3 AI Stocks That Will Make You Millionaires

Artificial intelligence (AI) has already proven its power, and this is reflected in market sentiment. S&P 500 High investment ratio in AI-related stocks NVIDIA, Microsoftand AmazonAnd the success of these top stocks is lifting the entire market.

But while these winning stocks are dictating the terms of AI adoption, there are also plenty of young talent vying for AI in niche industries with incredible long-term opportunities. lemonade (LMND 3.17%), Open Door Technologies (Open 2.02%)and Pagaya Technologies (PGY 1.36%).

1. Lemonade

Lemonade, which uses AI to provide fast and accurate insurance quotes and claims decisions, made waves on Wall Street when it went public a few years ago, but its stock price tanked as losses continued and investors lost confidence.

But it has the potential to generate immediate profits and revolutionize the insurance industry. It’s already making waves, forcing traditional insurers to take notice. Berkshire Hathawayis one of the largest insurers in the U.S., and its executives have repeatedly said it’s behind the curve on insurtech and at a disadvantage. If Lemonade can make headway against Berkshire Hathaway Inc.’s GEICO and other big competitors, it could gain market share and become a real player.

Here’s how this is playing out so far, but Lemonade is still a small company. In-force premiums (IFP) were $794 million (average annual amount written) and revenues were $119 million in the first quarter of 2024. IFPs were up 22% from last year, and revenues were up 25%.

Lemonade touts that it is built on a digital foundation, with all of its operations interconnected, allowing for instant calculations and fast processes. Executives say they don’t yet have enough data and experience to leverage the system to their advantage, but they’re confident that will happen soon. When that happens, and scale translates into profits, Lemonade will be able to surpass traditional insurance companies.

Lemonade will continue to report strong growth, and the stock price will reflect that. But if management is right, the stock price should soar as Lemonade’s loss rates stabilize and translate into profits. You’ll need a good risk tolerance and patience, but if you have them, Lemonade could be part of a millionaire-making portfolio.

2. Open Door Technologies

Opendoor operates a technology platform for residential real estate. Despite the company’s relevance and customer interest, it is struggling in the midst of a major industry-wide downturn.

The company is building a real estate platform that uses data science, accumulated over nine years of data and 10 million offers, to provide accurate pricing for buying and selling homes. While end-user AI may seem the most appealing at first glance, the company also uses AI across its operations, providing high-tech workflow tools, data analytics, and more.

In general, the idea is gaining momentum and Opendoor could have a great future under the right conditions. Only 1% of real estate business is done online. It is one of the most under-penetrated industries and therefore has the most opportunities. The company has built its platform over time and is one of the top players.

Opendoor stock is trading at a very low price of 0.3 price to sales, which is an incredible bargain for a stock with high growth potential. If things turn around, investors will see their money start to generate profits and Opendoor stock could be part of a millionaire-making investment strategy. This is a high-risk, high-reward situation and most investors will wait until the real estate market improves before taking a chance on this stock.

3. Pagaya Technologies

Pagaya uses AI to help financial clients assess borrowers’ credit and make other risk management decisions. visa and Bank of America The company has earned a positive reputation among its customers and is steadily gaining new customers for its AI-driven platform, having assessed over 2 trillion applications to date, feeding massive amounts of data into its AI models for accurate assessments.

The company acts as a two-sided platform, taking prepayment funds for approved loans, packaging them into asset-backed securities (ABS), and selling them back to large institutional lenders. With 116 lending partners and 30 clients as of the end of the first quarter of 2024, it is the largest issuer of retail loan ABS in the U.S. Because the company sells back all of its loans and does not keep any on its balance sheet, it is limited in its exposure to interest rate fluctuations.

Despite the challenging interest rate environment, Pagaya has continued to grow across the board, with both revenue and network volume up 31% year-over-year and raising $1.9 billion in funding, including 18 new partners.

Pagaya is still young and not yet profitable, but Wall Street expects it to post positive net income next year. They also expect Pagaya’s stock price to double in the next 12 to 18 months. The risks are high, but the stock could stand out as Pagaya expands its business. If interest rates fall, the business could expand even more, and the stock price could soar soon. Holding for years could help investors build a millionaire portfolio.