Top AI Penny Stocks in the UK for 2024: Picks & Review

Artificial Intelligence (AI) is moving fast and creating great investment opportunities in the AI industry, especially in AI penny stocks. These are smaller, newer companies in the AI space, so you can get growth at a fraction of the cost of bigger companies. Investing in AI penny stocks comes with risks, but they are for investors looking for low cost entry into one of the hottest sectors today. In this guide we look at the top AI penny stocks in the UK for 2024, the risks and rewards and how to make informed trading decisions.

What are AI Penny Stocks?

AI penny stocks are shares of smaller AI focused companies trading below £1 in the UK or $5 in the US. These are generally traded on over the counter (OTC) markets rather than major exchanges, so they are accessible but often volatile. Companies in this category range from early stage AI developers to businesses applying AI in niche markets like machine learning, data analytics and robotics.

Unlike big cap AI stocks like NVIDIA or Microsoft, penny stocks give you access to emerging AI tech without needing a lot of capital. But AI penny stocks come with big risks due to their volatility and low liquidity.

Why Invest in AI Penny Stocks?

Investing in AI penny stocks is high risk high reward. Here are the reasons why investors are interested in these stocks:

1. High Growth: As AI is being adopted across many sectors, smaller companies at the forefront have a lot of room to grow. Machine learning, AI tech and data centre innovations are putting these stocks in the spotlight.
2. Low Cost Entry: Unlike big AI companies, penny stocks allow you to buy in with minimal capital, so accessible to beginners and experienced investors alike.
3. Sector Expansion: As the AI sector is expanding, companies in healthcare, finance and manufacturing are starting to adopt AI. This means there’s a lot of choice for investors to pick from based on their industry interests.

Understanding market trends is crucial for navigating the volatility and making informed investment decisions in AI penny stocks.

As AI penny stocks are speculative, investors should do their research and be aware of the risks.

Key Characteristics of AI Penny Stocks

AI penny stocks are known for their unique characteristics, which set them apart from other types of stocks. Understanding these characteristics is crucial for investors looking to tap into the potential of AI penny stocks.

Exhibits a Tradeable Pattern on its Stock Chart

A tradeable pattern on a stock chart is a key characteristic of AI penny stocks. This means that the stock’s price movements follow a predictable pattern, making it easier for investors to identify potential buying and selling opportunities. Stocks with clear patterns are less risky and more profitable, as they allow investors to make informed decisions based on historical data. Recognizing these patterns can help investors time their trades more effectively, maximizing their potential returns while minimizing risks.

Is a Low-Float Stock

Low-float stocks are another characteristic of AI penny stocks. These stocks have a limited number of shares available for trading, which can lead to rapid price changes when there is significant buying or selling activity. While low-float stocks come with higher risks due to their volatility, they also offer the potential for substantial gains. Investors who can navigate the volatility of low-float stocks may find lucrative opportunities in the AI penny stock market.

Exhibits Unusual Trading Volume

Unusual trading volume is a characteristic of AI penny stocks that can indicate potential price movements. When a stock experiences a sudden surge in trading volume, it can be a sign that investors are taking notice of the company’s potential. This increased interest can lead to a price increase, making it an attractive opportunity for investors. Monitoring trading volume can provide valuable insights into market sentiment and help investors identify promising AI penny stocks before they experience significant price movements.

Top AI Penny Stock Picks in the UK for 2024

Here’s a look at some of the top AI penny stocks in the UK. These are based on market potential, unique AI use cases, recent performance and projected growth in the AI space.

DeepVerge PLC (LSE: DVRG)

Company Summary

• Sector: Environmental Technology & Life Sciences
• AI Application: DeepVerge PLC is an artificial intelligence penny stock in the environmental technology and life sciences sector. DeepVerge uses AI for environmental testing, such as detecting pollutants and pathogens in wastewater. Their AI tech is used for monitoring environmental and public health conditions.

Growth Drivers

• Environmental Demand: As environmental awareness grows, the need for real time water testing solutions has increased, so companies like DeepVerge benefit.
• Recent News: The company has recently expanded its testing infrastructure to meet growing demand, particularly from public health sectors.

2024 Price Forecast

• Target Price: £0.20 – £0.30
• Outlook: As they focus on environmental applications, DeepVerge has a lot of growth potential if they get public sector contracts.

Seeing Machines (LSE: SEE)

Company Summary

• Sector: Automotive & Safety Technology
• AI Application: Seeing Machines develops AI driven driver monitoring systems that detect fatigue and distractions, which is critical for safety in commercial and autonomous vehicles.

Growth Drivers

Safety Regulations: Growing regulations in the commercial transport sector are driving demand for AI safety solutions. Seeing Machines is also considered a data center stock due to its partnerships with major auto companies and its role in AI-driven safety solutions.

Automotive Partners: Seeing Machines has partnerships with major auto companies, so they’ll benefit from AI in autonomous vehicles.

2024 Price Forecast

• Target Price: £0.10 – £0.15
• Outlook: As demand for safety monitoring systems grows, Seeing Machines has a lot of potential as autonomous vehicles take off.

BrainChip Holdings Ltd. (ASX: BRN)

Company Summary

• Sector: Semiconductor & Neuromorphic AI
• AI Application: BrainChip develops neuromorphic processors that mimic brain function to optimise AI. These chips are used in applications like healthcare diagnostics, robotics and consumer electronics.

Growth Drivers

• AI Efficiency: BrainChip’s tech reduces energy consumption, a key factor as AI goes across industries.
• Strategic Partnerships: Recent partnerships with tech companies for hardware integration strengthen BrainChip’s position.

2024 Price Forecast

• Target Price: £0.25 – £0.35
• Outlook: BrainChip’s unique tech means they’ll grow as energy efficient AI applications grow.

Big Technologies PLC (LSE: BIG)

Company Summary

• Sector: Remote Monitoring & Security
• AI Application: Big Technologies develops AI monitoring systems for security and healthcare. Their tech is used for remote monitoring of offenders and vulnerable individuals.

Growth Drivers

• Security Sector: Growing demand for security and monitoring solutions means Big Technologies will grow.
• Healthcare: Their tech is also moving into remote patient monitoring, so healthcare is added to their addressable market.

2024 Price Forecast

• Target Price: £0.60 – £0.80
• Outlook: Big Technologies is in good shape as remote security and healthcare monitoring grows.

Investing in AI Penny Stocks

When investing in AI penny stocks, you need to be careful and plan ahead. Here’s what to consider: Valuing AI companies requires a deep understanding of their technology and market potential, beyond just financial metrics.

Company’s AI Application

Look for companies with unique AI applications that address a growing market need. For example DeepVerge’s environmental applications and Seeing Machines’ driver monitoring systems have a clear market demand so they have a lot of growth potential. When trading AI penny stocks, it’s crucial to focus on companies with unique and impactful AI applications.

Partnerships and Alliances

• Partnerships with big companies can give smaller companies credibility and market access. Companies like Seeing Machines which partner with established auto players will benefit from this.

Financial Health and Funding

• Smaller AI companies often need a lot of funding for R&D. Check each company’s financials, funding sources and cash flow to see if they can fund growth.

Sector Demand

• Look at the main market of each AI penny stock. The environmental, healthcare and autonomous vehicle sectors have seen AI adoption grow so companies in these sectors will benefit.

Media Attention and AI Penny Stocks

Media attention can have a significant impact on AI penny stocks, and understanding this relationship is essential for investors.

How Media Attention Affects AI Penny Stocks

Media attention can drive interest in AI penny stocks, leading to increased trading volume and potential price surges. When a company receives positive media coverage, it can attract new investors and increase demand for the stock. This, in turn, can lead to a price increase, making it an attractive opportunity for investors. However, it’s essential to note that media attention can also be a double-edged sword, as negative coverage can lead to a decline in stock price.

In the context of AI penny stocks, media attention can be particularly influential. As AI technology continues to advance and gain mainstream attention, companies that are at the forefront of this trend are likely to receive significant media coverage. This can lead to increased interest in their stocks, making them more attractive to investors.

Investors looking to tap into the potential of AI penny stocks should keep a close eye on media coverage and be prepared to act quickly when opportunities arise. By understanding the characteristics of AI penny stocks and the impact of media attention, investors can make informed decisions and potentially reap significant rewards.

Risks of AI Penny Stocks

AI penny stocks come with unique risks so you need to be careful. Here are some of the risks:

Volatility and Liquidity

AI penny stocks have low trading volume and can be very volatile so you can get huge gains and losses. Unusual trading volume stocks can experience significant price movements, adding to the volatility of AI penny stocks.

Limited Disclosure

• Many penny stocks don’t have to disclose financials so it’s harder to value them. Companies on OTC markets have even less reporting requirements.

Competition and Saturation

• The AI space is competitive. Smaller companies have to compete with tech giants like NVIDIA and Google which have more resources to invest in AI R&D.

Regulatory Risks

• AI is under the microscope due to privacy and ethical concerns. Regulatory changes will impact companies in sensitive areas like surveillance and healthcare.

Prone to Scams and Pump-and-Dump

• Penny stocks are often targeted in pump-and-dump schemes where prices are manipulated by false information. Be careful and do your research.

How to Trade AI Penny Stocks

Diversify

• Spread your investments across multiple AI penny stocks to reduce exposure to any one stock.

Use Stop Loss

• With high volatility, stop loss can protect you from big losses by automatically selling a stock if it hits a certain price.

Follow Industry News and Trends

Follow industry news especially regulatory updates and tech advancements as they impact AI stocks. Staying informed about industry news can help you anticipate changes in stock prices and make better trading decisions.

Look at Trading Volume and Liquidity

• Make sure the stocks you choose have enough trading volume so you can buy or sell shares without affecting the price too much.

FAQs

What are AI penny stocks?

AI penny stocks are shares of small, early stage companies in the AI space trading at a low price, generally under £1 in the UK or $5 in the US.

Why are AI penny stocks so volatile?

AI penny stocks are volatile because of low trading volume, speculative interest and these are early stage companies so they can move big.

How do I buy AI penny stocks in the UK?

AI penny stocks can be bought through brokerage platforms like Trading 212, Hargreaves Lansdown and IG Markets which offer UK and international penny stocks.