As the artificial intelligence (AI) megatrend continues to captivate investors – with Nvidia (NVDA) still dominating the spotlight – Citigroup strategists led by Drew Pettit recently advocated buying "the next leg of the artificial intelligence trade."

Highlighting the “micro bubble risks” in some areas of the market, they presented a list of AI stocks categorized into enablers, creators, and users, and suggest that growth investors focus on names still trading at a reasonable price. In the first screen under the "creators" umbrella, Bill Holdings, Inc. (BILL) and Smartsheet Inc. (SMAR) are in Citi’s “AI stocks at a reasonable price” basket.

Additionally, the strategists emphasize that investors often overlook many international names in favor of U.S. stocks, and note that Israel-based Wix.com Ltd. (WIX) is another compelling choice alongside its U.S. counterparts Bill Holdings and Smartsheet.

Let's take a closer look at these stocks.

AI Stock #1: Bill Holdings

Bill Holdings, Inc. (BILL), headquartered in San Jose, California, provides financial automation software for small and midsize businesses worldwide. The company offers software-as-a-service, cloud-based payments, and spend management products. In addition, its AI-enabled software provides connections between suppliers and clients.

BILL boasts over 470,000 clients using its software-as-a-service plans, continuously adding thousands of new clients. Its network encompasses 5.8 million members, including 7,000+ accounting firms and major financial institutions such as JPMorgan Chase & Company (JPM) and Wells Fargo & Company (WFC).

The company also looks primed to capitalize on the significant opportunity presented by the ongoing transition away from manual payment processing methods like check writing among small businesses. 

Valued at $6.7 billion by market cap, shares of BILL Holdings declined 11.5% over the past 52 weeks. 

The stock currently trades at 6.25 sales - a steep premium to more established peers like Paypal (PYPL) and Square (SQ), but significantly cheaper than the 13.7x sales multiple of Shopify (SHOP).

In its fiscal Q2 earnings report released on Feb. 8, the payments and bill software maker's revenue increased 22% year over year to $318.5 million, surpassing Wall Street projections by 6.8%. Its non-GAAP net income per share of $0.63 also beat analysts' expectations by 57.2%.

The company expects Q3 revenue to range between $299 million and $309 million, while non-GAAP net income per diluted share is projected to be between $0.48 and $0.57. Analysts tracking Bill Holdings expect the company to swing to a profit of $0.03 per share in fiscal 2024.

BILL has a consensus “Moderate Buy” rating overall. Of the 24 analysts covering the stock, 13 recommend “Strong Buy,” one suggests “Moderate Buy,” nine say “Hold,” and one gives a “Strong Sell” rating. 

The average analyst price target for Bill Holdings is $93.05, indicating a potential upside of 39.9%. The Street-high target price of $136 suggests a 104.6% upside potential.

AI Stock #2: Smartsheet

Bellevue, Washington-based Smartsheet Inc. (SMAR) is a cloud-based platform that assists businesses in managing and streamlining workflows. It allows users to create, automate, and track various projects, from simple task lists to complex workflows, using familiar spreadsheet-like formats, cards, calendars, and other tools. Smartsheet, with 90% of Fortune 100 companies on its client list, aims to expand further by offering AI-powered collaborative workflow solutions to tap into massive addressable markets.

Smartsheet's automation capabilities help streamline workflows by automating repetitive tasks and integrating with various third-party applications, such as Microsoft (MSFT) 365, Alphabet's (GOOGL) Google Workspace, and Salesforce's (CRM) Slack.

Valued at $5.3 billion by market cap, shares of Smartsheet declined 12.6% over the past 52 weeks.

Valued at about 5.5x sales, SMAR is priced in line with peers like Asana (ASAN), and is cheaper than rivals like Monday.com (MNDY). 

Its fourth-quarter results, reported on Mar. 15, are a testament to its growing demand. Smartsheet's CEO Mark Mader said, “Strong demand from our enterprise customers helped us achieve the major milestone of $1 billion in annualized recurring revenue in Q4.”

Its Q4 total revenue, which increased 21% year over year to $256.9 million, slightly beat analyst estimates, while its non-GAAP net income per share of $0.34 surpassed analyst estimates by a wide margin. Free cash flow was $56.3 million, or 22% of total revenue.

The company expects Q1 revenue to range between $257 million and $259 million, and guided between $1.11 billion and $1.12 billion for the full year. Smartsheet expects full-year earnings to range between $1.06 and $1.13 per share, on an adjusted basis. 

SMAR has a consensus “Strong Buy” rating overall. Of the 18 analysts covering it, 13 recommend “Strong Buy,” one suggests “Moderate Buy,” three say “Hold,” and one gives a “Moderate Sell” rating. 

The average analyst price target for Smartsheet is $50.12, indicating a potential upside of 26.4%. The Street-high target price of $63 implies a 58.9% upside potential.

AI Stock #3:  Wix.com

Tel Aviv-headquartered Wix.com Ltd. (WIX), with a market cap of $7.5 billion, is a website creation platform that allows its users to create their sites without any coding or designing skills. It offers complete solutions, from advanced SEO and marketing tools to enterprise-grade and business features, allowing users to build a professional website.

Shares of Wix.com rose 45.7% over the past 52 weeks, surpassing the S&P 500 Index’s ($SPX)26.7% gains over the same period.

The stock is currently trading at 115.81 times forward earnings, and 4.82 times sales, roughly in line with peers like SHOP and Squarespace (SQSP).

The company reported its Q4 results on Feb. 21, with revenue rising 13.7% to $403.8 million, above Wall Street projections. Its adjusted EPS of $1.22 surpassed analyst estimates by 24.5%.

Wix.com introduced new generative AI and AI tools, including AI Chat Experience for Business, AI Code Assistant, and the AI Site Generator, which has garnered positive user feedback. Wix Co-founder and CEO Avishai Abrahami said, "We expect continued momentum and ramping benefits from these milestone products coupled with our upcoming product pipeline to propel accelerating growth in 2024."

For fiscal 2024, Wix.com expects revenue between $1.73 billion and $1.76 billion, up 11% to 13% year over year. Analysts tracking Wix.com expect EPS to grow 73.1% in fiscal 2024 and 117.2% in fiscal 2025.

WIX has a consensus “Strong Buy” rating overall. Of the 18 analysts covering the stock, 12 recommend “Strong Buy,” three suggest “Moderate Buy,” and three say “Hold.”

The average analyst price target for Wix.com is $152.24, indicating a potential upside of 11.9%. The Street-high target price of $175 implies a 28.6% upside potential.