The Power of Artificial Intelligence for Xometry
Efficiency is a crucial component in custom manufacturing. Traditionally, procuring a custom order from a machine shop or manufacturer involved time-consuming bidding processes. However, Xometry’s use of cutting-edge AI technology has changed the game.
Navigating the Xometry platform, users are met with instant bids on their custom order requests, courtesy of the AI software. This invaluable feature sets Xometry apart from the competition, as even smaller shops lacking AI capabilities cannot match its lightning-fast response.
Nevertheless, the AI system must work in harmony with Xometry’s business model. Xometry doesn’t personally fulfill the orders but instead sells them to small shops at a lower price than the initial bid.
To ensure a successful collaboration with third-party manufacturers, Xometry must strike the right balance in pricing. Setting prices too low may discourage manufacturers from accepting the jobs, forcing Xometry to increase payouts and hampering gross profit. Conversely, pricing jobs too high could deter users from utilizing the platform, impeding revenue growth. Thus, Xometry relies on AI to navigate this delicate pricing equilibrium.
The performance of Xometry’s AI has been impressive thus far, evident from strong revenue growth and substantial improvement in gross margins.
A Glimpse at Xometry’s Promising Future
Xometry’s platform currently boasts 52,000 active buyers, representing only a fraction of its enormous untapped global user base. This presents a significant growth opportunity as Xometry seeks to attract new buyers.
Furthermore, within its existing buyer pool, Xometry has ample room for expansion. Large enterprises, over time, may increasingly outsource their work to Xometry’s reliable platform, bolstering the company’s market presence.
Xometry’s management estimates a massive addressable market of around $2.4 trillion, dwarfing their trailing-12-month revenue of $433 million. While industry estimates should be approached cautiously, even capturing 10% of the projected market ($240 billion) would position Xometry for remarkable success.
While Xometry exhibits great promise, it still has milestones to conquer. At only 10 years old, the platform must prove its readiness for widespread adoption, making an investment in Xometry a promising opportunity yet not without risks.
Investors should seek a favorable valuation that compensates for potential risks associated with this evolving market. It should be noted that Xometry’s recent 130% surge lacks significant news catalysts, suggesting short-term trader influence. Consequently, a correction in the stock’s value should not come as a surprise in the near future.
Nevertheless, Xometry remains a robust business with the potential for further growth in 2024. Investors keen on capitalizing on this opportunity should consider taking action sooner rather than later.