Angie Newman from UBS Private Wealth Management discussed how to take advantage of the ongoing artificial intelligence boom on CNBC’s Squawk Box Asia. Discussing the macroeconomic environment, Newman stated how the correlation between stocks and bonds often increases during geopolitical uncertainty and fluctuating interest rates.
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While investors may think that balancing stocks and bonds will make their portfolio well diversified and they would be able to create smooth returns over time, it’s not always the case. To address this, Newman recommends incorporating other alternative asset classes like gold. Investors can particularly focus on sectors such as data centers, which are poised to benefit significantly from AI advancements.
She noted that AI’s impact extends beyond tech companies producing AI components, highlighting data centers and established value companies integrating the technology. Newman also stressed the importance of adopting an equal-weight portfolio strategy and rebalancing regularly to capture opportunities across AI beneficiaries.
Heading into 2025, the frenzy around artificial intelligence and its vast potential show no signs of slowing down. Even business executives and researchers anticipate that autonomous “agents” and profitability are likely to dominate the artificial intelligence agenda next year. Speaking at the Reuters NEXT conference in New York, the executives explained how agents, or systems that can perform actions without direct involvement have long been an intangible goal for researchers. However, the capabilities were likely to be enabled by step-by-step reasoning approaches like those used in OpenAI’s o1 model.
“I think we are going to see a lot of motion next year around agents, and I think people are going to be surprised at how fast this technology comes at us. We think that’s just the beginning of what 2025 will be about: agents who are really there to help you with day to day tasks”.
– OpenAI CFO Sarah Friar.
Sarah Friar, CFO of OpenAI, anticipates that Artificial General Intelligence, a theoretical AI system with capabilities rivaling a human’s, will be developed in the next few years. Analysts and venture capitalists are already very bullish on 2025, stating that it is going to be “a year of profitability”. Moreover, companies have already moved beyond the stage of experimentation, having integrated AI technology into their operations. Businesses are benefiting from integrating AI by streamlining operations, enhancing decision-making, and driving innovation for increased efficiency and profitability.
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. 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 12, the company announced that its Artificial Intelligence subsidiary, Safe Pro AI, has introduced SpotlightAI™ ONSITE, a Microsoft Windows-based AI-powered drone imagery analysis software. Designed for use with virtually any drone, the software will enable threat detection of 150+ types of landmines and unexploded Ordnance in drone imagery supporting forward operations, and that too, in real-time. The software is currently being tested in Ukraine.
“SpotlightAI™ ONSITE is a significant enhancement to our AI-powered drone imagery analysis ecosystem and one of the most requested features sought by end users in Ukraine who require actionable intelligence for route planning, resupply and medevac operations for the safe movement of personnel and assets in hostile environments. By leveraging data processing on readily available laptop computers, we are enabling customers to automatically process drone imagery in real-time without an internet connection, a critical consideration for a wide array of field operations. Over the past two years, driven by real-world usage in Ukraine, we have greatly enhanced the capabilities and value of our patented SpotlightAI™ platform and are especially grateful for the support and trust that our stakeholders are placing in our technology as they seek to eliminate the threat of landmines and protect human lives.”
-Dan Erdberg, Chairman and CEO of Safe Pro Group Inc.
9. Rubrik, Inc. (NYSE:RBRK)
Number of Hedge Fund Holders: 23
Rubrik, Inc. (NYSE:RBRK) is an American cloud data management and data security company. It heavily utilizes artificial intelligence and machine learning to monitor threats and offer advanced data recovery capabilities. On December 10, the company announced the launch of Rubrik Data Security Posture Management (DSPM) in Rubrik Security Cloud (RBC). DSPM is a data security approach that employs innovative AI tools to swiftly detect data risks, playing a crucial role in mitigating the exposure of sensitive information in today’s environment.
Rubrik’s Data Security Posture Management (DSPM) is set to launch in early 2025, offering organizations enhanced data visibility and control across cloud, SaaS, and on-premises environments.
“Gen AI can unlock innovation for organizations of all sizes and industries, but it doesn’t come without challenges. While many are eager to deploy these tools, ensuring the right data is being inputted can be a time-consuming task, ultimately slowing down implementation. Additionally, organizations struggle to contain the risk of sensitive or critical data getting leaked through Gen AI, especially as that data grows rapidly across fragmented environments. Having Rubrik DSPM within Rubrik’s comprehensive Cyber Resilience platform reduces that complexity to help accelerate AI adoption, and secure data wherever it lives.”
-Mike Tornincasa, Chief Business Officer at Rubrik.
8. NICE Ltd. (NASDAQ:NICE)
Number of Hedge Fund Holders: 24
NICE Ltd. (NASDAQ:NICE) provides AI-powered self-service and agent-assisted CX software for the contact center – and beyond. On December 12, the company announced that the Monterey County District Attorney’s Office in California has selected NICE Justice, one of the AI-powered solutions in NICE’s Evidencentral platform, to streamline digital evidence management. This makes it the fourth prosecutor’s office in California to digitally transform evidence management with NICE Justice. The solution will modernize how district attorneys and office staff receive, interact with, manage, and share digital evidence. It also features built-in AI and automation capabilities for object detection, automated case building, video and audio transcription and translation, optical character recognition (OCR), analytics, and finding evidence connections.
“We’re thrilled to build on our momentum of helping prosecutors digitally transform their evidence management, with the addition of the Monterey County DA. With the breadth and scope of digital evidence growing exponentially, NICE Justice helps prosecutors get to the truth faster”.
-Chris Wooten, Executive Vice President, NICE
7. Pegasystems Inc. (NASDAQ:PEGA)
Number of Hedge Fund Holders: 28
Pegasystems Inc. (NASDAQ:PEGA) develops, markets, licenses, hosts, and supports enterprise software. On December 11, the company announced a new edition of Pega Smart Investigate™, an end-to-end case management system powered by Pega’s low-code platform for AI-driven decisioning and workflow automation. The new edition includes expanded automation and generative AI capabilities to help banks process payment exceptions and investigations faster and more efficiently.
It comes with a modernized user interface and supports the latest ISO 20022 standards, enabling financial institutions to tackle increasing payment exceptions while cutting down operational costs and improving client satisfaction. Key innovations in Pega Smart Investigate Enterprise Edition include expanded automation and improved workflows, advanced AI agents for guidance and summaries, and improved architecture and user interface.
“This new version of Pega Smart Investigate represents a significant leap forward in payment exception handling. By combining advanced automation with generative AI capabilities, we’re helping banks transform what has traditionally been a complex, manual process into a streamlined, intelligent workflow that can dramatically reduce resolution times and improve the client experience”.
-Ryan White, director, product management, Pega.
6. Box, Inc. (NYSE:BOX)
Number of Hedge Fund Holders: 31
Box, Inc. (NYSE:BOX) develops intelligent content cloud software. It operates a content-sharing platform that enables users to share, access, and manage content in the cloud, as well as provides mobile access, file storage, and online collaboration solutions. On December 12, Bank of America initiated coverage of Box (BOX) with a “Buy” rating and a $40 price target. The firm believes that the cloud company has an attractive outlook and is well-positioned for AI monetization opportunities. Moreover, The analyst noted that challenges like tighter budgets and staff reductions are easing, yet the valuation “still reflects an overly bearish view” of revenue growth and margin expansion potential.
“We are initiating on Box Inc. at Buy with a $40 PO, implying upside potential of 24%. As the leading enterprise data repository, we think it is well positioned for AI monetization opportunities as the market transitions from simply storing data and documents to extracting value, insights and increased productivity by leveraging AI”.
5. Fortinet, Inc. (NASDAQ:FTNT)
Number of Hedge Fund Holders: 47
Fortinet, Inc. (NASDAQ:FTNT) is a cybersecurity company that provides enterprise-level next-generation firewalls and network security solutions. On December 11, the company announced that it had completed the acquisition of Perception Point, a leader in advanced collaboration and email security. The acquisition harnesses Perception Point’s AI-driven technology and builds upon the company’s mission to provide end-to-end cybersecurity, encompassing protection beyond email into the broader modern workspace. Fortinet further highlighted that Perception Point’s innovative AI-powered capabilities secure email, critical collaboration platforms like Slack and Teams, web browsers, cloud storage apps, and more. Consequently, organizations will be able to protect their channels of communication, streamline operations, and mitigate risks across their digital ecosystems.
4. Cadence Design Systems, Inc. (NASDAQ:CDNS)
Number of Hedge Fund Holders: 53
Cadence Design Systems, Inc. (NASDAQ:CDNS) supplies software and specialized computer servers to leading AI-chip designers. On December 10, the company announced a collaboration with Rapidus Corporation to provide tools and technology that will help build advanced, energy-efficient chips. The collaboration will provide AI-driven design flows and a comprehensive portfolio to support the Rapidus 2nm gate-all-around (GAA) process, utilizing the advantages of Rapidus’ backside power delivery network (BSPDN) technology. The GAA and BSPDN are two manufacturing technologies that are helping build advanced chips.
“Our broad collaboration with Rapidus for 2nm GAA BSPDN technology leverages Cadence’s AI-driven solutions to solve real-world problems and meet customer needs. By bringing together Cadence’s advanced interface and memory IP technology, reference flows and Rapidus’ process technology, we’re empowering the buildout of the AI infrastructure of tomorrow.”
-Dr. Anirudh Devgan, president and CEO at Cadence.
3. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 78
Constellation Energy Corporation (NASDAQ:CEG) is an energy provider specializing in clean, carbon-free energy solutions. This top Goldman Sachs’s Phase 2 AI Stock benefits from the growing demand for electricity from large AI data centers. On December 12, Bank of America analyst Ross Fowler upgraded Constellation Energy Corporation (NASDAQ:CEG) to “Buy” from neutral and raised his price target by $32 to $269. The firm sees potential in Constellation Energy, anticipating shares to jump 13.7% over the next year.
Due to grid operator PJM Interconnection’s power deficit, the company will continue to thrive considering it is PJM’s largest supplier of clean baseload power. The firm strongly believes that data centers are key to the stock’s upside. With companies looking for clean energy solutions to power data centers and drive AI growth, Constellation announced earlier this year its plans to restart operations at Three Mile Island. Even though the company could see downside from declining power prices, Fowler said that should be offset by tax credits that are anticipated to remain due to bipartisan support.
“We believe CEG offers a unique investment opportunity, with sustained double-digit growth, an asset mix and business model that provides clean, baseload generation, and a compelling valuation relative to peers. We believe CEG is in the best position to prosper from rising demand, tightening supply, and likely soon to come regulatory clarity. This potential is not reflected in its current share price. As such it is undervalued.”
– Fowler wrote to clients on Thursday.
2. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 99
Tesla, Inc. (NASDAQ:TSLA) designs, develops, manufactures, sells, and leases high-performance fully electric vehicles and energy generation and storage systems. On December 11, Goldman Sachs raised the price target on Tesla, Inc. (NASDAQ:TSLA) to $345 from $250 and kept a “Neutral” rating on the shares. The firm has lowered its EPS estimates due to reduced EV market forecast, which are in turn driven by lower deliveries and auto gross margins. Even though challenges are anticipated for Tesla’s core business in the near term, the firm believes the market is taking “a more forward-looking approach to Tesla”. The market is focusing on Tesla’s future potential. In particular, it is focused on Tesla’s opportunities in artificial intelligence, especially its full self-driving (FSD) software and Cybercab robotaxi.
1. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 123
Adobe Inc. (NASDAQ:ADBE) is a software company that provides digital marketing and media solutions. On December 12, UBS analyst Karl Keirstead maintained a “Hold” rating on Adobe and set a price target of $525.00. Keirstead has given the hold rating due to the modest outlook for Adobe’s stock performance. One factor that the analyst noted is the projected growth rates for Adobe’s Digital Media revenue and annual recurring revenue (ARR) in FY25, demonstrating limited upside from artificial intelligence. This has been a key focal point for investors.
Moreover, growth momentum also looks challenged as evidenced by recent growth in new ARR for its Creative segment (which fell short). Adobe’s plans on making money from artificial intelligence by introducing specific new product tiers, instead of increasing prices across all products, hasn’t met investor expectations either. Consequently, the company’s valuation multiples appear high due to its growth profile and slow AI monetization. The lower price target by the analyst reflects all these considerations and a hold stance will be maintained until clearer signs of AI-driven growth materialize.
While we acknowledge the potential of ADBE 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 ADBE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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