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Artificial intelligence (AI) has represented a generational catalyst for the stock market in recent years, particularly in the technology sector.
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Prior to AI entering the spotlight, many of today's favorite tech stocks were viewed as speculative or "boring" blue chips whose best days were in the rearview mirror.
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In the background, a once-struggling retailer turned around its operation and won the hearts of new customers ... and investors.
Over the last few years, no theme has captured Wall Street's imagination quite like artificial intelligence (AI). Since AI burst into the mainstream in late 2022, investors have watched several companies climb into the trillion-dollar club. Chief among them is semiconductor giant Nvidia -- whose market value has surged more than twelvefold, making it the most valuable company in the world.
Beyond Nvidia, the so-called "Magnificent Seven" megacap tech titans have also thrived amid the AI revolution. And let's not forget about Palantir Technologies -- the data mining specialist that has quickly evolved from an elusive government contractor into a core operating system for Fortune 500 companies and military agencies alike.
AI has served as a once-in-a-generation catalyst for the tech sector. But not too long ago, many of these companies were dismissed as either speculative bets with limited use cases or mundane blue chips unlikely to deliver outsized gains.
Meanwhile, operating far from the AI spotlight was specialty retailer Build-A-Bear Workshop (NYSE: BBW) -- whose eye-popping 2,390% gain over the last five years has made it one of the best investment choices in the market, even more so than big tech.
This leads to an obvious question: How in the world did this happen?
While Build-a-Bear may not be found in splashy AI headlines, its stock has quietly become a monster. The best part? Despite its staggering returns, there's a compelling case that the stock remains dirt cheap and further gains are on the horizon.
The last several years have featured a number of headwinds that seemed almost insurmountable for Build-a-Bear. Consumer shopping patterns have been shifting online for years, with the so-called "Amazon Effect" blistering traditional brick-and-mortar retailers.
Moreover, rising inflation and elevated borrowing costs have weighed heavily on consumer purchasing power. For many households, discretionary purchases are the first things that get cut. That spelled even more risk for Build-a-Bear, whose core business of selling custom plush toys is far from an essential service.