The Motley Fool's AI Third Wave Stock Pick: Globent (GLOB)
The Motley Fool is promoting a stock pick related to what they call AI's "third wave," claiming it could see a 27x increase in value. This article will analyze The Fool's recent stock picking history, discuss the "third wave" of AI, and then assess the specific stock being promoted, Globent (GLOB).
A Look at The Motley Fool's Recent Stock Recommendations
Before diving into the AI stock pick, it is important to review The Motley Fool's recent performance.
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ASML (August 2024): Volatile, but up overall.
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AI Stocks (September 2024):
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Alphabet: Up 50%.
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Amazon: Up 14%.
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Meta: Up over 30%.
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Energy Stocks (November 2024):
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Lincoln Energy: Up.
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BWX Technologies: Up.
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Micro Caps (February 2025):
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Serve Robotics: Volatile, but up.
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Kixa Pharmaceuticals: Doubled in value.
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Iterin Location and Control: Down overall.
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Carrot Packaging: Down overall.
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Karu: Up slightly.
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AI's Third Wave: AI Agents
According to The Motley Fool, Microsoft's CEO Satya Nadella predicts the end of traditional software. This leads to the discussion of "AI's third wave," which industry experts predict will grow at an annual rate of 44% through at least 2032, potentially resulting in 27x returns in eight years.
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Wave 1: AI Hardware (e.g., Nvidia).
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Wave 2: AI Software (e.g., ChatGPT and generative AI).
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Wave 3: AI Agents - digital AI workers independently handling complex tasks.
Examples of AI agents include:
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Sourcing GPT: Manages global supply chains.
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Obo World: Conducts job interviews and manages HR tasks.
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Coder AI: Builds websites and apps from voice commands.
The Stock Pick: Globent (GLOB)
The stock being pitched is Globent (GLOB), a digitally native IT and consulting firm focused on AI-powered engineering and cloud solutions. Globent combines engineering expertise with product design, cloud infrastructure, and cybersecurity. Their AI-driven strategy is exemplified by their AI pods model, which offers subscription-based services.
Globent's key financials and strategic initiatives:
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Q2 2025 Revenue: \$614 million (4.5% year-over-year growth).
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Revenue Breakdown: North America (54%), Europe (20%), Latin America (20%), Emerging Markets (7%).
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Top 10 Clients: Represent 29% of revenue.
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Fiscal 2025 Revenue Guidance: At least \$2.445 billion (1.2% year-over-year growth).
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AI Pods Model: A subscription framework metered by token usage.
Globent's Strengths and Weaknesses
Globent aims to shift from traditional billable hours to a subscription model, potentially creating a more predictable revenue stream. However, the company faces strong competition from established players such as Accenture, EPAM Systems, and Cognizant.
Challenges:
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Slowing growth.
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Intense competition in the digital transformation and AI services market.
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Longer and more complex sales cycles.
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Pricing pressure.
Opportunities:
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Successful execution of its AI pod strategy.
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Deeper enterprise cross-sell opportunities.
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Potential recovery in overall technology spending.
Investment Recommendation
Globent's stock is down over 70% due to slowed growth. The company's struggles are compared to UiPath, another company in the robotic AI agent space that has faced challenges. While the valuation may be appealing, the lack of growth makes the stock unattractive at this time.
Recommendation: Put Globent on a watch list and track its growth. If growth improves, it could become a good value stock in the future.