Informatica (INFA.N) is a US-listed software development company and, according to analysts at the Bank of Nova Scotia, is in a favorable position in the rise of artificial intelligence. Last month, the California-based company launched its AI model - CLAIRE GPT, aimed at helping companies use their data to generate AI applications. Generated AI is the technology behind popular chatbots like ChatGPT, using a large amount of data to create new content such as text and images, but relies on well-managed and high-quality inputs to produce reliable results.

"Fragmented and poor quality data can lead to unreliable insights, biases, trust issues, illusions, and risks in generated AI, such as possible intellectual property infringement," wrote Bank of Nova Scotia analyst Patrick Colville in a report to clients. "Informatica has 30 years of experience in solving customer data management problems, and we believe the company will be an ideal partner for enterprises in generating AI projects."

The company said its AI model can answer customer queries about their business by retrieving data from multiple interconnected systems such as Salesforce (CRM.N), Tableau, Snowflake (SNOW.N), Amazon's AWS, and internal databases. This process may take engineers or analysts several days to complete. However, Bank of Nova Scotia warned that financial benefits may not be immediately apparent and noted that "using Informatica for generated AI is still in a very early stage" and that 2024 may not be a significant revenue driver. Investment banks predict the stock will rise to $33 in the next 12 months, representing a 15% upside potential.

Wall Street analysts are even more bullish. According to FactSet, the average target price of 16 analysts shows a 39% upside potential for the stock. Analysts at the Bank of Nova Scotia Capital Markets expect the stock to rise 43% to $41 per share in the next 12 months. They believe that while competitors such as Salesforce, Snowflake, and Microsoft (MSFT.O) also offer generated AI models, Informatica has a unique advantage thanks to its flagship product, Intelligent Data Management Cloud.

"Informatica can access an enterprise's entire data asset, while other tools can only see a narrow view of it in their specific repositories," wrote Bank of Nova Scotia analyst Matthew Hedberg in a report to clients on May 22. "ClaireGPT has a broader background and can provide more comprehensive analysis to answer complex questions about enterprise data."

As early as April, the Wall Street Journal reported that Salesforce had expressed interest in acquiring Informatica for about $10 billion, about 5% more than its current market value. However, a subsequent report said that this potential deal had fallen through. Informatica's stock has risen about 62% in the past 12 months.