The AIIP Methodology

Our methodology is a rules-based system used to evaluate and rank AI stocks, drawing on growth/fundamental strength and market momentum.

The system is titled the AIIP Algorithm Methodology and is designed to identify breakout AI stocks using structured, rules-based financial data. Its goal is to uncover stocks exhibiting accelerating fundamentals, strong cash flow, and reasonable pricing, before they achieve widespread popularity.

All proprietary scores are calculated using data supplied by Finbox, which aggregates institutional-quality fundamentals from providers such as S&P Global Intelligence.

The overall stock evaluation is driven by two main components: the Fundamental Score (measuring growth/fundamentals) and the Relative Strength (RS) Score (measuring momentum).

1. The Total Score (Growth/Fundamentals)

The Total Score is calculated out of 100 and combines three weighted categories to assess overall business strength. The model is growth-weighted by design.

Growth (65%) – We focus primarily on revenue and earnings-per-share (EPS) growth, both actual and forecast. This captures the companies delivering consistent expansion and future potential.

Financial Quality (25%) – We assess balance-sheet strength, profitability, and debt levels to identify firms with solid financial foundations.

Valuation (10%) – Finally, we consider how attractively each company is priced relative to its growth prospects, using measures such as the PEG ratio.

2. Relative Strength (RS) Score

The Relative Strength (RS) Score measures a stock’s price performance relative to the AI universe, which includes over 170 AI-focused public companies. This score ranges from 0 to 100.

3. Ranking Status (Criteria for Inclusion)

A stock's Ranking Status is assigned based on combining the Total Score and the Relative Strength (RS) Score. To qualify for the Watchlist, a stock must meet high thresholds in both categories.

Each stock is classified into one of four categories based on its Fundamental Score and Relative Strength (RS) Score, both measured on a 0–100 scale.

✔️ Watchlist – Stocks that score 70 or above on fundamentals and 80 or above on momentum. These are the strongest names that qualify for our Watchlist.

📊 Fundamental – Stocks with a Fundamental Score of 70 or higher but an RS Score below 80. They show solid underlying quality but limited recent price momentum.

📈 Momentum – Stocks with a Fundamental Score below 70 but an RS Score of 80 or higher. These are technically strong movers that may still lack fundamental confirmation.

🚫 No Signal – Stocks scoring below 70 on fundamentals and below 80 on momentum. These names currently fail to meet our criteria for inclusion.

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^{Not Investment Advice}^{: This content is provided by AI Investing Pulse for informational and educational purposes only. It does not constitute investment advice, a personal recommendation, or an invitation or inducement to engage in any investment activity.}^{Not Regulated}^{: AI Investing Pulse is not authorised or regulated by the Financial Conduct Authority (FCA) in the United Kingdom, is not registered with the Securities and Exchange Commission (SEC) or any state securities regulator in the United States, and is not registered with the Canadian Investment Regulatory Organization (CIRO) or any provincial securities commission in Canada.}^{Methodology Disclosure}^{: The AIIP Index scores and rankings mentioned in this article are generated by a proprietary quantitative methodology based on publicly available financial data. Our full methodology is explained in the "About AIIP" section below. These scores are objective system outputs, not recommendations or endorsements.}^{Risk Warning}^{: Investing in stocks involves risk, including the potential loss of principal. Past performance of stocks, scores, or rankings is not indicative of future results. Stock prices can decline as well as rise, and you may lose some or all of your invested capital.}^{Third-Party References}^{: References to analyst opinions, bank research, media publications, or the term "picks" refer to third-party selections, not AIIP recommendations. We aggregate this information for educational analysis only.}^{Seek Professional Advice}^{: Always consult a qualified, regulated financial professional who understands your personal circumstances before making any investment decisions. Consider your individual financial situation, risk tolerance, investment objectives, and time horizon.}