1 Dirt-Cheap AI Stock to Snag Before 2020

BlackBerry Ltd. (TSX:BB)(NYSE:BB) made a big acquisition in 2019 that will bolster its AI capabilities.

| More on:

BlackBerry (TSX:BB)(NYSE:BB) had a promising start to 2019. All the way back in January, I’d described the stock as a “steal” after it fell into single-digits during the December market rout. Shares would steadily climb into late March and hit a 52-week high after management projected revenue growth between 23% and 27% for the 2020 fiscal year.

The stock has been going in the opposite direction since the early spring. Shares plunged sharply after its first quarter FY 2020 earnings came in below expectations in late June. Investors saw little improvement when it posted its second-quarter results in September. Worse still, the company narrowed its previous guidance for revenue growth to between 23% and 25%. BlackBerry was flat on an adjusted earnings per share basis, which represented another miss.

Why it’s still worth getting excited about BlackBerry

BlackBerry has carved out a promising footprint with its push into software. It has emerged as one of the most trusted mobile endpoint security providers. The company has chosen to double down on this advantage. One of the ways it is doing this is by betting big on artificial intelligence (AI).

Capgemini, a French consulting and professional services firm, recently released a report on the importance of AI development in the cybersecurity sector. In it, 61% of enterprises say that they cannot detect data breach attempts today without the use of AI technologies. Nearly 50% of enterprises said their budgets for AI cybersecurity would increase by an average of 29% in fiscal year 2020.

In early 2019, BlackBerry completed its $1.4 billion acquisition of Cylance. BlackBerry pursued Cylance for its machine learning and artificial intelligence technology, which management said was a strategic addition to the company’s end-to-end secure communications portfolio. It planned for its embedded AI technology to aid in the development of BlackBerry Spark, the secure communications platform for the Internet of Things (IoT).

CEO John Chen said that its Cylance business surpassed expectations in the second quarter. Non-GAAP revenues at BlackBerry Cylance reached $51 million. The company is still in the process of integrating Cylance into its core business, but progress has been promising so far.

Is BlackBerry a buy in November?

Shares of BlackBerry have rebounded marginally over the past month, climbing 1.5% as of close on November 14. The stock has plunged 26.5% in 2019 so far. BlackBerry stock is still trading close to a 52-week low at the time of this writing.

Investors will have to wait until late December before we get a glimpse at BlackBerry’s next batch of results. This month, the company announced a partnership with a subsidiary of global auto supplier Bosch Group. BlackBerry’s QNX division will work with the new partner to develop a secure software platform for next generation vehicles. The company estimates that its QNX software for infotainment and related systems is already embedded in over 150 million vehicles globally.

BlackBerry offers exposure to AI technologies, as it has established footprints in cybersecurity and the development of automated vehicle software. Both sectors are poised for big growth in the coming years and decades. BlackBerry is going through growing pains in its transition to software, but I love the stock as a long-term pick-up, as it is priced in the single digits.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends BlackBerry. The Motley Fool recommends BlackBerry.

More on Tech Stocks

A person uses and AI chat bot
Tech Stocks

AI Where No One’s Looking: Seize Growth in These Canadian Stocks Before the Market Catches Up

Beyond flashy headlines about generative AI, these two Canadian AI stocks could deliver strong returns for investors who are willing…

Read more »

Data center servers IT workers
Tech Stocks

Better Buy: Shopify Stock or Constellation Software?

Let's dive into whether Shopify (TSX:SHOP) or Constellation Software (TSX:CSU) are the better options for growth investors in this current…

Read more »

nvidia headquarters with nvidia sign in front
Tech Stocks

Nvidia Just Delivered a Beat-and-Raise Quarter. There’s 1 Red Flag Investors Shouldn’t Ignore.

The chipmaker continued to benefit from robust demand for artificial intelligence (AI). But can it last?

Read more »

GettyImages-1473086836
Tech Stocks

Why Super Micro Computer Stock Is Soaring Today

The volatile stock is getting a boost from Nvidia.

Read more »

Snowflake logo in snowflake office on wall_snowflake-1
Tech Stocks

Here’s Why Snowflake Stock Skyrocketed Today

Shares of the data company are up 32% for the day.

Read more »

man touching magnifying glass button on floating search bar internet google search engine
Tech Stocks

Why Alphabet Stock Was Sliding Today

The parent company of Google is facing heat from U.S. regulators.

Read more »

chart reflected in eyeglass lenses
Tech Stocks

Top Canadian AI Stocks to Watch in 2025

Celestica (TSX:CLS) stock and another Canadian AI stock are worth watching closely this holiday season.

Read more »

Nvidia Voyager Headquarters
Tech Stocks

Why Nvidia Stock Rallied (Again) on Tuesday

The chipmaker is expected to report earnings this evening.

Read more »