If there were any doubt that Nvidia (US:NVDA) is the king of artificial intelligence, the company's Aug. 23 second-quarter of fiscal 2024 earnings results put those doubts to bed.

In the three months ended July 30, the company’s data center segment, which includes its AI operations, increased revenue by 171% over Q2 FY23, to $10.32 billion, $2.3 billion higher than analyst estimates for the segment. 

“A new computing era has begun. Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI,” said Jensen Huang, founder and CEO of Nvidia.

And while there is still room for NVDA stock gains over the next 12-18 months, investors should be looking at other “boats” that will get a lift from the rising chipmaker tide.

One of those is Quebec City-based Coveo Solutions (CA:CVO, US:CVOSF), whose dramatic AI growth has caught the attention of Bay Street analysts. 

It’s time investors take notice. CVO stock is a long-term buy. 

Long-time AI Player

Although AI has become the biggest trend in tech in 2023, Coveo has used artificial intelligence for its cloud-based product offering since 2014. 

Founded in 2005, the company’s Coveo Relevance Cloud has become an award-winning platform that helps the world’s leading brands deliver exceptional digital experiences. 

In early August, the company was named the “Most Innovative Digital Experience Cloud-Native AI Platform 2023” by Wealth & Finance International Magazine.

“We believe our platform is differentiated by its sophisticated applied AI, designed to deliver highly relevant, bespoke digital experiences that drive superior business outcomes,” Coveo’s Aug. 2 press release stated. 

“In addition, our platform’s scalability, rapid time to value, enterprise-grade security and compliance, and native integrations with other third-party technology applications set us apart.”

Now and then, a Canadian tech company takes the world stage with their innovation and excellence. Coveo’s time appears to be now. 

CVO stock is up more than 70% over the past 12 months on the Toronto Stock Exchange, while the Canadian version of the First Trust Cloud Computing ETF Fund (US:SKYY) is up about 12%.

Delivering Strong Results

Coveo reported Q1 2024 results on Aug. 8. Excluding currency, its software-as-a-service (SaaS) subscription revenue increased 20% year-over-year to $28.5 million. 

The company’s remaining performance obligations (RPOs) over the next 12 months are $94.4 million, 12% higher than a year earlier. On the bottom line, its adjusted operating loss was $2.8 million during the quarter, down considerably from $7.5 million a year earlier.  

For 2024, Coveo’s guidance calls for SaaS subscription revenue of $128 million at the midpoint of its estimate, 24% higher than a year earlier. Its adjusted operating loss of $12.5 million is projected to be 38% lower than in 2023. 

“Our years of experience in developing applied AI solutions for large, complex enterprises have allowed us to bring to market what we believe is a transformative offering in generative AI,” said Louis Têtu, chairman and CEO of Coveo. 

Coveo finished fiscal 2023 (April year-end) with more than 650 SaaS subscription customers and a net expansion rate of 110%. This means that customers with the company for the entire year spent approximately 110% over the prior year. 

Analysts Are Happy

Stifel analyst Suthan Sukumar’s is very upbeat about the company’s future after a recent meeting with two of Coveo’s executives, Toronto’s The Globe and Mail reported on Aug. 24.

“Discussions ranged from AI & LLMs [large language models], the state of enterprise search, to the macro and M&A, but ultimately, our key takeaway was more appreciation for Coveo’s rapid execution to-date in bringing a highly differentiated GenAI product offering to market, thus positioning the company early and competitively for surging enterprise AI tailwinds,” the analyst told clients, according to the report.. 

Sukumar believes CVO stock’s current valuation is attractive. As a result, he reaffirmed his ‘buy’ rating on the stock, with a $14 target, nearly 30% higher than its current share price.  

According to The Globe, the five analysts covering Coveo’s stock rate it a ‘strong buy  — 4.8 out of 5  — with a median 12-month target price of $12.50 per share.