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Why the Appen share price is storming higher again today

The Appen Ltd (ASX: APX) share price has continued its impressive run on Wednesday.

In morning trade the shares of global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence have pushed a further 3.5% higher to $23.66.

This latest gain means that Appen’s shares are now up an incredible 84% since the start of the year.

Why is the Appen share price on the rise today?

This morning Appen announced that it has now completed the US$175 million acquisition of Figure Eight Technologies.

Figure Eight is a best in class machine learning software platform which uses highly automated annotation tools to transform unstructured text, image, audio, and video data into customised high quality artificial intelligence training data.

Management believes the business will materially increase the quality of Appen’s revenues and the breadth of its customer base via high growth, high-gross margin recurring revenue from annual platform subscription fees earned from its customers.

Furthermore, management notes that the acquisition combines the scale, quality and language expertise of Appen’s leading global crowd, supported by its efficient crowd management platform, with Figure Eight’s innovative data annotation platform, to create a unique and valuable end-to-end solution.

Overall, the combined business is expected to significantly improve Appen’s capability to deliver the increasing volume, quality and speed requirements for high quality training data.

Should you invest?

Whilst Appen’s shares are certainly not the bargain buy they were at the start of the year, I still see a lot of value in them for patient long-term investors.

This is due to the company’s leading position in a market that is expected to grow at an astonishing rate of the next decade.

By 2025 it is estimated that the global AI market will be worth approximately US$170-190 billion (~A$243-271 billion). This is expected to be driven by the use of AI in chatbots, assistants, search, social media, online advertising, surveillance, computer vision, autonomous vehicles, and facial recognition.

The high growth in AI, combined with the push for more accurate applications, is driving the market growth for AI training data. Management estimates that training data will represent up to 10% of AI investment, equating to a market opportunity of US$17-19 billion (~A$24-27 billion) for the company by 2025.

Overall, I think this gives Appen a long runway for growth and makes it a great buy and hold investment option along with fellow tech stars Altium Limited (ASX: ALU) and WiseTech Global Ltd (ASX: WTC).

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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 WiseTech Global. 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.

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