EMERGING TECH RESEARCH

AI & ML Public
Comp Sheet and
Valuation Guide

Q3
2024
PitchBook Data, Inc.
Nizar Tarhuni Executive Vice President of Research
and Market Intelligence
Key takeaways
Paul Condra Head of Emerging Technology Research
• Conglomerates stand above the crowd in AI: New risers in the AI conglomerate category led in Q3. Both Apple and Oracle grew
their share prices above the Magnificent 7 average in Q3 based in large part on new AI announcements. Morningstar raised
Institutional Research Group
Analysis
Oracle’s fair value estimate to $108 per share from $98 based on increased guidance and 46% YoY growth in cloud infrastructure
revenue.1 Apple increased expectations for its iPhone replacement cycle based on new generative AI (GenAI) features, leading
Brendan Burke
Senior Analyst, Emerging Technology us to put the company in our public comp sheet and valuation guide for the first time. Other fast followers to Amazon, Google,
[email protected]
and Microsoft continued to outperform benchmarks, including IBM, Meta, and SAP. New announcements and product suite
[email protected]
modernization continue to yield returns for conglomerates that are likely to increase their cash flows as a result of GenAI.
Published on October 10, 2024

• Pure-play vertical applications benefit most from the lower-rate environment: Enterprise value (EV)/last 12-month (LTM)
Contents revenue multiples for pure-play GenAI vertical applications inflected upward in September, resulting in an average of 10.5x in
Key takeaways 2
September 2024, showing that long-duration assets can benefit most from permissive monetary conditions. Four stocks rose
Stock returns 5
above 20x EV/LTM revenue multiples as of September 30, 2024: CrowdStrike (21.5x), Duolingo (21.6x), Recursion Pharmaceuticals
Valuations 6 (33.6x), and SoundHound (32.2x). These companies’ multiple expansions are not necessarily based on superior results, given
Revenue 7 patchy revenue growth and profitability among this cohort, yet macro forces can support immature companies in this space.
EBITDA 9

• Semiconductors come back to earth: Eight out of 10 AI & machine learning (ML) semiconductor companies faced declining share
The full Excel data pack for prices in Q3 as investors questioned the sustainability of GenAI infrastructure investment. We added AI server leader HPE this
this report is available to
PitchBook clients. quarter in place of Intel, which has begun trading more based on its foundry business and takeover rumors than AI chip design
announcements. These share price declines pulled valuation multiples below the leading spot the segment briefly claimed in June
Disclaimer: Any -0 values are negative values 2024. Chip design leaders AMD and NVIDIA faced flat share prices during the quarter, yet Morningstar analysts maintained its
that have been rounded up to 0.

This comp sheet identifies public companies with

fair value estimates for both stocks. AMD can benefit from its acquisition of ZT Systems when pursuing cloud service provider
significant revenue from AI-centric software and
AI-focused products in both hardware and software.
contracts, although likely not until the acquisition is integrated by 2026. 2
Companies with diverse business models and AI leadership
are referred to as “conglomerates,” while companies whose
products are centered on AI systems are labeled as “pure-
1: “Oracle Earnings: Cloud Infrastructure Demand Harvested from ‘Acres’ of Large-Scale AI Model Clusters,” Morningstar Equity Research, Julie Bhusal Sharma, September 10, 2024.
play.” This qualitative categorization is not exhaustive yet
can offer a directional comparison for private companies. 2: “AMD: Acquisition of ZT Systems Should Aid AI Efforts; Maintain $145 Fair Value Estimate,” Morningstar Equity Research, Brian Collelo, August 19, 2024.

Q3 2024 AI & ML PUBLIC COMP SHEET AND VALUATION GUIDE 2

 • Enterprise AI beneficiaries becoming clearer: Vertical application conglomerates experiencing high stock price growth during
the quarter included Moody’s (+13%), ServiceNow (+14%), and Zoom (+18%). Moody’s GenAI Research Assistant is associated
with a 60% increase in usage for its CreditView product and offers upselling opportunities. 3 Zoom disclosed 1.2 million Zoom
AI companion activations, which contributes to the company’s competitive advantage.4 ServiceNow benefits from both higher-
priced GenAI products and internal cost savings from GenAI usage. Companies that achieve return on investment (ROI) on GenAI
investments will begin to outperform their lagging peers.

• Best- and worst-performing stocks: Q3’s standouts include Appen (+334%), Veritone (+59%), Palantir (+47%), Datadog (+35%),
and Tesla (+32%). Appen trades as a penny stock on the Australian Securities Exchange and thus increased its stock price from
a low base, yet it restarted revenue growth in Q2 2024 and has tailwinds from GenAI data labeling. Palantir became an S&P 500
company along with reporting strong operating results, demonstrating the potential of VC-backed IPOs from the pre-pandemic
wave of listings. The worst-performing stocks in the quarter came from autonomous machines with Mobileye (-51%) and Luminar
(-40%), semiconductors with Supermicro (-49%), and vertical applications with CrowdStrike (-27%). The lessening need for
lidar technology in the era of large transformer models for autonomous driving is weighing on legacy self-driving stocks such
as Mobileye and Luminar and benefiting Tesla. Supermicro is the target of a short-seller campaign and competitive pressure
from bigger server manufacturers, despite its first-mover advantage packaging NVIDIA graphics processing units (GPUs) for
cloud customers.

• AI unicorn valuation growth falls short of biopharma: The Morningstar-PitchBook AI Unicorn Index grew 4.1% in Q2, narrowly
surpassing the Nasdaq, yet lagging the Global Unicorn Index and almost all other vertical indexes. This result factors in strong
valuation growth in primary deals for unicorns such as Anduril, Cohere, Glean, and Groq, yet a continuing aging of pre-GenAI
unicorns brings overall valuation growth more in line with public comps. New unicorns included GenAI innovators Black Forest
Labs, Codeium, Sakana AI, and World Labs, demonstrating the continued minimum valuation of $1.0 billion for foundation

3: “Moody’s: Fundamentals Are Better Than Expected, But Valuation Is Still High,” Seeking Alpha, September 25, 2024.
4: “Zoom Earnings: Enterprise Strength Building,” Morningstar Equity Research, Dan Romanoff, August 22, 2024.

Q3 2024 AI & ML PUBLIC COMP SHEET AND VALUATION GUIDE 3

 model startups with elite research talent. This result still underperforms the Magnificent 7, suggesting that private companies
in aggregate are not outperforming public leaders. We tracked a down round for Zhipu AI and a flat round for DevRev,
demonstrating that not every closed AI deal generates outstanding valuation growth.

• Private valuations remain disconnected from existing public company financial metrics: Revenue multiples for leading
foundation model infrastructure and application companies with rapid growth continue to exceed 30x annual recurring revenue
(ARR) multiples, stretching up past 100x ARR for high-flying research labs with strategic value such as Anthropic and Cohere in
secondary markets and recent strategic deals. Our recent analyst note on foundation models summarizes the revenue growth of
these companies, differentiating them from public company valuations.

The PitchBook AI & ML comp sheet was constructed with the PitchBook Excel plugin utilizing both PitchBook and Morningstar data. The tool
allows subscribers to pull financial data and company information into Excel for over 55,000 public companies across the US and the world,
as well as PitchBook’s proprietary data on over 4 million private companies.

Q3 2024 AI & ML PUBLIC COMP SHEET AND VALUATION GUIDE 4

Stock returns The fully interactive Excel data pack for this report is available to PitchBook clients via the Excel plugin.

Sources: PitchBook and Morningstar • Geography: Global • As of September 30, 2024

Q3 2024 AI & ML PUBLIC COMP SHEET AND VALUATION GUIDE 5

Valuations The fully interactive Excel data pack for this report is available to PitchBook clients via the Excel plugin.

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Sources: PitchBook and Morningstar • Geography: Global • As of September 30, 2024 Sources: PitchBook and Morningstar • Geography: Global • As of September 30, 2024
Note: “Generative AI vertical applications - Pure-play” and “AI core - Pure-play” are excluded for scale.

Q3 2024 AI & ML PUBLIC COMP SHEET AND VALUATION GUIDE 6

Revenue The fully interactive Excel data pack for this report is available to PitchBook clients via the Excel plugin.

Sources: PitchBook and Morningstar • Geography: Global • As of September 30, 2024

Q3 2024 AI & ML PUBLIC COMP SHEET AND VALUATION GUIDE 7

Revenue The fully interactive Excel data pack for this report is available to PitchBook clients via the Excel plugin.

Sources: PitchBook and Morningstar • Geography: Global • As of September 30, 2024

Q3 2024 AI & ML PUBLIC COMP SHEET AND VALUATION GUIDE 8

EBITDA The fully interactive Excel data pack for this report is available to PitchBook clients via the Excel plugin.

Sources: PitchBook and Morningstar • Geography: Global • As of September 30, 2024

Q3 2024 AI & ML PUBLIC COMP SHEET AND VALUATION GUIDE 9

EBITDA The fully interactive Excel data pack for this report is available to PitchBook clients via the Excel plugin.

Sources: PitchBook and Morningstar • Geography: Global • As of September 30, 2024

Q3 2024 AI & ML PUBLIC COMP SHEET AND VALUATION GUIDE 10

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