In our recent lineup of the cloud juggernauts – Microsoft (NASDAQ:MSFT) (Azure), Alphabet (NASDAQ:GOOGL) (GCP) and Amazon (NASDAQ:AMZN) (AWS) – it is clear that the Big Three will continue to reap the benefits from AI demand. Nonetheless, owing to their already heavy market caps, their average price target range delivers 11% to 16% potential profits.
This is why it is important to be on the lookout for smaller stocks in the rapidly evolving AI arena. As their market caps are relatively small, there is much greater space for growth and shareholder profits. Alongside AI, investors should also observe how AI is implemented in robotics and other fields for commercial use. Here are some of the stocks that deserve such consideration.
1. Serve Robotics
As of April 2024, DoorDash (NASDAQ:DASH) holds the dominant market share in meal delivery at 67%, followed by Uber Eats at 23%. If any sector is to benefit from the AI+robotics combo it is this sector. Wages are often unpredictable and below the minimum after expenses. Simultaneously, customers ordering the meals feel pressured to tip.
To scale up this industry and make it more robust, both DoorDash (NASDAQ:DASH) and Uber Technologies (NYSE:UBER) are investing in autonomous deliveries. DoorDash has its partnership with Coco Robotics, while Uber strategically invests in Serve Robotics as the only publicly traded company of the two.
In fact, Uber acquired Postmates in 2020, under which Serve Robotics (NASDAQ:SERV) operated as a division. Since going public in April 2024, SERV stock had three price peaks at and above $20, currently priced at $11.84 per share. It is therefore very likely that this still cheap stock will see a similar resurgence this year and beyond.
After expanding in Los Angeles and Miami, Serve’s sidewalk robots are available in the Dallas-Fort Worth metro area this April, via the Uber Eats app. By the end of 2025, the company plans to have deployed 2,000 delivery robots, powered by Nvidia’s Jetson AI platform.
At this stage, the company is still to enter the profitability zone. However, its Q1 2025 revenue of $440k does represent a 150% increase from the prior quarter. Although Nvidia (NASDAQ:NVDA) exited its ~10% SERV stake in early 2025, the company concluded the Q1 quarter with record $198 million in cash.
Per WSJ’s forecasting data, the average SERV price target is $16.20, giving investors a potential profit gain of 37% at this price point. Of course, during the tariff-induced market dip in early April, when SERV dropped into the $5 range, this was the best timing for exposure, which investors should keep in mind going forward.
The bottom SERV outlook is close to the current price level, at $10, while the ceiling price for SERV stock is $23 per share.
2. AppLovin Corp
Even in its early stage of development, it is clear that AI is breaking barriers to entry to movie-making, coding and idea-churning to build or sell a business. This enables more people to start projects without having decades of experience or heavy funding.
In turn, more people are likely to create their own apps. Then, they would need marketing to draw in customers. This is where Applovin (NASDAQ:APP) steps in with its proprietary suite of tools to enable in-app advertising.
The company uses advanced machine learning algorithms, such as AXON 2 engine, to place ads just where they maximally boost user engagement and deliver on monetization. Although AppLovin is set to sell its mobile gaming division to Tripledot Studios for $400 million, the company would have a 20% ownership stake.
At the end of the line, nearly every website and every project can turn into an app for AppLovin to monetize with AI algorithms. In Q1 2025 ending March, the company reported a 40% uptick in revenue, of which advertising sales went up by 71% to $1.16 billion year-over-year.
Likewise, AppLovin delivered a 144% net income increase to $576.4 million in the same period. In February, APP stock reached its all-time peak of $525 per share, currently priced at $395.42. Although AppLovin’s market cap is not small, its growth potential is heavy considering the floodgates of easier app development.
The average APP price target is $475, giving investors a potential profit gain of 24% at this price point. Only one analyst recommends selling, while the overwhelming majority, 21, recommend buying exposure to AppLovin’s business model.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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