Is the AGI bubble about to burst? According to Margaret Mitchell, chief ethics scientist at the AI startup Hugging Face, it is to some extent. The crux of the matter is that, while essential for building more advanced systems, high-quality, human-made training data is lacking. Additionally, minor improvements to AI technologies such as ChatGPT are failing to justify the enormous costs associated with building and operating new models. That said, Bloomberg reports that three of the leading AI companies are now witnessing diminishing returns from their costly efforts to build newer models of artificial intelligence products.
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It is reported that the upcoming iteration of Google’s Gemini software is falling short of internal expectations. Likewise, Anthropic has also been experiencing delays in releasing its highly anticipated Claude model, 3.5 Opus. Moreover, OpenAI’s Orion is reportedly not meeting its desired performance expectations. Although market commentary may indicate otherwise, a Google DeepMind spokesperson has noted that the company is “pleased with the progress we’re seeing on Gemini and we’ll share more when we’re ready”. On the other hand, Bloomberg reports that companies such as OpenAI and Anthropic have declined to comment. In turn, Anthropic pointed out to a podcast featuring Chief Executive Officer Dario Amodei.
“People call them scaling laws. That’s a misnomer,” he said on the podcast. “They’re not laws of the universe. They’re empirical regularities. I am going to bet in favor of them continuing, but I’m not certain of that”.
According to Amodei, many factors may come in the way of reaching more powerful AI in the next few years, but companies who are optimistic about artificial intelligence will most likely find a way around them. As the race to develop more advanced AI continues, recent developments in the field highlight both the challenges and breakthroughs that are shaping its future.
Latest Events in AI
According to a report from Bloomberg, OpenAI is on its way to launch a new artificial intelligence agent codenamed “Operator”. The AI agent will be able to take actions on a person’s behalf, such as writing code or booking travel. The tool is reportedly released in January as a research preview.
In other news, a Google chatbot has seemingly responded in a non-sensical manner to a Grad student in a back-and-forth conversation they were having about aging adults. The grad student was seeking homework help when the chatbot responded in a threatening manner. The response from the chatbot appeared disconnected from the context and lacked coherence, raising concerns about the current limitations of large language models (LLMs). While LLMs have made significant advancements, this incident underscores the need for further refinement in ensuring their reliability and accuracy in handling complex and nuanced topics.
“Large language models can sometimes respond with non-sensical responses, and this is an example of that. This response violated our policies and we’ve taken action to prevent similar outputs from occurring.”
– Google in a statement to CBS News
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 scientist at a computer station, surrounded by a neural network of artificial intelligence code.
10. Veritone, Inc. (NASDAQ:VERI)
Market Capitalization: $117.09 million
Veritone, Inc. (NASDAQ:VERI) is a leading enterprise AI software, applications and services provider. Its leading enterprise AI platform, aiWARE™, coordinates an ecosystem of machine learning models, transforming data sources into actionable intelligence.
On November 14, Veritone, Inc. (NASDAQ:VERI) announced the expansion of its global footprint in talent acquisition solutions through a programmatic job advertising service in Australia. The service aims to revolutionize the hiring process through the use of artificial intelligence in areas such as candidate sourcing, job ad placement, cost reduction, and improving the quality of job applications.
“The launch of programmatic job advertising in Australia is a major milestone for Veritone in expanding the global footprint of our talent acquisition solutions. Our AI-powered solution gives companies the tools they need to recruit smarter, faster, and more effectively.”
– Alex Fourlis, general manager, Veritone Hire, Veritone, Inc. (NASDAQ:VERI).
9. The Hackett Group, Inc. (NASDAQ:HCKT)
Market Capitalization: $833.32 million
The Hackett Group, Inc. (NASDAQ:HCKT) is a leading digital transformation and AI strategy consulting firm. It engages in the provision of dedicated expertise in generative artificial intelligence strategy, operations, finance, and human capital.
On Friday, November 15th, The Hackett Group, Inc. (NASDAQ:HCKT) rung the Nasdaq Stock Market Opening Bell in celebration of its recent acquisition of the GenAI development firm LeewayHertz. The acquisition marks a significant step in expanding Hackett’s AI capabilities, which will help the company offer a comprehensive end-to-end AI solution to its clients. The transaction will leverage The Hackett Group’s world-class intellectual property and AI XPLR™ platform with LeewayHertz’s Gen AI development capabilities and ZBrain™ platform.
“This acquisition is meant to highly differentiate our consulting services and software platforms. It significantly increases our AI implementation capabilities, and highly differentiates our AI XPLR™ ideation and evaluation platform. Integrating it with ZBrain™ will empower our clients to unlock the value of their data and result in new levels of innovation, customer experience and workflow productivity enabled by Gen AI-powered solutions.”
– Ted Fernandez, Chairman and CEO of The Hackett Group.
8. Bloom Energy Corporation (NYSE:BE)
Market Capitalization: $4.71 billion
Bloom Energy Corporation (NYSE:BE) is engaged in the design, manufacture, selling, and installation of solid-oxide fuel cell systems for on-site power generation. Its proprietary solid oxide technology converts natural gas, biogas, or hydrogen into electricity without combustion, leading to low or no CO2 emission. The company has the potential to meet the power needs of AI data centers.
On November 14, Bloom Energy Corporation (NYSE:BE) announced that it has signed a supply agreement with American Electric Power (AEP) for up to 1 gigawatt (GW) of its products. The agreement marks the world’s largest commercial procurement of fuel cells to date. AEP has ordered 100 MW of fuel cells from Bloom Energy Corporation (NYSE:BE), with further orders expected in 2025. Fuel cell solutions offered by Bloom Energy Corporation (NYSE:BE) have the ability to be rapidly deployed, and have high availability and density, producing 100MW per acre. This initial installation will allow Bloom Energy’s fuel cells to meet the immediate power of AI data centers.
“I am delighted that there is strong market recognition that the Bloom Energy platform is the ideal choice for powering AI data centers. We are thrilled to be working with AEP as they lead the charge to bring innovative solutions to the transforming electricity market. With our proven track record of more than 1.3 GW deployed, and a fully functional factory that can deliver GWs of products per year, we are ready and able to meet this rapid electricity demand growth”.
– KR Sridhar, Founder, Chairman, and CEO of Bloom Energy.
7. Elastic N.V. (NYSE:ESTC)
Market Capitalization: $8.85 billion
Elastic N.V. (NYSE:ESTC) is a search artificial intelligence (AI) company that enables everyone to securely harness search-powered AI to find the answers they need in real time using all their data, at scale. Its solutions are built on the Elastic Search AI Platform.
On November 14, Elastic N.V. (NYSE:ESTC) announced an AI ecosystem that will help enterprise developers build and develop advanced AI applications called RAG (Retrieval Augmented Generation) faster. Their Elastic AI Ecosystem will provide a comprehensive set of AI tools and technologies that work with their Elasticsearch vector database, empowering developers to use the “best-in-class” resources that accelerate the deployment of their RAG applications.
“Elasticsearch is the most widely downloaded vector database in the market, and customers and developers want to use it with the ecosystem’s best models, platforms, and frameworks to build compelling RAG applications. With our handpicked ecosystem of technology providers, we’re making it easier for developers to leverage Elastic’s vector database and choose the best combination of leading-edge technologies for their RAG applications. These integrations will help developers test, iterate, and deliver their RAG applications to production faster and improve the accuracy of their Gen AI applications.”
-Steve Kearns, general manager of Search at Elastic.
6. Hewlett Packard Enterprise Company (NYSE:HPE)
Market Capitalization: $27.28 billion
Hewlett Packard Enterprise Company (NYSE:HPE) is an American multinational technology company offering solutions that allow customers to capture, analyze, and act upon data seamlessly. The company offers high-performance computing (HPC) systems, AI software, and data storage solutions that help run complex AI workloads.
On November 13, Hewlett Packard Enterprise Company (NYSE:HPE) announced its new high-performance computing and AI infrastructure portfolio for service providers and large enterprises. The portfolio encompasses HPE Cray Supercomputing EX solutions along with two other systems that are designed to optimize large language models (LLMs) training, natural language processing, and multi-modal training. The portfolio is based on HPE’s 100% fanless direct liquid cooling system architecture, claiming to use 37% less power to keep servers cool.
“Service providers and nations investing in sovereign AI initiatives are increasingly turning to high-performance computing as the critical backbone enabling large-scale AI training that accelerates discovery and innovation. Our customers turn to us to fast-track their AI system deployment to realize value faster and more efficiently by leveraging our world-leading HPC solutions and decades of experience in delivering, deploying and servicing fully-integrated systems.”
– Trish Damkroger, senior vice president and general manager, HPC & AI Infrastructure Solutions at HPE.
5. Snowflake Inc. (NYSE:SNOW)
Market Capitalization: $41.89 billion
Snowflake Inc. (NYSE:SNOW) offers a cloud-native platform that can store and analyze all data records in one place. It empowers businesses to build, manage, and scale AI and machine learning applications.
On November 15, Mizuho Securities raised the price target for several enterprise stocks ahead of their earnings. According to the firm, cloud services have been performing well in the October period. The elections didn’t significantly impact spending, and the adoption of artificial intelligence is picking up pace too. That said, one of their favorite October-ending stock to own ahead of the prints is Snowflake Inc. (NYSE:SNOW). The firm reiterated its $165 price target and “Outperform” rating on the stock. As per the analysts, despite negative investor sentiment, partner checks have been positive with solid overall consumption and one large net new logo win.
4. Datadog, Inc. (NASDAQ:DDOG)
Market Capitalization: $42.34 billion
Datadog, Inc. (NASDAQ:DDOG) offers a SaaS-based cloud-based monitoring and analytics program with expertise in cloud computing and AI-powered cybersecurity products.
On November 14, CMB International Securities analyst Saiyi HE initiated Datadog, Inc. (NASDAQ:DDOG) with a “Buy” rating and a price target of $154.3. According to the analyst, several factors point toward the company’s strong market position and growth potential. For starters, it is poised to benefit from the ongoing cloud migration and digital transformation trends that are expected to continue driving significant growth in cloud-based technologies. In this regard, Datadog’s comprehensive observability program gives it an edge and meets the modern demands of hybrid cloud environments. The company’s impressive revenue growth projections and increase in large customers are a big plus point. To conclude, the price target rise is a reflection of confidence in the company’s ability to maintain its growth trajectory and capture market opportunities, especially with the increasing adoption of its AI-powered solutions.
3. Vertiv Holdings Co (NYSE:VRT)
Market Capitalization: $44.78 billion
Vertiv Holdings Co (NYSE:VRT) offers digital infrastructure technology and services for data centers, communication networks, and commercial and industrial facilities. Its offerings, such as its cooling and power systems, are crucial to ensure that data centers run smoothly.
As reported on November 14, Vertiv Holdings Co (NYSE:VRT) will be collaborating with Ansys, a global leader in engineering simulation, to digitally transform its design of data center cooling systems. Using Ansys digital engineering technology, Vertiv Holdings Co (NYSE:VRT) will be able to achieve benefits such as reduced development time, improved scalability, and early decision-making. In particular, heat exchanger coils, essential for cooling systems but complex to design, will benefit from Ansys’ technology that will make development quicker and more accurate. Businesses will be able to develop products and respond to customer requests at a faster pace; speeding up their go-to-market time.
“Ansys’ industry-leading simulation solutions will help drive Vertiv’s business model as we design solutions for the future. Our mission is to revolutionize the way the world conceptualizes and develops data centers — from cooling and power technologies through implementing AI in the design of the data center itself. With Ansys, we will more quickly meet critical milestones that will help us deliver the most optimal infrastructure to support our customers’ AI-based projects with energy-efficient and reliable future-forward designs”.
– Steve Blackwell, vice president of engineering at Vertiv.
2. Palo Alto Networks, Inc. (NASDAQ:PANW)
Market Capitalization: $126.8 billion
Palo Alto Networks, Inc. (NASDAQ:PANW) is a global cybersecurity company offering security solutions for all apps, users, and devices. The company leverages artificial intelligence, such as Precision AI, Palo Alto Networks’ proprietary AI system, to detect and mediate cybersecurity threats.
On November 14, Palo Alto Networks, Inc. (NASDAQ:PANW) revealed its top seven artificial intelligence and cybersecurity predictions for 2025, aiming to serve as essential guidelines for organizations as they frame their cybersecurity strategies. Palo Alto forecasts that cyberinfrastructure will be centered on a single unified data security platform that not only optimizes resources and offers improved visibility but also ultimately “outpace” attackers. Other forecasts include the advancement of System on Chips (SOCs) with AI-driven autonomous operations, broader use of secure enterprise browsers, a greater focus on AI’s energy consumption, readiness for quantum security challenges, and closer collaboration between CIOs and CMOs.
1. Salesforce Inc (NYSE:CRM)
Market Capitalization: $311.23 billion
Salesforce Inc (NYSE:CRM) offers a cloud-based CRM software. The company has become an exciting AI stock after the recent launch of Agentforce.
On November 15, Mizuho kept an “Outperform” rating on Salesforce Inc (NYSE:CRM) and raised the price target on the shares to $370 from $300. Analysts led by Gregg Moskowitz note checks on the company have been generally good for the quarter, and even though net new business remains soft, the company drove strong renewal business. They also believe that Salesforce will report strong fiscal third-quarter growth, adjusted for currency changes. Nevertheless, the focus will likely be less on the quarter and more on Agentforce, the company’s recently launched AI-powered platform. Since September, Salesforce stock has surged 32% with Agentforce being the key catalyst for the surge.
While we acknowledge the potential of CRM 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 CRM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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