1 Under-the-Radar AI Stock That Looks Like a Screaming Buy Right Now

Three years after OpenAI launched ChatGPT, sparking a surge in semiconductor stocks like Nvidia, software stocks now seem to reap the benefits.

After all, hardware exists to run software, and there's no point in the billion-dollar data center build-outs if there isn't software available to take advantage of the hardware. In other words, the massive build-out implies a big wave of demand for artificial intelligence (AI) software as well.

A number of software-as-a-service (SaaS) stocks have rolled out AI products in recent months, showing the industry could be at a tipping point.

One of them is Amplitude (NASDAQ: AMPL), the digital product analytics company that recently launched a new AI platform featuring AI agents and other tools to help businesses more easily gain insights into their data and make improvements to their products.

The new AI launch already seems to be paying off for Amplitude as the company just reported its fastest revenue growth in more than two years, showing its momentum is accelerating after revenue growth bottomed last year.

Amplitude reported 18% revenue growth in the third quarter to $88.6 million, well ahead of the consensus at $86.3 million. On the bottom line, adjusted earnings per share (EPS) rose from $0.02 to $0.03, ahead of the consensus at $0.01.

Additionally, remaining performance obligations (RPO) jumped 37% to $391.9 million, showing that its customers are booking longer-term contracts as Amplitude's execution gets better and customers get more comfortable with it.

Guidance was also strong, calling for $89 million to $91 million, up 15% from the quarter a year ago, and adjusted EPS of $0.04 to $0.05. However, the most impressive part of the quarter is Amplitude's rollout of its AI platform.

Image source: Getty Images.

What Amplitude is doing with AI

After adding the guides and surveys feature, Amplitude has finished building out its core platform, and it's added several AI features in recent months.

The most important of those appears to be its Model Context Protocol (MCP), a server that connects AI assistants to the Amplitude platform, allowing its customers to use AI search or query to find data and get answers to the problems they're trying to solve, like learning how their customers typically move through the onboarding funnel.

CEO Spenser Skates said in an interview with The Motley Fool that MCP is the No.1 most requested feature from customers, adding, "We have tons of customers using it already. It expands access to Amplitude dramatically. It's fantastic."

Additionally, it launched AI Visibility, a free tool that anyone can use that is essentially search engine optimization (SEO) for large language models (LLMs), meaning that a user can search a company or brand and see how its performing in AI searches on chatbots like ChatGPT and Claude.

Finally, the company is also launching AI Feedback, which connects to feedback sources like Zendesk, tickets, online reviews, and social media, aggregates the feedback, and summarizes it.

Is this a breakout moment for Amplitude?

According to Skates, customers are eager for exactly the kind of tools that Amplitude is rolling out. He said, "They are so hungry for this and they don't necessarily know what it is they want, but they want this to be better," referring to the analytics experience.

The opportunity here is massive, and Amplitude is still a small company in the software and analytics world, competing against behemoths like Alphabet's Google Analytics and Adobe Analytics. It's on track for $340.8 million to $342.8 million. Its market cap is just $1.3 billion, meaning the stock trades at a very affordable price-to-sales ratio (P/S) of just 4.

If its AI platform gains traction with its customers and its revenue growth accelerates, the stock could move a lot higher from here.

Jeremy Bowman has positions in Nvidia. The Motley Fool has positions in and recommends Adobe, Alphabet, and Nvidia. The Motley Fool recommends the following options: long January 2028 $330 calls on Adobe and short January 2028 $340 calls on Adobe. The Motley Fool has a disclosure policy.