During an appearance on CNBC’s Squawk Box Europe, Matt Calkins, CEO of Appian, discussed the outlook for the artificial intelligence industry and regulation in the United States with Donald Trump set to become president.
When asked if there is a bit of a gold rush regarding AI, Calkins agreed. He said that AI comes with significant concerns, particularly among CEOs. This is because AI has the potential to embarrass organizations or compromise sensitive data, which creates hesitation. “We are all looking for a safe way to take the first step with AI,” he said.
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Regarding whether companies are panicking about using AI profitably, Calkins observed a cautious approach from most businesses, while large tech firms have been investing aggressively. “It’s a calculated risk, and they should be doing it,” he said, contrasting this with the restraint shown by smaller companies.
Talking about regulation, Calkins revealed that the bottom line is that AI can be somewhat dangerous if misused, which underscores the importance of regulatory frameworks. He referenced the European AI Act as an example, explaining that regulation could focus on restricting how AI is used or limiting the types of data it can access.
With the Trump administration coming in, Calkins predicted a strong focus on competing with China in the tech space. He also mentioned Elon Musk’s influence on Trump, stating that Musk’s influence on the Trump administration is positive because he knows deeply about artificial intelligence.
In other recent news, Sam Altman has announced a special event titled “12 Days of OpenAI”. Altman will be revealing a new model or feature every weekday for two weeks, posted Altman on X, formerly Twitter. Some new models and features that users have been predicting include AI video generator Sora, the complete version of the “o1” reasoning model, and better control over ChatGPT’s Advanced Voice feature.
“Each weekday, we will have a livestream with a launch or demo, some big ones and some stocking stuffers”.
-Sam Altman
With OpenAI seemingly in holiday spirits, the series of reveals will be live-streamed starting December 5, continuing for the next twelve weekdays. It looks like a very merry Christmas for all the tech fans.
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 team of reporters in a newsroom, gathering the latest news for broadcast.
10. Pure Storage, Inc. (NYSE:PSTG)
Number of Hedge Fund Holders: 31
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 December 5, Pinjalim Bora from J.P. Morgan maintained a “Buy” rating on Pure Storage (PSTG) with a price target of $75.00. Bora cited the company’s strong growth potential behind the rating. Its recent design win with a top mystery hyperscaler signifies a long-term growth opportunity for the company. This is because the win positions the company as the primary provider of online storage solutions for the hyperscaler.
Moreover, the deal is anticipated to translate into significant revenue and operating margin expansion in the upcoming years as it scales to large production deployments. Additionally, Pure Storage has exceeded expectations in its recent financial performance, with higher-than-expected revenues, strong product growth, and impressive profitability metrics like operating margin and EPS.
9. SAP SE (NYSE:SAP)
Number of Hedge Fund Holders: 36
SAP SE (NYSE:SAP) is a leader in ERP software that leverages artificial intelligence to enhance its enterprise resource planning (ERP) solutions. On December 3rd, the company announced at AWS re:Invent 2024 conference the immediate availability of Amazon’s new foundation models (FMs) — Amazon Nova Micro, Amazon Nova Lite, and Amazon Nova Pro. The foundation models will be available through SAP’s generative AI hub, a platform capability that helps simplify how businesses access and deploy advanced AI models.
The move underscores SAP’s commitment to deliver transformative AI technologies that drive meaningful business impact, combining SAP’s AI innovations and enterprise expertise with Amazon’s latest and most advanced AI capabilities and technology solutions. The Nova models are tailored for each business’s unique needs and enable efficient AI-driven solutions from workflow automation to multimodal applications, seamlessly integrated with SAP’s Business Technology Platform. Ultimately, developers can build and scale AI-powered solutions that seamlessly work with the SAP applications.
8. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 43
Palantir Technologies Inc. (NASDAQ:PLTR), a leading provider of artificial intelligence systems, has surged more than 300% this year. The stock surge can be largely attributed to its pivotal role in the AI revolution, securing significant government contracts and achieving its first profitable year, which ultimately led to its inclusion in the S&P 500 index. While investors are happy with the rewards they are reaping, some analysts are worried that the stock’s valuation isn’t in line with company fundamentals.
One such analyst is from William Blair, an American multinational investment bank and financial services company. On December 4, William Blair reaffirmed their “Underperform” rating on shares of Palantir Technologies in a research note issued to investors. Analyst Louie DiPalma is still skeptical about Palantir (PLTR) and remains critical of the stock, though he admits he underestimated the impact of factors unrelated to the company’s fundamentals that have driven its valuation higher.
“In our view, market conditions similar to what took place in 2022 could trigger a correction if they were to recur. Palantir shares declined 81% from January 2021 through December 2022 as revenue growth decelerated and there was an increased scrutiny on valuation”.
-William Blaire analyst Louie DiPalma
The bull case for Palantir rests on its artificial intelligence platform (AIP), but DiPalma pointed out that its revenue is still over $700 million below its 2025 target of $4.5 billion. Despite this, Palantir’s $158 billion market cap far exceeds competitors like Snowflake ($60.5 billion) and Databricks ($55 billion), despite that both generate similar or higher revenues with comparable growth. The analyst forecast that Palantir shares could drop by over 20% as part of a “phase-one rerating as the revenue multiples of Palantir and Snowflake converge”.
7. Fortinet, Inc. (NASDAQ:FTNT)
Number of Hedge Fund Holders: 47
Fortinet, Inc. (NASDAQ:FTNT), a cybersecurity company, provides enterprise-level next-generation firewalls and network security solutions, leveraging artificial intelligence across its cybersecurity products. On December 3, Fortinet announced the launch of FortiAppSec Cloud, a new cloud-delivered platform that integrates key web application security and performance management tools into a single offering. The platform simplifies web and API security, advanced bot defense, and global server load balancing, among other capabilities. This helps customers secure and effectively manage their hybrid and multi-cloud environments.
“Web applications are foundational to the success of modern enterprises, but they are extremely challenging to secure, leaving businesses with a substantial attack surface. With FortiAppSec Cloud, we’ve converged AI-powered security and key performance tools to empower organizations with a unified platform that simplifies web application security management, decreases risk, and reduces costs for our customers. By evolving from conventional, siloed web application security solutions, businesses can stay ahead of sophisticated threats and provide a superior user experience across their entire network”.
-Vincent Hwang, VP, Cloud Security, Fortinet.
6. Marvell Technology, Inc. (NASDAQ:MRVL)
Number of Hedge Fund Holders: 70
Marvell Technology, Inc. (NASDAQ:MRVL) engages in the development and production of semiconductors and is focusing heavily on data centers. On December 2nd, Barclays analyst Blayne Curtis maintained Marvell Technology, Inc. (NASDAQ:MRVL) with an “Overweight” rating and raised the price target from $85 to $115. The rating follows Marvell’s recent collaboration with Amazon Web Services, a partnership that will enhance the company’s capabilities in producing custom AI products and other advanced technologies, including optical DSPs and Ethernet switching silicon.
In particular, AWS’s provision of cloud-based electronic design automation solutions is expected to drive significant business growth. As part of Marvell’s deal with Amazon, Marvell has issued a warrant to Amazon that allows it to purchase up to approximately 4.18 million shares of Marvell’s common stock. This arrangement highlights Amazon’s spending with Marvell, further setting the stage for an enhanced partnership between the two.
5. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders: 71
Snowflake Inc. (NYSE:SNOW) is an enterprise software giant and an AI Data Cloud company. On December 4, Cloudera, an American data lake software company, revealed on its website that enterprises can leverage the combination of Cloudera and Snowflake- allowing users a single, reliable source for managing data and insights. Moreover, new integrations with AWS allow customers to connect their workloads with Snowflake, Cloudera, and unique AWS services such as Amazon Simple Storage Service (Amazon S3) and Amazon Elastic Kubernetes Service (Amazon EKS), among others.
Customers will be able to leverage Cloudera’s data lakehouse capabilities alongside Snowflake’s AI Data Cloud, achieve enhanced AI/ML performance, maximize cloud investments, support multi-cloud strategies, and achieve scalable and secure data management.
“We’re thrilled to be working alongside AWS and Snowflake to deliver a unique alignment amongst three powerful companies. The positive feedback from our customers affirms we’re delivering meaningful impact”.
-Michelle Hoover, SVP Global Alliances & Channels of Cloudera.
4. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 99
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives. On December 5, Bank of America raised its target price on Tesla, Inc. (NASDAQ:TSLA) from $350.00 to $400.00 and gave a “Buy” rating. The rating follows Tesla’s recent focus on robotics and artificial intelligence, highlighted as the key to its long-term development plan. The optimism follows analyst John Murphy’s recent visit to Tesla’s Gigafactory in Austin, Texas.
Murphy said that the trip gave increased confidence that Tesla is well-positioned to grow in 2025+, citing discussions with investor relations, a factory tour, and test drives showcasing Tesla’s technological advancements. In particular, Tesla’s Full Self Driving (FSD) technology stood out during the visit, with the Cybertruck and Model Y adeptly navigating construction zones and executing challenging left turns against traffic. Moreover, Murphy highlighted Tesla’s growing AI infrastructure, including 50,000 active Nvidia H100 chips as of October, which positions the company to potentially launch its robotaxi service by 2025.
3. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 116
Salesforce Inc (NYSE:CRM) is a cloud-based CRM company that has gained traction after the launch of its AI-powered platform called Agentforce. On December 5, BofA analyst Brad Sills raised the firm’s price target on Salesforce (NYSE:CRM) to $440 from $390 and kept a “Buy” rating on the shares. The company’s strong growth prospects and efficiency have led to the rating.
The company’s strong Q3 results reflect its successful launch of Agentforce, its artificial intelligence platform, and allowed it to prove its leadership in the agentic AI cycle. The launch has not only sparked customer interest but also boosted its core Sales and Service Clouds. Strategic initiatives such as integrating Agentforce across 200 deals only shortly after its release further demonstrate the company’s growth potential. The company’s Q3 operating margin of 33.1% exceeds expectations owing to streamlined sales and internal use of Agentforce. With a strong Q4 outlook and early deal successes, Salesforce is well-positioned for continued growth and profitability, leading to the Buy rating.
2. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 128
Broadcom Inc. (NASDAQ:AVGO) is a technology company uniquely positioned in the AI revolution owing to its custom chip offerings and networking assets. On December 4th, HSBC analysts initiated coverage of chipmaker Broadcom Inc. (NASDAQ:AVGO) with a “Hold” rating and a price target of $160 per share. The rating initiation comes from Broadcom’s increasing revenue exposure from artificial intelligence. As of Q3 2024, the company saw its revenues rise 47% to $13.1 billion, fueled by strong demand for AI semiconductor solutions and VMware.
The analysts told investors in a research note that Broadcom’s valuation has risen significantly, now trading at 27 times its estimated earnings for fiscal 2025, compared to 18 times previously. However, the firm believes there is no room for further upside since the stock is already trading at a higher valuation than its competitors Nvidia and AMD. This is why the firm sees a less attractive risk/reward for Broadcom.
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) is a technology company that has strengthened its mark in the AI realm with the launch of Apple Intelligence, its intelligence system that enhances its devices and services worldwide. On December 3rd, Apple reported that it is currently using Amazon Web Services’ custom artificial intelligence chips for services like search. It also said that it will evaluate if the company’s latest AI chip can be used to pre-train its models like Apple Intelligence.
The company recently appeared in Amazon’s AWS Reinvent conference, revealing its usage, and also endorsing Amazon as it competes with Microsoft Azure and Google Cloud for AI dominance. Benoit Dupin, Apple’s senior director of machine learning and AI, suggested that Apple would use Amazon’s Trainium 2 chip to pretrain its proprietary models. AWS CEO Matt Garman also revealed that Apple had been an early adopter and beta-tester for the company’s Trainium chips.
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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