Cathie Wood's Biggest AI Investment Is UiPath. Your Portfolio: Should the Stock Be?

Ark Investment Management's Cathie Wood is known for investing in pioneering technology businesses she considers industry disruptors. AI is one of her favorite investment concepts  

However, her flagship Ark Innovation ETF (NYSEMKT: ARKK) top AI position may surprise investors. UiPath (NYSE: PATH) is a lesser-known corporation. The Ark Innovation ETF's fifth-largest holding is the stock, at 5.8%. Wood is thrilled about UiPath, but should you add it to your portfolio?  

A pioneer in AI automation Automation startup UiPath helps businesses design tools for business processes using AI. So what does that mean? The company's platform lets companies perform many things. It automates monotonous activities. This could involve data entry or form-filling. It also offers low-code app development and invoicing processing capabilities.  

Besides helping clients automate processes, UiPath's technology helps enterprises find areas where automation might improve their operations. The platform will also analyze and share automation performance information and perform quality assurance. The organization also customizes solutions for sectors and departments.  

Overall, UiPath's AI-powered automation technology helps enterprises save money and improve efficiency. This is crucial since these tech companies are less economically sensitive and expand steadily through economic cycles.  

Upselling and partnerships UiPath has grown revenue from large enterprise customers. The organization has good net dollar retention, which measures revenue from existing customers after churn, upgrades, and downgrades. Dollar-based net retention was 123% in fiscal year 2023, which concluded in January, and 119% in 2024. This suggests that consumers expand UiPath's platform to new departments or purchase licenses.  

Not many new clients have joined UiPath recently. It completed fiscal 2024 with 10,830 customers, up 30 net subscribers from the year before. However, it has gained huge enterprise customers. Over $100,000 consumers jumped 15% to 2,054, while $1 million customers rose 26% to 288.  

New customers are an opportunity for UiPath. The company has lately formed or extended many distribution partnerships to sell its solutions. It will seek new customers through SAP, Microsoft, Deloitte, and Ernst & Young connections. After entering an organization, UiPath has grown well, and these relationships can help it expand.  

UiPath's sales grew rapidly in fiscal 2024. The company's fourth-quarter revenue climbed 31%, compared to 24%, 19%, and 18% in the previous quarters. That highlights how UiPath's company is changing and how clients are adopting its products as AI technology grows.  

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