Looking for an overlooked S&P/ASX 200 Index (ASX: XJO) AI share to capture the mammoth growth potential on offer from the fast-developing technology?
You're not alone!
While not an ASX share, no company better demonstrates the potential returns on offer from the rapid rise and largely untapped opportunities presented by artificial intelligence than Nvidia Corporation (NASDAQ: NVDA).
With global companies lining up for the United States-based generative AI stock's chips, the Nvidia share price is up 184% in 12 months. That's seen Nvidia's market cap reach US$2.8 trillion (AU$4.2 trillion) — more than Australia's annual GDP!
With that growth in mind, we turn to an ASX 200 AI share that could reap major benefits from the global rollout of artificial intelligence.
Namely, Life360 Inc (ASX: 360).
Image source: Getty Images
An unexpected ASX 200 AI share
Like Nvidia, Life360 is also based out of the US.
The ASX 200 AI share develops software predominantly used for location sharing. The company's smartphone app is favoured by families looking to track their children's locations or to help keep elderly people and folks with special needs safe.
And like Nvidia, the Life360 share price has been on fire of late, up 124% over 12 months. That gives the company a current market cap of $3.1 billion, with some significant growth potential still ahead.
A new Morgan Stanley report, spearheaded by equity analyst James Bales, names Life360 as one of several ASX 200 shares that could catch sustained tailwinds from the AI revolution.
According to the report (courtesy of The Australian Financial Review):
We see the most scope for meaningful upside surprise in the industries with lower expectations where innovation, data advantages and labour automation can provide earnings upside not yet envisioned by consensus…
Demand drivers behind the AI theme are robust, setting the stage for a multiyear structural growth cycle.
Morgan Stanley is bullish on Life360 in part due to all of the data it collects from its users. Data that AI-enabled systems could monetise down the road.
According to Morgan Stanley:
We see Life360 as having access to huge volumes of user data, from personal details to daily habits, driving patterns and behaviours. Life360 understands who you are with, and where your belongings are and how you spend time on the weekend.
Longer-term, we see significant potential in terms of both monetisation and user experience of consumers being served compelling offers.
The ASX 200 AI share really began to lift off on 1 March this year after reporting its full 2023 calendar year results.
Though still operating at a net loss of US$28 million, losses were trimmed back from the more than US$91 million reported in 2022. That was driven by a 33% year-on-year revenue boost to US$305 million.
