Spire Global (NYSE: SPIR) emerged as an AI winner during Nvidia Corporation's (NASDAQ: NVDA) GTC developer conference. The conference was a name-dropping event as much as anything, with Nvidia CEO Jenson Huang mentioning numerous critical players in AI. The news for Spire Global is a collaboration that will juice its propriety platform with the power of AI.
Spire Global's Collaboration With Nvidia Will Accelerate Growth
The collaboration aims to integrate Nvidia's Earth-2 cloud with Spire's radio occultation data and propriety assimilation platform to accelerate weather predictions. Earth-2 is an AI application that seeks to simulate and visualize Earth's atmosphere, incorporating insights from numerous AI models. The result will be weather predictions Spire says are infeasible using traditional methods.
The opportunity for Spire is obvious. AI is expected to enhance its appeal to consumers, businesses, and governments and help to accelerate its growth. Not only is the global weather prediction industry expected to grow at a high-single-digit CAGR for the foreseeable future, but there is also market share to be taken. Within the weather prediction industry, weather-related business services will grow at double the broader market, which is a segment where Spire can excel.
Spire Global is a weather company, but its satellites, data assimilation, and AI-enhanced platform allow for much more. The offerings include weather intelligence, Earth and climate data, ship and plane tracking, and port/routing intelligence.
Spire Global Is On Track to Outperform in 2024 and 2025
Spire Global analysts forecast a solid year in 2024 and 2025 but may be underestimating its growth. The forecasts do not include the impact of collaboration with NVIDIA, and growth is expected to begin slowing this year. Accelerating growth should be expected because the business is supported by organic growth, penetration of clients, and market share gains.
Analysts' sentiment for the stock is bullish, but its valuation is questionable. The three analysts tracked by Marketbeat.com rate it at Buy but see it moving lower by 10% at the consensus. The caveat is that most targets are several months old, the range is vast, and revisions are likely. The question is whether analysts think the collaboration with NVIDIA will move the revenue needle enough to warrant a stock price increase.
There Are Headwinds for Spire Global's Stock Price
There are headwinds for Spire Global's stock price, including insiders and institutions. Insiders and institutions have been selling the stock conspicuously and may cap gains soon. Insiders own about 20% of the stock, and institutions own another 20%, so there is a risk for investors in addition to dilutive share offerings. The share count is up nearly 20% in F2024, and the guidance assumes an additional 2.25% dilution this year.
Balance sheet details are less than favorable. The company has adequate cash to continue operations until profitability, but the figure is dwindling, debt is rising, and equity is crashing. Shareholder equity fell more than 35% in 2023 and is not likely to grow in 2024.
Spire Global's Stock Price Forecast is Bullish With a Chance of Resistance
The technical action is favorable, but there are hurdles to overcome. The market shows a rounding bottom on the weekly chart, with the upswing supported by rising volume. This pattern could lead the market into a complete reversal. The first target for significant resistance is near $26, which is good for a gain of 50% from current levels. The risk is that this market will not increase beyond that level and become range-bound with $26 as the ceiling.
The next visible catalyst for higher share prices is the earnings report due April 30. Potential movers for the market include performance and guidance, which may be robust. The critical takeaway will be profitability, which is expected over the next few quarters.
