The S&P/ASX 200 Index (ASX: XJO) closed the day in the red on Thursday. Although the index fell 0.14% for the day, it is still up 14.7% over the year.
Meanwhile, the S&P/ASX 200 Information Technology Index (ASX: XIJ) closed 0.4% higher for the day. Over the past year the index has grown 40.02%.
But I have my eye on one undervalued AI stock which I think could be set to surge this year, driving index gains even higher.
The Life360 Inc (ASX: 360) share price finished the day 0.33% higher at $39.59 on Thursday. The stock has been a success story over the past 18 months with the share price soaring 394.5% from February 2024 to the time of writing.
Over the past year alone, Life360 shares have climbed 161.46%.
Image source: Getty Images
Who is Life360 and what does it do?
Life360 is a United States-based software development company that is dual-listed on the Nasdaq and the ASX.
Its core product is a location-sharing app which also acts as a virtual safety net and updates users about each other's whereabouts and safety. Users can create a 'circle' of up to 99 people.
The product has an emergency roadside assistance feature, driver monitoring and reporting, and direct navigation to a member's location without needing an address. It also has theft identification and medical assistance features.
It's incredibly popular too. As of Q4 2024, Life360 had over 79.6 million global monthly active users.
Why has the AI stock's share price risen so much?
Thanks to its popularity, the business has experienced some exceptional financial results.
In May, the company posted its Q1 2025 results, which revealed a 32% year-on-year revenue increase to US$103.6 million. Its annualised monthly revenue (AMR) of US$393.0 million was 38% higher, and its positive operating cash flow was 13% higher year-on-year at US$12.1 million. The figures propelled a strong share price increase.
It's not the first time its financial results have caused a share price rally either. Its earlier Q2 2024 earnings beat estimates, with revenue up 20% and adjusted EBITDA doubling to US$11 million.
The company has also been expanding its offering. It is set to introduce pet tracking features this year, followed by an elderly-focused solution in 2026—both of which could open up new revenue streams.
Is there more to come?
In short, yes, it's likely the share price of the AI stock will keep storming upwards.
According to TradingView data, 13 out of 15 analysts have a strong buy rating on Life360 shares and a target price of as much as $50.64. This represents a potential 27.91% upside for investors over the next 12 months from the share price at ASX close on Thursday.
Earlier this month Citi analysts initiated coverage on the AI stock with a buy rating and $46.20 price target.
Citi is very positive about Life360's outlook thanks to its evolution into a family safety ecosystem. It feels that this leaves it well positioned to reach its aspirational monthly active users target of 150 million+ by 2028.
In fact, it thinks Life360 will surpass this target and grow its user base to over 160 million by this point. And thanks partly to its fledgling advertising business, Citi believes the company can surpass its US$1 billion revenue target as well.
Bell Potter also has a buy rating on the shares and a price target of $37.50. The broker thinks another strong financial result is on the way this month when Life360 releases its quarterly update.
