Services activity in the United States is surging, with the latest US services PMI hitting its strongest level in 20 months. That points to powerful demand for the software, cloud and data tools that artificial intelligence depends on. Investors looking at AI stocks are watching this closely. This article highlights three stocks from an AI screener that are tightly linked to this trend and explains what each brings to the table.
These three stocks are a starting sample from the AI list, and the full screen surfaced 16 more companies directly tied to semiconductors, software, LLMs, ChatGPT and cloud tools that also have compelling AI narratives not covered here. To identify and analyze the highest conviction AI plays across that wider universe, head straight to the Artificial Intelligence/ AI Stocks screener.
SEEK (ASX:SEK)
SEEK is an online employment marketplace and HR software provider. Its core AI hook is its Advanced job ad product, which uses machine learning for candidate targeting alongside tools like Talent Search and SEEK Pass to match and verify applicants. Most revenue still comes from its broader job ad and marketplace services, with A$945 million from Employment Marketplaces ANZ and A$254 million from Employment Marketplaces Asia, so the AI products sit within a much larger hiring ecosystem. The company has a market cap of about A$5.1 billion.
Investors watching the AI shift in recruitment may consider SEEK because its AI powered matching, targeting and verification tools are being built on top of an already large job marketplace in Australia, New Zealand and Asia. The story carries risks, with current losses, high leverage and a dividend that leans on cash flow all putting pressure on how aggressively SEEK can fund data and AI product development. If its Asia rollout, freemium model and Advanced ad mix gain traction, the combination of richer data, more engaged users and higher value HR software could differ significantly from today’s headline earnings.
SEEK’s AI hiring engine is already wired into a A$5.1b marketplace, yet the real story may be how that mix of losses, leverage and product rollout evolves next. Get the full context in the 2 key rewards and 2 important warning signs
Xero (ASX:XRO)
Xero is a cloud accounting platform for small businesses and their advisors, offering tools for bookkeeping, payroll, payments and tax, with its Syft product using AI to turn financial data into reports, forecasts and dashboards. Almost all of its NZ$2.8b revenue comes from providing online solutions for small businesses and advisors, which are sold across Australia, New Zealand, the UK, the US and other markets. Xero has a market cap of about A$14.8b.
Investors watching AI applied to everyday business workflows may consider monitoring Xero. The company is weaving AI into real world tasks through Syft’s AI reporting, JAX agentic automation and live integrations with Microsoft 365, Claude and ChatGPT, all on top of a high margin subscription base. Forecasts currently indicate expectations of strong earnings and revenue growth, yet profitability has recently slipped and return on equity remains modest, so execution on these new AI tools is important. There are also questions around a rich valuation, funding structure and a relatively short tenured management team. For long term investors, a key consideration is whether Xero can turn this AI heavy product push into durable margins and cash flow, rather than simply delivering eye catching demos.
Xero’s AI push is accelerating on top of a large subscription base, yet the real story may be how that translates into durable cash and margins. Get the full analyst forecasts for Xero before the next chapter in this shift comes into focus
CAR Group (ASX:CAR)
CAR Group runs online vehicle marketplaces and related software, data and inspection services across Australia, Asia, Latin America and North America. It uses its large datasets to build AI powered valuation tools, inspection automation and data driven advertising products on top of its core listings business. Revenue is anchored in Australia at about A$518 million, with meaningful contributions from North America at about A$327 million, Latin America at about A$253 million, Asia at about A$145 million and a smaller A$11 million from investments. The company has a market cap of roughly A$10.8b.
Investors watching AI move from hype to real utility may find CAR Group interesting because it is applying AI directly to how cars are valued, inspected and advertised, using data from its global marketplaces rather than starting from scratch. That mix of high margin digital earnings and targeted AI investment is supported by strong cash generation, but it comes with trade offs, including a premium P/E, a dividend that leans on ongoing earnings strength and a balance sheet that already carries meaningful debt. The key question is whether these AI powered valuation and data products can grow fast enough to justify continued spending and support returns, or whether competition and funding pressure start to bite first.
CAR Group’s AI backed car valuations and inspections are supported by sizeable digital earnings. The main focus is how the balance of growth, debt and dividends fits together in the analysis report for CAR Group
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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