In this article, we will take a detailed look at the 10 AI News You Can’t Miss.
The AI stocks selloff that started following the launch of DeepSeek is still impacting the US markets. Aswath Damodaran, NYU Stern School of Business professor of finance, said in a recent program on CNBC that he believes innovation in AI technology like DeepSeek and new models would “commoditize” AI products and could result in lower spending.
“In my view, what it does is reduce the total size of the segment of the AI market that needs high-power chips and immense amounts of data. Whether deep seek is a fake or whether it’s going to pass by, what it opens people’s eyes to is that not all AI products and services need these incredibly powerful chips and huge amounts of data and huge data centers. You can get there with much cheaper devices. I think for many companies, when they look at the AI products and services they have to develop, they don’t need this high-powered stuff. They don’t need to spend the tens of billions of dollars up front. So, I think that’s the real worry you have to have.”
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For this article, we picked 10 stocks trending based on the latest news. For each company we have mentioned the number of hedge fund investors. 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
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10. Snap Inc (NYSE:SNAP)
Number Of Hedge Fund Investors: 44
Andy Swan from LikeFolio said in a latest program on Schwab Network that Snap Inc (NYSE:SNAP) is getting traction among advertisers.
“Snapchat is kind of the new frontier for digital ads. Snapchat had a great report, and while the market reacted a little bit off, the initial reaction was very good because Snapchat showed that advertisers are flocking to these platforms.”
RiverPark Large Growth Fund stated the following regarding Snap Inc. (NYSE:SNAP) in its Q3 2024 investor letter:
“Snap Inc. (NYSE:SNAP): SNAP was a top detractor in the third quarter following a second quarter earnings report that fell short of high expectations. While the company reported strong Daily Active User (DAU) growth (432 million +10% year-over-year) and time spent watching content on the app (+25% year-over-year), revenue of $1.24 billion was below the midpoint of the company’s guidance and slightly below investor expectations. Management pointed to weakness in their Brand Advertising vertical, specifically highlighting demand for retail, technology, and entertainment advertising for slowing through the quarter. SNAP did exceed EBITDA expectations by $15 million due to better operating leverage, but guided third quarter EBITDA below expectations as the company plans to make some targeted investments around AI infrastructure.
We believe that improvements in SNAP’s ad platform and continued growth in DAU should lead to continued acceleration in revenue growth over the next several quarters and years. With 2023 revenue of $4.6 billion (as compared with Meta’s $134 billion), we believe SNAP has a long runway for both revenue growth and expanded profitability.”
9. Super Micro Computer Inc. (NASDAQ:SMCI)
Number Of Hedge Fund Investors: 45
Matthew Tuttle from Tuttle Capital said in a Schwab Network program recently that Super Micro Computer Inc. (NASDAQ:SMCI) has further room to grow if accounting violation confusions are cleared and the stock sees a further pullback.
“There’s still room for growth—AI is the future. They’ve been a leader in the AI server market, but I’d like to hear how they’re handling competition and the risk of becoming commoditized. If everything looks solid and there’s a bit of a pullback, that could be an opportunity to buy in.”
Columbia Acorn Fund stated the following regarding Super Micro Computer, Inc. (NASDAQ:SMCI) in its Q3 2024 investor letter:
“Super Micro Computer, Inc. (NASDAQ:SMCI) had a tough quarter due to a confluence of negative events. It declined, but is still up significantly for the year. While demand for the company’s AI server racks remains strong, with revenue up over 100%, gross margins have fallen sharply for two straight quarters, implying a price war. In addition, Super Micro was the subject of a short-seller report and a delay in filing its annual report with the SEC. We have been taking profits in the stock all year and have only a small position, which we are maintaining given the strong performance and demand for Super Micro’s AI racks and a depressed stock valuation.”
8. Shopify Inc (NYSE:SHOP)
Number Of Hedge Fund Investors: 64
Chris Wang from Runnymede Capital explained in a latest program on Schwab Network how Shopify Inc (NYSE:SHOP) is using AI to its advantage.
“They are developing a lot of AI tools for their merchants. They’ve heavily invested in AI with Shopify Magic and Shopify Sidekick. And as you can see, their operating efficiency is really improving each and every quarter. So I think the AI tools are benefiting not only their customers but also their bottom line. So AI is just doing great things for Shopify.”
For the first quarter, Shopify expects revenue growth at a mid-twenties percentage rate year-over-year, reaching about $2.31B (+25% YoY) and estimated operating income of $190M (+120% YoY). The company expects to see accelerated top- and bottom-line growth at a CAGR of +22.6%/ +25% through FY2027. This compares to previous estimates of +17.8%/ +14.2%, and reflects a strong history of 5-year growth at +41.3%/ +111.2%, highlighting SHOP’s promising long-term outlook. This growth is supported by the projected rise in the e-commerce SaaS market size from $9.4B to $29.82B by 2032 at a CAGR of +15.5%.
Rowan Street Capital stated the following regarding Shopify Inc. (NYSE:SHOP) in its Q4 2024 investor letter:
“Shopify Inc. (NYSE:SHOP): Investment Initiated: February 2022
Internal Rate of Return (IRR): 23%
Our IRR for Shopify aligns closely with the growth in revenues and gross profits the company has delivered over the past three years since we first purchased it in February 2022 (as shown in the table below). However, the path to achieving this return has been far from smooth-as is often the case with investments.
In fact, for the first 2.5 years of holding Shopify, our position generated little to no return. Nearly all of the gains have come within the past six months. This illustrates a fundamental principle of long-term investing: the longer your holding period, the more closely your returns will reflect the underlying fundamentals of the business…” (Click here to read the full text)
7. QUALCOMM Incorporated (NASDAQ:QCOM)
Number Of Hedge Fund Investors: 79
Olivier Blanchard from The Futurum Group in a latest program on Schwab Network made the case for QUALCOMM Incorporated (NASDAQ:QCOM).
“One that seems consistently under-indexed is Qualcomm. First of all, they’re kind of everywhere. They have a dominant position in the premium Android market, an increasingly dominant position in automotive as well—and that’s not just EVs, but what we call software-defined vehicles, basically smart vehicles. Qualcomm is in a really unique position. They have extremely low-power, power-efficient AI chips that go into phones, PCs, cars, and also IoT—specifically commercial IoT, where a lot of intelligence is done locally on-device instead of being pushed to the cloud. That makes it much cheaper, delivers a better ROI, and offers better security. I think we’re going to see a resurgence in 2025 in the commercial or industrial IoT segments, and companies like Qualcomm and Broadcom will be right there with that bump.”
Qualcomm shares have wavered amid reports that Apple plans to move modem production in-house. However, QCOM bulls believe the company can thrive without Apple. Qualcomm had a $10 billion annual run rate for non-handset revenue as it reported $8.3 billion in revenue for FY24. The company expects the AI PC market to reach $4 billion in sales by FY29, with only a 12% market share. QCOM management said during a latest earnings call that it aims to reach $22 billion in non-handset revenues by 2029.
Fidelity Dividend Growth Fund stated the following regarding QUALCOMM Incorporated (NASDAQ:QCOM) in its Q3 2024 investor letter:
“At the stock level, QUALCOMM Incorporated (NASDAQ:QCOM) was a major detractor, returning about -14% the past three months. The firm develops and manufactures semiconductors, software and services used in mobile phones, and other wireless technologies. On July 31, the company reported second-quarter results, and issued guidance for Q3, both of which solidly exceeded expectations. The stock slid, however, on concerns about a slow recovery for smartphones. Additionally, shares dipped this quarter in step with other semiconductor-related names.”
6. Intel Corp (NASDAQ:INTC)
Number Of Hedge Fund Investors: 83
Steven Dickens from HyperFRAME Research said during a program on Schwab Network that he believes Intel Corp (NASDAQ:INTC) is still in its early stages of chip buildup. According to Schwab Network, Dickens believes Intel is undervalued.
“I think Intel’s early in its journey with the lab. They’ve got some breakthrough wins with AWS for some of the stuff they’re doing there. 18A is coming, and what I hear about that is all positive. They’re probably going to beat TSMC to the market for that. Where we’re looking at is building out a fab facility. We’re talking about ASML machines—they’re $350 million each. So it’s a “build it and they will come” strategy. I think Pat Gelsinger was right in trying to keep IFS as part of Intel. And I think what we’re seeing is if Intel’s board is given time and we can fill the void left by Pat Gelsinger, that strategy is going to work out.”
Invesco Growth and Income Fund stated the following regarding Intel Corporation (NASDAQ:INTC) in its Q3 2024 investor letter:
“Intel Corporation (NASDAQ:INTC): The chipmaker reported weaker-than-expected quarterly results as revenues declined and earnings were below expectations. Management also provided weaker guidance going forward; the stock fell on the news. We sold the position during the quarter.
The chipmaker’s quarterly earnings report was weaker than anticipated as revenues declined and earnings were below expectations. Management also provided weaker guidance going forward. Given that a potential recovery appears to be further in the future than we originally anticipated, we sold the position.”
5. Reddit Inc (NYSE:RDDT)
Number Of Hedge Fund Investors: 87
Andy Swan from LikeFolio said in a latest program on Schwab Network that advertisers are “flocking to” Reddit Inc (NYSE:RDDT) amid the value they are getting on the social platform.
“I think advertisers are figuring out what a great value advertising on Reddit is and what great technology they have in place there. It delivers a higher ROI, I think, than some of the more traditional digital advertising platforms like Facebook, Google, etc. Those have kind of squeezed everything they can out of the ROI for advertisers, and Reddit is kind of the new frontier, if you could say it that way, and it’s growing really fast. If we look at Reddit web visits, they are up—digital traffic is up 21% year-over-year, and that’s off a really strong base and a strong uptrend. Things are a little seasonally flat right now, but you can see that uptrend really began over the last couple of years and seems to be continuing. More importantly, on the ad-related web visits—so this is potential advertisers or advertisers looking at Reddit’s advertising solutions—that’s up 90% year-over-year.”
