According to a famous Wall Street brokerage Goldman Sachs, the S&P 500 index will reach 6,500 by the end of 2025. The US economy and corporate earnings are expected to continue growing, a key factor driving the optimism behind this forecast. Another brokerage, Morgan Stanley, has made a similar prediction, stating that US earnings will continue to grow in 2025. This can be expected if the Federal Reserve cuts interest rates next year and there are signs of a stronger business cycle. The ‘Magnificent 7’ stocks, which are key tech giants leading in AI innovation, are likely to outperform the rest of the 493 companies in the benchmark index next year, Goldman notes. The outperformance, however, is only predicted to be by 7 percentage points, the slimmest margin in seven years.
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The Latest Developments in AI
As companies increasingly leverage artificial intelligence to drive growth, the pivotal role that AI technology is playing in influencing market trends becomes increasingly undeniable. In the latest news, AI-powered search engine Perplexity is reportedly taking a jab at some of the tech giants by launching its very own shopping feature that it claims is a “one-stop solution where you can research and purchase products.”
“You can use it to research and make purchases on all things like building your library, buying electronics for throwing a party, and so on,”
-Perplexity said in a thread on X that also included a short video (below) showing the new feature in action.
The shopping tool allows users to enter queries, refine results, and includes features such as one-click checkout. Its major point of differentiation, however, is that it describes its results as “unbiased recommendations” that are powered by AI and based on in-platform reviews.
“When you ask Perplexity a shopping question, you’ll still get the precise, objective answers you expect, plus easy-to-read product cards showing the most relevant items, along with key details presented in a simple, visual format.”
In other news, Coca-Cola is facing backlash with an AI-made advertisement. Originally meant to pay homage to a classic 1995 commercial, many creatives have drawn criticism, stating that it is distasteful for the company to use AI technology to create the video instead of the work of artists. As per Forbes, the video was created by three AI studios, namely Secret Level, Silverside AI, and Wild Card, and used four different generative AI models.
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 financial analyst giving a presentation to a group of investors about annuity insurance.
10. Penguin Solutions, Inc. (NASDAQ:PENG)
Market Capitalization: $894.2 million
Penguin Solutions, Inc. (NASDAQ:PENG) is a technology company and a leading AI infrastructure provider for organizations looking to build and operate state-of-the-art generative AI facilities.
On November 18, JMP Securities initiated coverage of Penguin Solutions, Inc. (NASDAQ:PENG) with an “Outperform” rating and a $23 price target. As per the analysts, Penguin Solutions, Inc. (NASDAQ:PENG) is an enterprise artificial intelligence solutions innovator offering hardware, software, and services solutions across a variety of end markets. JPM believes the stock has potential for long-term growth, with several key strengths that will fuel it.
9. Bloom Energy Corporation (NYSE:BE)
Market Capitalization: $5.19 billion
Bloom Energy Corporation (NYSE:BE) designs, manufactures, sells, and installs solid-oxide fuel cell systems for on-site power generation; helping meet the rising energy demands of AI data centers.
On Monday, November 18, Wells Fargo raised the firm’s price target on Bloom Energy Corporation (NYSE:BE) to $22 from $14 and kept an “Equal Weight” rating on the shares. Bloom Energy recently reached an agreement with American Electric Power to power artificial intelligence data centers, supplying up to 1 gigawatt of its products. According to Wells Fargo, the deal is a positive milestone, but the pacing and magnitude of future order growth remain unclear. This is because AEP is not obligated to place additional orders, the analyst notes in a research note. The firm believes a reasonable amount of future orders is now reflected in Bloom’s valuation.
8. Cirrus Logic, Inc. (NASDAQ:CRUS)
Market Capitalization: $5.37 billion
Cirrus Logic, Inc. (NASDAQ:CRUS) is a fabless semiconductor company that benefits from the production of leading-edge chips for smartphones and artificial intelligence applications.
On Monday, November 18, Susquehanna raised the firm’s price target on Cirrus Logic, Inc. (NASDAQ:CRUS) to $140 from $135 and kept a “Positive” rating on the shares. The firm has expressed excitement about the near-term PC opportunity that the company holds, complemented by the long-term AI opportunities in power and audio.
7. Skyworks Solutions, Inc. (NASDAQ: SWKS)
Market Capitalization: $13.41 billion
Skyworks Solutions, Inc. (NADAQ: SWKS) designs, produces, and markets semiconductor products. It is known for supplying semiconductor components that power AI-enabled smartphones and related technologies.
On November 13, Mizuho reaffirmed an Outperform rating and reduced the price target to $105 from $127. The firm believes Skyworks is well-positioned for growth despite near-term headwinds. Its strong partnership sustaining at Apple, the improvement in handset inventory levels, and the anticipated recovery of China’s Android market are positive indicators. Moreover, the company’s emphasis on premium handset segments and the upcoming upgrades in Wifi7 and on-device AI applications are seen as important growth drivers.
6. Pure Storage, Inc. (NYSE:PSTG)
Market Capitalization: $16.23 billion
Pure Storage, Inc. (NYSE:PSTG) is an advanced data storage platform that stores, manages, and protects the world’s data at any scale. Its advanced data storage solutions have the potential to support artificial intelligence workloads.
On Monday, November 18, Pure Storage, Inc. (NYSE:PSTG) announced the new Pure Storage GenAI Pod, a complete solution designed to accelerate AI-powered innovation and simplify the deployment of generative AI (GenAI) projects. This announcement marks the expansion to Pure Storage’s suite of AI solutions, helping organizations speed up their efforts through one-click deployments and similar streamlined operations. Built on the Pure Storage platform, the GenAI Pod includes new validated designs that enable turnkey solutions for GenAI use cases. The company has partnered with Arista, Cisco, KX, Meta, NVIDIA, Red Hat, SuperMicro, and WWT for the initial designs. It is expected to be generally available in the first half of 2025.
“The pace of innovation is compelling enterprise customers to leverage AI across their business, but customers are held back by the fundamental challenge of siloed data platforms and complex-to-deploy GenAI pipelines. Pure’s expanded portfolio of AI solutions with turnkey, validated designs for GenAI and large enterprise AI clusters help customers navigate these challenges. The validated designs dramatically reduce the time to value and operational risks of AI projects by holistically addressing the needs at every layer of the technology stack”.
-Dan Kogan, VP, Enterprise Growth and Solutions, Pure Storage
5. Keysight Technologies, Inc. (NYSE:KEYS)
Market Capitalization: $26.28 billion
Keysight Technologies, Inc. (NYSE:KEYS) is a global technology company that provides electronic design and test solutions that support the development and optimization of AI-driven technologies.
On November 18, Keysight Technologies, Inc. (NYSE:KEYS) announced the launch of their new Electronic Design Automation (EDA) software portfolio that transforms the way engineers handle challenges related to next-generation technologies. Their suite of EDA leverages artificial intelligence, machine learning, and Python integrations; speeding up the design process and time taken for complex RF and chiplet products. In turn, this enables easier development of advanced solutions for 5G/6G and data center applications.
“AI is transforming how engineers approach complex design challenges. Automating traditionally time-intensive tasks enables engineers to focus on innovation rather than repetitive refinements, resulting in real productivity gains. The foundation for the practical application of AI and ML is first having an open, interoperable workflow and then providing turn-key solutions tuned for specific applications. It’s a fascinating time, and AI and ML will undoubtedly be a huge driver of design innovation in the future”.
– Nilesh Kamdar, EDA Design & Verification General Manager at Keysight.
4. Hewlett Packard Enterprise Company (NYSE:HPE)
Market Capitalization: $36.07 billion
Hewlett Packard Enterprise Company (NYSE:HPE) is an American multinational technology company offering high-performance computing (HPC) systems, AI software, and data storage solutions that help run complex AI workloads.
On Monday, November 18, Citi analyst Asiya Merchant raised the firm’s price target on Hewlett Packard Enterprise Company (NYSE:HPE) to $23 from $20 and kept a “Neutral” rating on the shares. The rating comes as part of an earnings preview for the hardware sector. According to the analyst, infrastructure demand indicators remain mixed, excluding artificial intelligence. Updates in the supply chain suggest that recovery in the general-purpose server market will continue until 2025. However, the demand increase hasn’t led to significant growth in external spending storage, as supply chain insights reveal slower decision-making.
3. Snowflake Inc. (NYSE:SNOW)
Market Capitalization: $42.71 billion
Snowflake Inc. (NYSE:SNOW) is an AI-driven cloud data warehouse company. On Monday, November 18, Citi analyst Tyler Radke lowered the firm’s price target on Snowflake Inc. (NYSE:SNOW) to $183 from $200 and kept a “Buy” rating on the shares. The firm expects strong Q3 results along with a 2-3% revenue beat. It has also raised the conservative Q4 guide due to continued hyperscaler stabilization commentary and fewer Iceberg storage headwinds. Despite these positives, the firm notes that intra-quarter checks remained mixed and cites slightly lower FY26 estimates for its price target cut. Nevertheless, there is a good entry point ahead of stabilizing growth and a GenAI product cycle.
2. Vertiv Holdings Co (NYSE:VRT)
Market Capitalization: $46.17 billion
Vertiv Holdings Co (NYSE:VRT) offers digital infrastructure technology and services for data centers, communication networks, and commercial and industrial facilities.
On November 18, global provider of critical digital infrastructure and continuity solutions, Vertiv Holdings Co (NYSE: VRT), and Compass Datacenters, a multinational data center company, announced a collaboration that allows future AI setups to switch between air and liquid cooling to support high-density computing. Both companies have collaborated on this vision together, with Vertiv developing and manufacturing the technology solution. The initial units are set to be installed at a Compass facility in the first quarter of 2025, as part of a planned multi-year, multi-billion-dollar supply agreement.
“AI is not only bringing change to data centers, it is also changing how key industry players work together to enable growth. Data center operators, customers, chip manufacturers, infrastructure providers, utility companies and others must work together to innovate and reduce barriers to AI adoption. Compass Datacenters and Vertiv engineers worked together to make this important project a reality. Vertiv™ CoolPhase Flex makes it possible to support today’s IT and quickly enable the data center of the future. With our deep expertise and understanding of the complexities of AI applications, Vertiv was uniquely able to bring this solution to market.”
– Giordano (Gio) Albertazzi, CEO of Vertiv.
1. Palo Alto Networks, Inc. (NASDAQ:PANW)
Market Capitalization: $126.59 billion
Palo Alto Networks, Inc. (NASDAQ:PANW) is a global cybersecurity company that uses Precision AI, Palo Alto Networks’ proprietary AI system, to offer cybersecurity solutions.
On November 18, Truist analyst Joel Fishbein raised the firm’s price target on Palo Alto Networks, Inc. (NASDAQ:PANW) to $425 from $400 and kept a “Buy” rating on the shares. The rating comes as part of a broader research note reviewing Q3 results for the Infrastructure & Security Software names. Since last year, buyer behavior has started becoming steady and the firm now focuses on 2025 when generative AI projects will be put to the test. The firm adds that for Palo Alto, customer and partner conversions imply that the company is performing well, driven by strong demand for vendor consolidation.
While we acknowledge the potential of PANW 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 PANW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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