We recently compiled a list of the 10 Best AI Penny Stocks to Buy According to Analysts. In this article, we are going to take a look at where Lantronix Inc. (NASDAQ:LTRX) stands against the other AI penny stocks.
Kim Forrest, chief investment officer at Bokeh Capital Partners, recently appeared on CNBC’s ‘The Exchange’ on November 13 to discuss why tech could be a winner in a new Trump administration, focusing her discussion on the current state of AI, particularly the distinction between large language models and smaller, targeted AI solutions.
Forrest noted that while LLMs have garnered significant attention and represent impressive technological advancements, they are not without their flaws. Specifically, she pointed out that these models are still prone to errors, which can hinder productivity and limit their practical applications in real-world scenarios. This concern leads her to advocate for what she refers to as small AI, which emphasizes targeted solutions aimed at addressing specific problems rather than attempting to cover a broad spectrum of tasks.
Her background as a software engineer and her experience working with AI tools have shaped her perspective on the matter. She believes that smaller, more focused AI models will ultimately prove to be more effective in driving productivity gains. Unlike the more complex and exotic LLMs that may resemble something out of science fiction, like HAL 9000 from “2001: A Space Odyssey”, small AI solutions are designed to tackle particular challenges efficiently. Forrest argues that this targeted approach is where true productivity can be realized, making small AI a compelling area for future development and investment.
When discussing investment opportunities in the tech sector, she highlighted several key players in the semiconductor industry that are essential for powering AI technologies. NVIDIA was noted as a natural leader in this space due to its dominance in graphics processing units (GPUs) that are crucial for AI computations. However, she also expressed continued confidence in AMD, despite its recent struggles in the market.
In addition to semiconductor companies, Forrest pointed out opportunities within software firms that are leveraging AI technologies. Microsoft was cited as a prime example, the company is actively working on providing access to LLMs while also narrowing focus to practical applications. For instance, it’s developing finance-oriented GenAI tools designed specifically for accounting tasks. This kind of targeted application exemplifies how LLMs can be adapted for specific industries, enhancing their utility and effectiveness.
Forrest also mentioned C3.ai as another noteworthy player in the AI space. It offers targeted AI solutions but has a significant service component mixed into its revenue model. While this diversification can provide stability, she cautioned that it may also limit scalability compared to bigger companies, which primarily focus on software products with higher margins. She emphasized the importance of understanding the business models of these companies when considering investment opportunities.
Overall, her insights reflect a nuanced understanding of the current tech landscape and the potential of both small and large AI solutions. She advocates for a balanced investment strategy that recognizes the strengths and weaknesses of various companies within the AI ecosystem. As AI continues to evolve, Forrest’s perspective underscores the critical need for investors to remain adaptable and informed about emerging trends and innovations in this dynamic field, which is why we’re here with a list of the 10 best AI penny stocks to buy according to analysts.
Methodology
We used ETFs, stock screeners, and financial media reports to compile an initial list of the top AI penny stocks, with a share price under $5. From that list, we narrowed our choices to 10 AI penny stocks that analysts were the most bullish on. The stocks are ranked in ascending order of analysts’ upside potential.
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).
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Lantronix Inc. (NASDAQ:LTRX)
Average Upside Potential: 76.77%
Share Price as of November 5: $3.77
Number of Hedge Fund Holders: 13
Lantronix Inc. (NASDAQ:LTRX) is a technology company that specializes in providing connectivity solutions for the Internet of Things (IoT) and Remote Environment Management (REM). It offers a range of products and services, including SaaS, intelligent hardware, and engineering services. Its solutions enhance connectivity and data management across sectors like smart cities, transportation, and healthcare. It focuses on integrating AI and edge computing into its offerings, enabling advanced applications like video collaboration and machine learning.
It introduced 5 new SiP (System-in-Package) solutions powered by Qualcomm Technologies to accelerate AI-driven applications, in October. These solutions offer enhanced AI capabilities, advanced video and AI features, and scalable AI solutions, empowering developers to create innovative AI-driven applications. Later the same month, it also launched SmartLV, an AI-powered IoT gateway for smart grids, which offers real-time control, visibility, and automation of low-voltage substations, enabling efficient energy management.
The company reported a 4.21% year-over-year increase in revenue for the first quarter of fiscal 2025. Its Embedded IoT Solutions segment experienced growth, with revenue increasing by 18% year-over-year. In contrast, IoT System Solutions revenue declined by 1%. IoT System Solutions revenue experienced a significant drop due to reduced shipments to a large customer and delayed government orders.
Its strategic focus on AI and IoT positions the company for significant growth. Its expansion into new markets, particularly in North America and Europe further strengthens its growth prospects. While short-term headwinds exist, the long-term outlook remains positive, driven by AI-powered innovations.
180 Degree Capital Corp stated the following regarding Lantronix, Inc. (NASDAQ:LTRX) in its Q2 2024 investor letter:
“More recently, we have been working behind the scenes with the management and board of Lantronix, Inc. (NASDAQ:LTRX) on ways to solidify the strong foundation of the company and set it up for success and significant value creation for stockholders in the future. We believe LTRX’s new CEO, Saleel Awsare brings an interesting and successful background to LTRX. What we believe he needed to be in the best position for success were board members who have experience navigating the challenges unique to microcapitalization companies. Following multiple discussions, we introduced Saleel and his board to Narbeh Derhacobian, the former Chief Executive Officer and founder of our former portfolio company, Adesto Technologies, Inc., and one of Adesto’s board members, Kevin Palatnik, who has significant experience as a CFO at multiple related businesses. We were pleased to see that LTRX’s board saw the same value that we do in these individuals, in terms of helping Saleel and his team to have the best opportunities to achieve multiple catalysts that could lead to material increases in value for LTRX and its stockholders.”
Overall LTRX ranks 8th on our list of the best AI penny stocks to buy according to analysts. As we acknowledge the growth potential of LTRX as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LTRX 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.