Technological innovations in steam power, electricity and microprocessors drove the first industrial revolution. Fast forward, artificial intelligence is the catalyst driving the fourth industrial revolution. That’s because the technology is reshaping industries at a breakneck speed. From revolutionizing the healthcare sector to addressing cybersecurity challenges to reshaping the auto industry, technology is reshaping the way of life in ways not seen before.
According to Markets and Markets, the global AI market is projected to grow at a compound annual growth rate of 35.7% to $1.3 trillion by 2030. Significant advancements in computational power and data availability are the factors expected to accelerate the growth. Similarly, revolutionary technology is giving rise to unique investment opportunities as companies compete against time to develop game-changing innovations and enhance productivity.
The $500 billion Stargate project is one such investment that sums up the enormous sums of money that companies are willing to spend to gain an edge on AI. While most of the investments are going to data centers and other infrastructures, companies are also inking deals and partnerships to secure reliable energy to power AI models and infrastructure.
The companies that provide the metaphorical picks and shovels of artificial intelligence, the manufacturers of semiconductors, servers, networking gear, and power generators—have seen a sharp increase in stock prices as a result of the spending frenzy.
The tremendous opportunity up for grabs is evident due to the blockbuster gains in the equity markets over the past two years. Major US indices are trading near all-time highs. While deep pullbacks have come into play in recent months, Dan Ives at Wedbush Securities remains bullish about the AI-driven rally.
Ives dismissed the recent tech stock sell-off caused by DeepSeek as a “tech AI head fake” and believes that investors have a “golden buying opportunity” with it. Ives claims that the fear surrounding the low-cost, high-performance model of the Chinese AI company is exaggerated and won’t affect the AI revolution’s long-term course.
“This DeepSeek tech-driven sell-off will be historically noteworthy in market history,” Ives wrote, emphasizing that it does not reflect a genuine threat to AI spending trends. “We expect more innovation in AI and LLM model costs to come down… that is ultimately a great thing for computing power, use cases, and where the tech world is going in this 4th Industrial Revolution.”
President Donald Trump has already reiterated that DeepSeek is a “wake-up call” for the U.S. tech industry, insisting the sector should be laser-focused on computing if the US is to maintain its edge on the technology.
In an attempt to keep American businesses from lagging behind their Chinese counterparts, Wall Street thinks DeepSeek’s success will encourage the US government to increase its investment in AI.
“In the near term, DeepSeek’s achievement is likely to pressure the U.S. into increased support for domestic AI development, most likely leading to increased federal investment in AI research and infrastructure,” wrote Mills of Raymond James. The firm added that it could envision the U.S. passing an AI version of the CHIPS and Science Act.
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).
Pixabay/Public Domain
10. Duolingo, Inc. (NASDAQ:DUOL)
Number of Hedge Fund Holders: 31
Duolingo, Inc. (NASDAQ:DUOL) is a technology company that operates as a mobile learning platform. It offers courses in 40 different languages, including Spanish, English, French and German. On January 27th, UBS analyst Chris Kuntarich upgraded the stock to a Buy with a $410 price target. The upgrade comes when the company is at the forefront of product innovation in the language learning space while leveraging artificial intelligence.
Although Duolingo, Inc. (NASDAQ:DUOL) has made investments in AI features since 2012, its most recent initiatives have been driven by developments in generative AI. These developments aided in developing the AI-powered features Video Call, Explain My Answer, and Roleplay.AI, which could improve Duolingo’s features and content production skills, resulting in more individualized and successful learning outcomes. An early illustration of how AI can be used to enhance user engagement and learning outcomes is the company’s Video Call feature with Lily.
This feature makes learning more dynamic and immersive by enabling users to have simulated conversations with an AI character named Lily. The launch of Max, a new premium feature, is anticipated to significantly boost bookings in 2025. Max provides users looking for a more intensive language learning experience with cutting-edge learning resources and content.
9. Genpact Limited (NYSE:G)
Number of Hedge Fund Holders: 31
Genpact Limited (NYSE:G) provides business process outsourcing and information technology services. It offers retail customer onboarding, customer service, collections, and card servicing operations. On January 28th, the global advanced technology company unveiled Genpact AI Gigafactory, an AI accelerator designed to scale AI solutions from pilot to full-scale production.
Genpact Limited (NYSE:G) AI Gigafactory is the new solution that the company believes will address the growing demand for enterprise-wide AI adoption. Its edge stems from its ability to tackle critical governance challenges. The solution should provide transformative approaches for running businesses, leading to accelerated efficiencies. Genpact AI Gigafactory should revolutionize how enterprises adopt and scale AI solutions quickly and effectively through strategic partnerships with ecosystem partners like Databricks.
8. HP Inc. (NYSE:HPQ)
Number of Hedge Fund Holders: 42
HP Inc. (NYSE:HPQ) provides personal computing and other digital access devices. It also offers imaging and printing products, solutions, and services worldwide. It is one of the companies well-positioned to capitalize on the latest artificial intelligence wave. That’s because AI-based laptops and personal computers are expected to experience a 165% growth in 2025 according to a report by Gartner.
HP Inc. (NYSE:HPQ) has broadened its product portfolio by developing AI-powered personal computers and laptops. It’s also focused on offering advanced tools to consumers to harness AI potential. On January 23rd, HP’s CEO, Enrique Lores, reiterated that they are committed to defining the future of work by integrating AI into all products. It’s part of an effort to allow customers to run AI at the edge to drive significant productivity improvement.
7. Corning Inc. (NYSE:GLW)
Number of Hedge Fund Holders: 46
Corning Inc. (NYSE:GLW) engages in display technologies, optical communications, environmental technologies, specialty materials, and life sciences businesses. On January 29th, Tim Long of Barclays reiterated a Hold rating on the stock with a $52 price target. The bullish rating comes amid expectations that the deep pullback on the stock triggered by the DeepSeek revelation presents a buying opportunity on the stock.
The display technologies company delivered solid financial results bolstered by its Optical communications segment. The Enterprise division within this segment showed a robust year-over-year growth exceeding 90%. Likewise, Corning Inc. (NYSE:GLW) is forecasting first-quarter revenue and profit above analyst expectations amid robust demand for its optical fiber products for artificial intelligence-related infrastructure. Its optical fiber, used to transfer data at high speeds, is in high demand owing to consumers’ and enterprises’ increased adoption of AI technologies.
According to the analysts, Corning Inc. (NYSE:GLW) has a compelling growth driver that is not reliant on the data center and general artificial intelligence spending. The Optical business’s cyclical recovery, the Lumen/Broadband Equity, Access, and Deployment (BEAD) program ramps and the Display segment’s steady profitability are some of the key growth drivers.
6. Twilio Inc. (NYSE:TWLO)
Number of Hedge Fund Holders: 52
Twilio Inc. (NYSE:TWLO) provides customer engagement platform solutions and software solutions for communications between customers and end users. Needham analyst Ryan Koontz raised the stock’s price target to $165.00 from $91.00 on January 28th while maintaining a buy rating. The upgrade comes on the company delivering solid quarterly results and issuing guidance that affirms double-digit percentage growth.
According to the analyst, artificial intelligence initiatives, GTM transformation, and 4Q preliminary results are catalysts that should drive growth. Adding more automation and AI enhancements are some factors that should accelerate Twilio’s path toward double-digit revenue growth. The remarks come on Twilio Inc. (NYSE:TWLO) reiterating that a growing number of companies in the artificial intelligence space are using its services, with over 9,000 relying on them as of the end of last year.
5. Workday, Inc. (NASDAQ:WDAY)
Number of Hedge Fund Holders: 71
Workday, Inc. (NASDAQ:WDAY) is a leading provider of solutions that help organizations manage their people and money. On January 29th, the company confirmed a strategic partnership with TechWolf, paving the way for the rollout of AI-powered skills intelligence across its global workforce. The rollout of the AI-powered tools will make it easier for employees to manage worker profiles and fuel career growth. The partnership is a testament to the power of combining AI-driven innovation with practical applications.
By using AI to identify employees’ skills from data in platforms like Jira and Salesforce, TechWolf will enhance Workday’s current skills offering. The collaboration with TechWolf should enhance Workday, Inc.’s (NASDAQ:WDAY) current skill set and give staff members more control over their professional development. It should also provide tools and insights that help them proactively upskill and reskill for success.
4. Snowflake Inc (NYSE:SNOW)
Number of Hedge Fund Holders: 71
Snowflake Inc (NYSE:SNOW) provides a cloud-based data platform that enables customers to consolidate data into a single source of truth to drive meaningful business insights and build data-driven applications. The stock sentiments received a boost on January 28th, jumping by 7.3% as the debate around the future of AI continues to flow following DeepSeek revelations.
Likewise, Snowflake Inc’s (NYSE:SNOW) CEO, Sridhar Ramaswamy, weighed in on the debate on January 30th, reiterating that DeepSeek has created a permanent reset on how AI development will unfold. Likewise, he insists that the company is well-positioned to capitalize on new developments. Snow is one of the companies taking advantage of the proliferation of AI fueling demand for big data, cloud solutions and automation software.
3. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 74
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a software infrastructure company that provides cybersecurity solutions. On January 28th, the stock hit record highs in the market as Chinese artificial intelligence sensation DeepSeek was the subject of a cyber-attack. The attack came a day after the company triggered a massive sell-off in the market on the news that its AI assistant model runs on less advanced chips at a low cost.
The DeepSeek cyber-attack news triggered investor enthusiasm in the cybersecurity sector, with CrowdStrike Holdings, Inc. (NASDAQ:CRWD) emerging as the biggest beneficiary. The 10% rally came a day after CrowdStrike’s Falcon cybersecurity platform achieved a perfect score in a real-world ransomware test. Cybersecurity software testing company SE Labs gave the platform a perfect score, stating that it “stopped all known and unknown threats with no false positives. JMP Securities analysts have reiterated a market outperform rating on the stock with a $400 price target. The bullish rating stems from expectations that CrowdStrike and rival Palo Alto Networks are well positioned to capitalize on the opportunities that crop up in securing AI infrastructure and data.
2. ServiceNow, Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 78
ServiceNow, Inc. (NYSE:NOW) is a software application company providing end-to-end intelligent workflow automation platform solutions for digital businesses. On January 30th, the company confirmed a strategic partnership with tech giant Google. The partnership paves the way for the company’s customers to access both company’s AI capabilities needed to complete tasks related to customer relationship management.
Under the terms of the agreement, ServiceNow, Inc. (NYSE:NOW) is to launch Google Cloud Marketplace and Google Distributed Cloud to address the soaring demand for AI capabilities in private and public sector organizations. The collaboration will allow users to benefit from agentic AI that can reason over ServiceNow and Google Cloud data. By enabling human resources departments to compare business development plans with data they store in Google’s cloud, the partnership will help businesses enhance employee hiring and development by better understanding performance and growth.
1. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 116
Salesforce, Inc. (NYSE:CRM) is a software application company that provides Customer Relationship Management (CRM) technology that connects customers with businesses. It is one of the company’s well-positioned to capture the growing demand for AI software as a leader in CRM with over 150,000 customers. While the company was under pressure on January 27th, owing to the DeepSeek triggered sell-off, it has bounced back due to the tremendous opportunities presented by AI agents.
Salesforce, Inc. (NYSE:CRM) has made it simple for businesses to set up basic agents to automate a variety of tasks. London’s Heathrow Airport has used its AI agents to coordinate functions like gate changes and the operation of passenger navigation software. Additionally, thanks to Salesforce’s AI agents, 83% of customer inquiries can now be successfully answered without the assistance of a human customer support representative. Due to TD Cowen’s belief in the company’s potential, shares of Salesforce (NYSE:CRM) were upgraded from a “Hold” rating to a “Buy” rating on January 20th.
While we acknowledge the growth potential of Salesforce, Inc. (NYSE:CRM), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CRM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article was originally published at Insider Monkey.
