The Appen Ltd (ASX: APX) share price has been one of best performers on the Australian share market this year with a gain of 61%.
This compares to the ASX 200 and its year to date decline of just over 6%.
Why is the Appen share price up 61% this year?
A good portion of its gain has come in recent weeks following the release of a positive trading update.
That update revealed that the developer of high-quality, human annotated datasets for machine learning and artificial intelligence has continued to experience strong demand for its services in recent months.
This has led to a sharp increase in monthly revenues from existing projects from existing customers. As a result, management raised its underlying EBITDA guidance to the range of $62 million to $65 million in FY 2018.
This compares to its previous guidance of between $54 million and $59 million and will be a 120% to 131% increase on FY 2017’s result.
While some of this year’s EBITDA is being generated by the Leapforce business which was acquired late in 2017 for US$80 million, the majority of its growth is organic.
Is it too late to invest in Appen?
I don’t believe it is too late to invest in Appen’s shares. After all, management believes strong tailwinds are fuelling a need for AI data. And due to its global presence and industry-leading status, it believes it is strongly positioned and executing well.
All in all, I think this could make it worth taking advantage of any selling in the tech sector today to pick up shares with a long term view.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium, Appen Ltd, and Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.