Artificial intelligence has certainly become a major global investment theme over the past two years, benefitting many ASX tech stocks and enabling all types of companies to raise efficiency and productivity.
In a recent update, Blackwattle Investment Partners revealed the ASX tech stock it says has "arguably the best exposure to the AI thematic" in the Australian share market.
So, which one is it?
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The ASX tech stock with 'the best exposure to AI'
It's Nuix Ltd (ASX: NXL).
Nuix provides specialised software for investigating and analysing large data sets.
At Tuesday's close, Nuix shares ended the day at $6.77, up 0.74% despite yesterday's ASX 200 selloff.
In the latest update from the Blackwattle Small Cap Quality Fund, portfolio managers Robert Hawkesford and Daniel Broeren said their investment in Nuix shares was a key contributor to the fund in September.
They said the fund outperformed the ASX Small Ordinaries Accumulation Index by 3.49% in September.
The Nuix share price soared by 37.82% in September. That was remarkable on its own, but especially so given the ASX tech stock rose by 37.97% in August as well!
Hawkesford and Broeren attribute the ASX tech stock's phenomenal short-term rise to better-than-expected earnings guidance for FY25.
What happened with Nuix in FY24?
On 19 August, Nuix announced its full-year FY24 results.
The company reported a 14% increase in annualised contract value (ACV) to $211.5 million and a 20.9% lift in statutory revenue to $220.6 million.
Its underlying earnings before interest, tax, depreciation and amortisation (EBITDA) leapt 38.7% to $64.4 million and its statutory net profit after tax (NPAT) lifted by more than 100% to $5 million.
Management announced it would target ACV growth of 15% in FY25.
Nuix CEO Jonathan Rubinsztein said FY24 represented "a year of remarkable delivery by the Nuix team" and the company was "well-positioned for the next stages of growth".
Investors loved the results and the ASX tech stock ripped 25.5% higher on the day of the news.
Hawkesford and Broeren say Nuix is becoming better known among ASX shares investors.
They commented:
As the size of the company increases (now greater than A$2bn), more investors are becoming aware of the transformation that has taken place under CEO Jonathan Rubinsztein.
Nuix is a clear leader in its field, has enviable blue-chip clients and it [is] aided by strong sector tailwinds given the world's increasing data usage.
NXL is arguably the best exposure to the AI thematic on the ASX given its capital-light growth and recurring revenues.
Despite the ASX tech stock's recent run, the portfolio managers see more upside ahead.
They say that Nuix still trades at "a significant discount to global peers".
CEO survey shows AI is a 'top investment priority'
KPMG International's annual CEO Outlook survey found a majority of Australian (58%) and global (64%) chief executives rate generative AI as a top investment priority for their businesses.
The survey of 1,325 CEOs in 11 leading economies, including Australia, showed three-quarters of CEOs believe their senior managers had a clear understanding of how generative AI could benefit their companies and create competitive advantages.
However, less than half (42% Australian, 35% global) said their data was ready to safely and effectively integrate generative AI.
CEOs viewed the principal benefit of generative AI as increased efficiency and productivity through automating routine operations.
The biggest challenge was ethical concerns. Other issues cited included staff lacking the technical capability and skills to implement AI, the lack of regulation, the implementation costs, and security.
The majority of CEOs (60% Australian, 63% global) said they were not expecting to see a return on their AI investments for another three to five years.
