at all. The AI investigated all the data points and approves the loan.
If it works, it will be an incredible business, one that completely changes the banking industry.
Upstart says it experiences 75% fewer defaults than traditional underwriting methods. To support this claim, the company did an internal study back in 2017, with hypothetical default rates.
So far, the sales are increasing nicely. The stock price boosted when the company reported its Q4 numbers. It was not only the 39% growth that got traders revved up. Upstart also raised their estimates for the first quarter. And it was a big increase, calling for revenue growth in the triple-digit range.
Using AI To Transform Everything
Upstart and Mohawk are both fast-growing companies using AI to give themselves an advantage. Both of them are transforming huge markets. If either makes major inroads, early stock owners should get amazing profits.