According to the “Hyperscale Data Centers – Global Strategic Business Report”, the global market for hyperscale data centers is estimated to reach US$730.2 Billion by 2030, growing at a CAGR of 23.1% from 2023 to 2030. From the increasing adoption of cloud services to the rise of big data and artificial intelligence, several factors are at play when it comes to its rapid growth. As per the report, the biggest driver is cloud computing, with more and more companies migrating their workloads to the cloud to reduce costs, improve scalability, and enhance flexibility.
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These hyperscalers need a lot of energy to run their data centers around the clock. According to McKinsey & Company, data center power needs are expected to grow three times higher than the current capacity by the end of the decade, from between 3 and 4 percent of total US power demand today to between 11 and 12 percent in 2030. Naturally, the power sector has become a significant AI player. Several technology companies are looking at nuclear power, including the use of small modular reactors (SMR), to meet their electricity needs.
“Driven by recent trends in AI development, projected power consumption by data centers in the U.S. is expected to increase in the range from 8% to 17% by 2030—or potentially even higher, as progress in AI technologies is not linear but exponential, as seen in Silicon Valley today”.
-Energy expert Maksim Sonin
Recent AI News
As the demand for advanced computing power grows, the latest AI breakthroughs are reshaping industries and driving innovation at an unprecedented pace. Then again, nothing is perfect. A few days back, OpenAI’s premier chatbot, ChatGPT, went down for a total of 30 minutes. According to an outage tracking website Downdetector, over 19,000 people were impacted due to the chatbot’s unavailability. Sam Altman, the CEO, admitted to the outage on X and apologized.
The same company is said to be hitting stumbling blocks recently. That’s because, according to Bloomberg, its latest model Orion hasn’t been performing as well as the developers had hoped for. OpenAI, however, isn’t the only company seemingly facing a plateau. Three leading AI companies are now seeing diminishing returns from their costly efforts to build newer models.
In other news, search habits are changing across the globe now that artificial intelligence is here. According to research from Yext, a digital presence platform for multi-location brands, 45% of customers are likely to use and trust an AI tool for finding more information about a brand, while 51% now use social media, and 28% turn to voice assistants.
“Google impressions have dropped 8-20% in the past two years, pushing marketers to adapt as search behaviour shifts with AI-driven overviews, chatbots and social media searches. Instagram and TikTok have become favoured alternative search engines, particularly for younger consumers”.
– Anthony Rinaldi, senior director of insights at Yext.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A journalist typing up a news article in their home office.
10. SoundHound AI (NASDAQ:SOUN)
Market Capitalization: $2.71 billion
SoundHound AI (NASDAQ:SOUN) is an independent voice AI platform offering voice AI solutions to businesses. The company boasts more than 200 enterprise brands employing its AI agents across a growing number of verticals.
On Tuesday, November 12, SoundHound AI (NASDAQ:SOUN) CEO and Co-Founder Keyvan Mohajer said during the company’s quarterly earnings call that its voice artificial intelligence (AI) solutions have been signed by seven out of the top 20 quick-service restaurants (QSR). Several of them are already live with the company’s phone and drive-thru AI solutions. QSRs and restaurants have been using these solutions for drive-thru, kiosks, phone ordering, mobile apps, and more. A few days ago, the company reported that its AI phone ordering technology had marked a milestone, processing more than 100 million interactions with restaurant customers, meaning that they were all handled exclusively by artificial intelligence.
9. Bloom Energy Corporation (NYSE:BE)
Market Capitalization: $3.08 billion
Bloom Energy Corporation (NYSE:BE) is a renewable energy company that offers solid oxide fuel cells that convert natural gas, biogas, and hydrogen into electricity without combustion, resulting in low CO2 emissions. The company’s fuel cell technology powers AI data centers.
On November 12, Wells Fargo analyst Michael Blum maintained a “Hold” rating on Bloom Energy Corporation (NYSE:BE) with a price target of $14.00. The hold rating comes amid the company falling short of expectations in its third quarter. Even though new commercial agreements have improved short-term outlook, there are risks associated with the timing of financing and customer orders. Moreover, despite the potential that comes from the data center market, there is a lack of clarity on specific details on such opportunities that are causing ambiguity. That said, the company has secured large-scale project deals, but there is uncertainty about its ability to finalize them.
8. Informatica Inc. (NYSE:INFA)
Market Capitalization: $7.36 billion
Informatica Inc. (NYSE:INFA) is a leader in enterprise AI-powered cloud data management. Its artificial intelligence-powered platform connects, manages, and unifies data across multi-vendor, multi-cloud, and hybrid systems at enterprise scale worldwide.
On November 12, Informatica Inc. (NYSE:INFA) announced the expansion of CLAIRE® GPT, the industry’s first enterprise GenAI-powered data management assistant, in Europe and Asia Pacific (APAC). The expansion allows customers in the said regions to access services locally, meeting their needs for data residency, regulations, and performance.
“With the regional availability of our CLAIRE® GPT, customers will now have greater flexibility and accessibility to leverage GenAI-powered data management capabilities. This takes us closer to realizing our vision of providing all enterprise users with secure, AI-ready data to unlock business value with faster response times while responsibly scaling the adoption of AI”.
-Gaurav Pathak, VP for Product Management, Metadata and CLAIRE at Informatica.
7. Samsara Inc. (NYSE:IOT)
Market Capitalization: $29.12 billion
Samsara Inc. (NYSE:IOT) provides solutions that connect physical operations data to its connected operations cloud, specializing in fleet management and industrial operations through connected sensors and data analytics.
On Tuesday, November 12, Samsara Inc. (NYSE:IOT) revealed its latest innovations at the Go Beyond conference in London that aim to drive technology innovation across physical operations. The latest innovations at Samsara will leverage artificial intelligence to enhance operational efficiency and safety. The solutions include data-driven remote training to reduce safety incidents in the transportation sector, features to alert drivers to avoid costly bridge collisions, driver coaching, and real-time safety monitoring without video recording.
“These new product features have been driven by Samsara’s deeply embedded culture of customer feedback. We collaborate with some of Europe’s largest and most complex operational companies to solve hard problems using the unparalleled scale of our regional and global data. Our customers are using our platform to turn this data into real human impact by making roads safer and reconnecting their people to the work they love doing”.
– Kiren Sekar, Samsara’s chief product officer.
6. Snowflake Inc. (NYSE:SNOW)
Market Capitalization: $42.05 billion
Snowflake Inc. (NYSE:SNOW) is an AI data cloud company. This cloud-based data storage company is benefiting from the AI boom as data warehouses are a critical component in making AI useful for enterprises.
On November 12, Snowflake Inc. (NYSE:SNOW) announced a new platform at its annual developer conference, BUILD 2024. The new platform, Snowflake Intelligence, will allow enterprises to ask business questions across their enterprise data, unlock data-driven answers, and create data agents accordingly. The platform will provide enterprise-grade data agents that can help derive relevant business insights from the data, hosted within their data cloud instance and beyond. These insights can then be used to take action across different tools and applications, like Google Workspace.
“With Snowflake Intelligence, teams can easily create data agents that allow business users to talk to their enterprise data using natural language, and then analyze, summarize, and take action on those results from one unified platform. Snowflake Intelligence represents the next step in Snowflake’s AI journey, further enabling teams to easily, and safely, advance their businesses with data-driven insights they can act on to deliver measurable impact.”
– Baris Gultekin, Head of AI, Snowflake
5. Micron Technology, Inc. (NASDAQ:MU)
Market Capitalization: $115.42 billion
Micron Technology, Inc. (NASDAQ:MU) is an innovative memory and storage solutions provider. Its products are used in data centers, AI PCs, and more.
On November 12, Citi analyst Christopher Danely noted that semiconductor stock estimates have dropped 11% during earnings season, and the SOX index fell by 9%, largely due to declines from stocks such as NXP and Microchip. However, the firm believes that the selloff is almost complete and industrial and auto market issues will also be resolved by the first half of 2025. As such, 75% of semiconductor stock appears to be solid, and investors should be ready to build positions again. Micron Technology, Inc. (NASDAQ:MU) is one such buy-rated stock that the analyst has recommended to buy, amongst other key semiconductor companies.
4. Cisco Systems, Inc. (NASDAQ:CSCO)
Market Capitalization: $234.02 billion
Cisco Systems, Inc. (NASDAQ:CSCO) is a leader in enterprise networking and security, providing information technology and networking services. It leverages AI capabilities across its entire product and customer service portfolio.
On November 12, Cisco Systems, Inc. (NASDAQ:CSCO) announced that LTIMindtree is now leveraging its Cisco Secure Access as its new security solution. The solution will help LTIMindtree protect its 80,000 hybrid workers with secure internet access, advanced zero-trust network access, and embedded AI. As part of an expanded partnership, the company will also be offering this solution to its global client base. The Cisco Secure Access enables employees to connect securely and quickly, whether they work remotely or in the office.
“Great workplaces require great security. With AI-powered threats rising, we are combating sophisticated attackers across a more expansive landscape. Our customers need their security to operate in the background, at machine scale to make the experience seamless and secure for hybrid workers. LTIMindtree’s rapid deployment of Secure Access is a great testament to Cisco’s platform strategy and differentiation. Together with our partners, we are changing what user protection means for a modern workplace.”
– Jeetu Patel, Executive Vice President and Chief Product Officer, Cisco.
3. Broadcom Inc. (NASDAQ:AVGO)
Market Capitalization: $823.05 billion
Broadcom Inc. (NASDAQ:AVGO) is a technology company that designs, develops, and supplies semiconductor and infrastructure software solutions. It designs chips for companies that are building AI data centers.
On November 12, Citi analyst Christopher Danely noted that recent earnings saw semiconductor consensus estimates dropping by 11% while the SOX index, which measures semiconductor stocks, fell by 9%. The declines largely come from Microchip, NXP Semiconductors, and Intel; but the firm believes that the selloff is “almost over and attention will shift to 2025”. Citi further states that industrial market struggles will end sometime in the first half of 2025. Since 75% of semiconductor demand looks solid, investors should start investing more in them going into Q1. One of its Buy-rated names is Broadcom Inc. (NASDAQ:AVGO). Broadcom has also been deemed an important stock by Jefferies analysts, who expect outperformance from it later in 2025.
2. Tesla, Inc. (NASDAQ:TSLA)
Market Capitalization: $1.03 trillion
Tesla, Inc. (NASDAQ:TSLA) is engaged in the design, development, manufacture, and sale of fully electric vehicles, energy generation and storage systems. The company is an AI stock, with its autonomous technology having the potential to be the “great unlock” that drives it to become an AI giant.
On November 12, Deutsche Bank reiterated a “Buy” rating on Tesla, Inc. (NASDAQ:TSLA) with a $295 price target. Tesla has added over $300 billion of market cap since the recent election, allowing it to cross the $1 trillion mark for the first time since early 2022, analysts wrote in a research note. The firm also sees “potential large terminal value benefits” to Tesla’s efforts in auto, robotaxi, and humanoid robotics from a Trump win. The new administration may set national standards for robotaxis to speed up deployment and provided that the Inflation Reduction Act gets repealed or changed, or extra tariffs get levied for imported parts, the company’s relative competitive position would only strengthen, notes the firm.
1. Apple Inc. (NASDAQ:AAPL)
Market Capitalization: $3.39 trillion
Apple Inc. (NASDAQ:AAPL) designs, manufactures, and markets smartphones, tablets, PCs, wearables, and accessories worldwide. It is a key AI player due to AI investments, offerings, and now Apple Intelligence.
A major analyst call for Apple Inc. (NASDAQ:AAPL) came on Tuesday, November 12, from Bank of America Securities. The firm says it is sticking with its buy rating on the stock as it is confident in the company’s future prospects, particularly its silicon technology and expansion in the services segment.
“We maintain Buy on Apple given margin expansion from silicon roadmap and growth in Services, with rev for Mac expected to increase +8% y/y in C24”.
-Bank of America Securities
While we acknowledge the potential of AAPL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AAPL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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