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Some might argue the frenzy on ASX artificial intelligence (AI) stocks has well and truly begun.
Since NVIDIA Corporation’s (NASDAQ: NVDA) epic financial results last month and similar impressive returns for other companies in the AI space, experts are constructive on the outlook for ASX AI stocks.
But it’s always wise to tread with caution. More thought is needed than to simply ‘ride the AI wave’.
If you’re hunting for an ASX AI stock with significant growth potential, I think Life360 Inc (ASX: 360) is one to consider closely.
Life360 shares have surged 105% this year to date and climbed from a 52-week low of $6.71 per share in December last year to today’s price of $15.34 at the time of writing.
Here’s why I think it is well-positioned for future growth.
Why Life360 is a top ASX AI stock
Life360’s core product is a smartphone app for location sharing. This app has become a reliable way for families to track children, frail individuals, and those with special medical needs.
The ASX AI stock’s recent financial performance has been sound, in my view. For instance, company revenues were up 15% year over year and increased to US$78.2 million in Q1 CY2024. Life360 also grew operating cash flow to US$10.7 million, an improvement of nearly $20 million from last year.
Broker Morgan Stanley has expressed its bullish sentiments on Life360. It cited the company’s extensive data collection as a potential AI advantage in a recent note.
Through its “huge volumes of user data,” Life360 has unique insights into what customers do with their time and money. Because of this, it sees “significant potential” for the company in the AI scene.
Solaris Investment Management also likes the growth outlook for the ASX AI stock. Talking to The Australian Financial Review, chief investment officer Michael Bell said the company had been a “very, very strong performer”, and that “importantly, [its] revenue has been growing”.
“Life360 [has] 66 million subscribers, and [it has] been growing aggressively over the last eight years”, he added, echoing Morgan Stanley’s statements.
Bright future prospects
Life360 also has the ability to enter new markets, a point highlighted by Bell Potter in a recent note. The company’s launch of ‘Driver Protect’, a subscription-based roadside assistance service, is a prime example of this, the broker says.
This new product is just one example of how the company has the “potential to leverage its large and growing user base to enter new markets and disrupt the legacy incumbents.”
Bell Potter labels potential future markets for the ASX AI stock as insurance, home security, and identity theft protection, to name a few. If they prove correct, I believe these opportunities could significantly boost the company’s growth trajectory.
The firm has a buy rating and a price target of $ 17.75 for Life360. This represents a potential upside of nearly 15% from the time of publication.
ASX AI stock Foolish takeaway
In my opinion, Life360 stands out as a top ASX AI stock well positioned to capitalise on Al-related tailwinds. It is looking to expand into new markets and boasts a substantial user base. This data can be used in specialty ways going forward.
While analysts are also constructive on the stock, it’s essential to remember the risks involved with investing and that past performance is no guarantee of future results.