The Generative AI market, a crucial branch of artificial intelligence, is revolutionizing entire industries today. According to ResearchAndMarkets.com, the Gen-AI market was valued at USD 20.21 billion in 2023 and is expected to reach USD 440 billion by 2032. This signifies an impressive CAGR of 41.31% over the forecast period from 2024 to 2032.
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According to the report, the North American region leads the Generative AI market with a 34% share in 2023. Its robust technology ecosystem, skilled workforce, and increasing demand for AI-powered content are responsible for the leading market share. The European region has also been experiencing growth, driven by government funding, startup innovation, and region-specific applications.
Back in 2022, the generative AI market was dominated by established players only. These established players accounted for 88% of the market share, whereas start-ups grasped only 12%. This is now changing, with more players entering the market with each passing year.
Highlighting advancements in artificial intelligence, Sam Altman, CEO of AI Company OpenAI states how the next innovations in AI are going to be more disruptive than people can imagine. Speaking at the New York Times’ DealBook Summit in New York City, he stated that the industry may begin to see examples of artificial general intelligence (AGI), which refers to the hypothetical intelligence of a machine similar to that of a human, as soon as 2025.
“I think it’s possible… in 2025 we will have systems that we look at… and people will say, ‘Wow, that changes what I expected”
-Sam Altman
Altman noted that at first, the introduction of AGI, and the level of intelligence beyond it, is going to have minimal effect. However, it will later “be more intense than people think”. In its latest advancements in AI, OpenAI has now begun testing new reasoning AI models, o3 and o3 mini.
This demonstrates a sign of growing competition with rivals such as Google to create smarter models proficient at solving complex problems. According to Altman, OpenAI plans to launch the o3 mini by the end of January, and the full o3 after that. The enhanced models aim to outperform existing ones, driving new investments and user growth.
The new o3 and o3 mini models are currently undergoing internal safety testing, and are anticipated to be more powerful than the o1 models. OpenAI has ignited a competitive AI arms race, pushing tech companies worldwide to accelerate the development of cutting-edge AI technologies.
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.
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A doctor in a laboratory, overseeing the development of Artificial Intelligence (AI).
10. Knightscope, Inc. (NASDAQ:KSCP)
Knightscope, Inc. (NASDAQ:KSCP) is an innovator in robotics and artificial intelligence (“AI”) technologies in public safety. On December 19, the company announced 12 new contracts across 7 US States for its K1B Emergency Communication Devices (“ECDs”) and related services. These emergency communication devices offer voice connectivity, broadcast alerts, area illumination capabilities, and priority cellular bandwidth access through Verizon Frontline service. The devices will help reduce the reliance on cell phones, allowing users to get priority access to cellular bandwidth, and ensuring the call reaches the right help promptly. Knightscope also added three new resellers to the Knightscope Authorized Partner (“KAP”) program, where the KAPs will offer an expanded range of innovative tools for helping clients improve safety at public facilities, reduce costs, and improve the overall safety of their facilities.
9. Safe Pro Group Inc. (NASDAQ:SPAI)
Safe Pro Group Inc. (NASDAQ:SPAI) leads in artificial intelligence-driven drone imagery analysis for humanitarian mine-clearing efforts. On December 20, the company announced that it anticipates reporting a record-breaking annual 2024 revenue, with an increase of over 130% as compared to the previous year. The expectations regarding a record fiscal 2024 result can be attributed to an increase of 200+% in fourth-quarter revenue versus the year-ago period. In turn, the surge in fourth-quarter revenue is fueled by strong sales in the company’s mission-critical drone services, ballistic products, and artificial intelligence (AI) unit.
“I am extremely proud of our growth and of the impact our organization made in 2024 as we continue to build long-term customer relationships in the US and with our allies. Our revolutionary and patented software ecosystem has been battle tested in Ukraine where our AI located over 16,000 mines and explosive items for our users since the deployment of the platform. We continue to see growth across our drone services business and ballistic protection manufacturing unit building upon the strong foundation we have created and laying a path for further growth and success in the coming year”.
-Dan Erdberg, Chairman and CEO of Safe Pro Group Inc.
8. Perfect Corp. (NYSE:PERF)
Number of Hedge Fund Holders: 9
Perfect Corp. (NYSE:PERF) is a leader in AI and AR-powered beauty technology solutions. On December 20, the company announced that it would be showcasing its groundbreaking Beautiful AI innovations at the CES Creator Space 2025 in Las Vegas. The company will demonstrate its Generative AI-powered solutions that have been designed to transform consumer experiences as well as discuss the future of personalized consumer experiences. Some of the newest B2B Generative AI innovations will include Perfect GPT, a proprietarily trained AI assistant framework that offers real-time beauty and skincare advice; AI Skin Analysis and AI Skin Simulation, and AI Hair solutions. Additionally, the company will also showcase innovations for the consumer market, including the YouCam Online Editor. The YouCam is an all-in-one tool for photo and video editing featuring AI portrait generators, AI hairstyle try-ons, and more.
“Perfect Corp. is proud to return to CES to showcase how our latest advancements in Generative AI technology are enhancing personalization, creativity, and digital innovation within the beauty and fashion industries. These solutions are set to transform the way consumers, brands, and creators engage in truly immersive, customized experiences in 2025 and beyond”.
-Alice Chang, Founder and CEO of Perfect Corp.
7. NXP Semiconductors N.V. (NASDAQ:NXPI)
Number of Hedge Fund Holders: 44
NXP Semiconductors N.V. (NASDAQ:NXPI) is a Dutch semiconductor manufacturing and design company. On December 16, the company announced that it has entered into a partnership with South Korean startup bitsensing to sell radar systems used in cars. By integrating NXP’s radar chips with bitsensing’s radar hardware and software, the collaboration aims to create high-performance, scalable radar solutions. Bitsensing radar systems utilize AI technology, integrating advanced signal processing techniques and AI-driven insights to offer high accuracy and reliable object classification in applications like automotive safety. The company said that the radar technology of bitsensing has a better range than that of its competitors and also holds the ability to operate in horizontal and vertical planes.
6. Accenture plc (NYSE:ACN)
Number of Hedge Fund Holders: 60
Accenture plc (NYSE:ACN) offers strategy and consulting services. On December 20, Bank of America Securities analyst Jason Kupferberg maintained their bullish stance on Accenture plc, giving a Buy rating. The recent financial performance and outlook have led to the rating. The company’s first-quarter fiscal results exceeded expectations as it reported first-quarter revenue of $17.7 billion and beat analysts’ estimates of $17.12 billion, according to data compiled by LSEG. It also demonstrated rapid growth in GenAI bookings, landing first-quarter bookings of $18.7 billion, an increase of 1% from the year-ago period.
Moreover, even though a potential second-half deceleration is expected, the company’s guidance suggests it may hit the high end of its full-year revenue outlook. This is supported by operating margin expansion and growth in key sectors like Financial Services and Health/Public Services, particularly in the Americas. All of these factors demonstrate Accenture’s promising growth trajectory and justify the buy rating.
5. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Holders: 64
Palo Alto Networks, Inc. (NASDAQ:PANW) is a leader in AI-powered cybersecurity. On December 19, the company announced that it has received Federal Risk and Authorization Management Program (FedRAMP) High Authorization across its industry-leading network, cloud, and security operations (SOC) platforms. The “FedRAMP High Authorization” signifies that a cloud service provider has met the most rigorous security controls necessary to handle highly sensitive and classified government data. The achievement has allowed Palo Alto to offer the most comprehensive suite of AI-powered cybersecurity solutions authorized for use in federal networks at the High-impact level. Powered by artificial intelligence and automation, the company’s unified platform offers customers operational efficiencies and protection against cyber threats.
“Today’s disconnected infrastructure makes security complex and difficult to manage. This authorization is validation of Palo Alto Networks platform approach and the ability to ingest and correlate data from an integrated approach and provide comprehensive security across platforms of products. We have long championed the efforts of FedRAMP to ensure products are tested and vetted to meet the highest of standards in protecting our government. We will continue to work with FedRAMP to further expand on the products and features offered in the HIGH authorization”.
-Eric Trexler, senior vice president, US Public Sector, Palo Alto Networks.
4. Hewlett Packard Enterprise Company (NYSE:HPE)
Number of Hedge Fund Holders: 64
Hewlett Packard Enterprise Company (NYSE:HPE) is a technology company that provides high-performance computing (HPC) systems, software, and data storage solutions. On December 19, Deutsche Bank analyst Matt Niknam upgraded HP Enterprise (HPE) to “Buy” from Hold with an unchanged price target of $25. The buy rating is justified given the company’s attractive valuation and potential gains from the proposed Juniper acquisition slated to close in early 2025. The $5 billion Juniper deal is expected to expand HPE’s higher-margin networking business and result in significant cost synergies.
“We view the proposed Juniper acquisition positively, given the newfound scale the deal brings HPE in higher-margin networking, alongside sizable cost synergies”.
The analyst also told investors in a research note that HPE’s standalone operations are also improving. This is driven by stronger artificial intelligence and server sales, along with growth in the hybrid cloud and its existing networking segment.
3. Marvell Technology, Inc. (NASDAQ:MRVL)
Number of Hedge Fund Holders: 70
Marvell Technology, Inc. (NASDAQ:MRVL) engages in the development and production of semiconductors. On December 20, Morgan Stanley analyst Joseph Moore raised the firm’s price target on Marvell Technology to $120 from $102 and kept an “Equal Weight” rating on the shares. According to the firm, the semiconductor industry is attractive with the artificial intelligence market leading the way. The firm sees “a U-shaped bottom continuing to play out elsewhere”, as noted in its 2025 industry outlook. Marvell reported a revenue of over $1.5 billion in the third quarter of fiscal 2025, reflecting a 7% growth from the previous year. The strong demand for AI technologies was a significant driver of this growth. In particular, data center revenue—driven by AI products, surged 98% year-over-year to comprise 73% of total revenue.
2. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 74
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a leader in AI-driven endpoint and cloud workload protection. On December 19, Jefferies raised the firm’s price target on CrowdStrike to $450 from $415 and kept a “Buy” rating on the shares. According to the firm, software stocks are going to have a “slower start out of the gate” in 2025. This is because investors will be recalibrating and adjusting to changes under the new administration. For most of these stocks, benefits from artificial intelligence will likely start to materialize in late 2025. Furthermore, the firm also states that cybersecurity “should prove more resilient” in the first half of 2025 based on strong fundamentals. However, it will fall behind the wider recovery of AI-driven software markets.
1. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Holders: 91
Vertiv Holdings Co (NYSE:VRT) is a global provider of digital infrastructure technology and services for data centers, communication networks, and commercial and industrial facilities. On December 20, the company announced that its Chinese subsidiary has acquired certain assets and technologies of BiXin Energy Technology (Suzhou) Co., Ltd (BSE). BiXin Energy Technology (Suzhou) Co., Ltd (BSE) is a manufacturer of chillers, heat pumps, heat recovery products, and air-handling units. The acquisition will enable Vertiv to expand its chiller products as well as strengthen its portfolio of critical technologies and solutions in support of high-performance compute and AI applications.
“This acquisition supports our capital allocation strategy, which includes adding technologies that are early in the maturity curve to our portfolio. BSE’s solutions and technologies complement and reinforce Vertiv’s existing chiller portfolio and will assist us in addressing growing air and liquid cooling demand to support high-performance compute and AI. Vertiv has the most complete critical digital infrastructure portfolio and BSE further strengthens our technology offerings that we can provide to customers globally”.
-Giordano Albertazzi, Chief Executive Officer, Vertiv.
While we acknowledge the potential of VRT 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 VRT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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