NVIDIA has seen a significant rise in the stock market over the past two years. Starting at a low of $12 in September 2022, the company experienced rapid growth after the launch of ChatGPT, which went viral on Twitter and highlighted the demand for AI software. As a key supplier of chips to the AI industry, NVIDIA saw substantial profits, with its stock rising nearly 877% in less than two years.
While AI remains popular, some investors may be concerned about a potential pullback in NVIDIA’s growth. However, there is another AI company that stands to benefit from similar trends and is more affordably priced. Kinaxis Inc (TSX:KXS) is a Canadian supply chain software company that offers the Rapid Response software suite, which helps businesses manage key supply chain variables with features such as real-time insights, scenario analysis, and automated data wrangling.
In terms of financial performance, Kinaxis has shown strong results in its most recent quarter, with $119 million in revenue (up 18%), $73 million in gross profit (up 20%), $6.1 million in earnings (up 420%), and $22.8 million in adjusted EBITDA (up 32%). The company also boasts a 60% gross profit margin and a 15% return on equity in the trailing 12-month period.
While Kinaxis is not a bargain, trading at multiples higher than the market average, it is still more affordable than NVIDIA. With a lower book value multiple compared to other tech stocks, Kinaxis may present a more attractive investment opportunity for some investors. Ultimately, choosing between Kinaxis and NVIDIA will depend on individual preferences and risk tolerance.
In conclusion, while NVIDIA has experienced significant growth in the stock market, Kinaxis offers a compelling alternative for investors looking to capitalize on the AI industry’s potential. It’s essential to carefully evaluate both companies’ financial performance and valuation before making an investment decision.