Artificial Intelligence (AI) companies are rapidly focusing on securing funding to propel R&D, roll out products and services across diverse sectors, and create interconnected ecosystems amid fierce industry competition. According to Reuters analysis of PitchBook data, AI startups have single-handedly contributed to the rebound of US venture capital funding, as total capital raised last year jumped 30% year over year.
More importantly, AI startups comprised 46.4% of the total $209 billion raised in 2024, as optimism around AI-powered technology sparked a year-long market rally led by tech giants and semiconductor leaders.
However, concerns remain about the rapidly evolving technology as tech leaders prioritise enforcing guardrails to ensure the best use of AI.
OpenAI CEO at Davos 2024
OpenAI CEO Sam Altman said during his speech at Davos 2024: “I think it’s good that we and others are being held to a high standard. We can draw on lessons from the past about how technology has been made to be safe and how different stakeholders have handled negotiations about what safe means.”
“Let society and the technology co-evolve, and sort of step-by-step with a very tight feedback loop and course correction, build these systems that deliver tremendous value while meeting safety requirements,” he added.
Overall, the global markets are optimistic about how leading companies are increasingly developing and integrating AI in their workflows and strategies globally. PWC’s AI Global Study projected that the AI industry could contribute $15.7 trillion to the global economy by 2030, boosting GDP for local economies by 26% on average. Here are the top 10 AI stocks driving the transition to a new era of product development, data flow, and sustainability in 2025.
For this article, we selected AI stocks by reviewing news articles, stock analysis, and press releases. We listed the stocks in ascending order of their hedge fund sentiment taken from Insider Monkey’s database of 900 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 close-up of a complex network of integrated circuits used in logic semiconductors.
10. Accenture Plc (NYSE:ACN)
Accenture Plc (NYSE:ACN) is a leading technology services provider in segments that include agile transformation, data analytics and management, intelligent automation, software engineering services, and AI solutions. The company is working to accelerate the R&D and deployment of AI agents using Nvidia’s AI offerings for faster placement of multi-agent networks that can be readily integrated into enterprise systems. Accenture Plc (NYSE:ACN) is also upgrading its core banking modernization capabilities by acquiring platforms that help unify data from legacy and modern banking architectures to facilitate product development while minimizing operational roadblocks.
On January 15th, Accenture plc (NYSE:ACN) unveiled a proposed seven-year joint venture with Australia-based telecom giant Telstra. The joint venture will see Telstra leverage Accenture plc’s (NYSE:ACN) AI teams and resources to overhaul its existing AI systems and expand network leadership while enhancing business processes and customer services.
9. Analog Devices Inc (NASDAQ:ADI)
Analog Devices, Inc. (NASDAQ:ADI) is a global semiconductor leader that leverages analog, digital, and software technologies to offer data conversion, signal processing, and power management services.
On January 10th, Truist Securities increased Analog Devices Inc’s (NASDAQ:ADI) share target price to $230 from $216, reiterating its “Hold” rating. Currently, Analog Devices, Inc. (NASDAQ:ADI) is implementing the full-stack GenAI platform SambaNova Suite as part of a companywide AI transformation to ramp up field sales and customer engagement. The development will help the semiconductor firm access its data sheets faster with high precision and improve field recommendations.
8. Autodesk Inc (NASDAQ:ADSK)
Autodesk Inc. (NASDAQ:ADSK) offers a range of software products and services, including 3D design tools for the architecture, engineering, construction, manufacturing, media, and entertainment industries. The company is integrating AI across its products and services to boost customer experience.
On January 8th, Piper Sandler upgraded the stock to an Overweight rating from Neutral and raised its target price per share to $357. Although the stock has faced downward pressures following the appointment of Janesh Moorjani and uncertainty over a “new transaction model” for higher billings and revenue, Piper Sandler analyst Clarke Jeffries maintained that the company has exited “the steepest part of the multi-year billings trough in FY24” and its FCF could increase by over 40% this year. He added that the company could “deploy cash more aggressively toward capital return policies in the coming year.”
7. Aehr Test Systems (NASDAQ:AEHR)
Aehr Test Systems (NASDAQ:AEHR) is a leading designer, manufacturer, and seller of test and burn-in products for semiconductor devices in the wafer level, singulated die, and package part forms globally. The company’s high-power package part burn-in test solutions for AI chip manufacturers position it as a top provider of reliability and testing solutions globally.
Although the company’s net revenues and cash and equivalents fell sequentially for the quarter ended November 29, 2024, Aehr Test Systems (NASDAQ:AEHR) was able to secure the first AI processor customer for wafer-level burn-in and its first volume production order from the AI client, which happens to be a large-scale data center hyperscaler.
“Market diversification into artificial intelligence (AI) processors, gallium nitride power semiconductors, data storage devices, silicon photonics integrated circuits, and flash memory is driving new opportunities in terms of customers and revenue. This progress includes our wafer-level burn-in solutions and also the success we’re achieving with the new semiconductor package part test and burn-in product line from the acquisition of Incal Technology,” said CEO Gayn Erickson.
6. C3.ai Inc (NYSE:AI)
C3.ai (NYSE:AI) offers AI-powered enterprise applications for the US government and businesses in manufacturing, utilities, defense and intelligence, and the financial sector.
The company’s latest financial results revealed that 50% of new bookings came from aerospace and defense contractors, while 30% came from sectors like manufacturing, energy and utilities, and life sciences. Moreover, C3.ai (NYSE:AI) almost tripled its revenue growth rate in the past year, and its top-line growth remains on par with rival Palantir.
On January 17th, Canaccord Genuity hiked C3.ai’s (NYSE:AI) target price with a “Hold” rating, citing its marked performance growth despite looming concerns over profitability.
5. Astera Labs Inc (NASDAQ:ALAB)
Astera Labs Inc. (NASDAQ:ALAB) designs and manufactures PCIe and ASIC ramps to boost hardware connectivity for AI and cloud infrastructure. It supplies AI fabric switches to top AI firms like Nvidia (NASDAQ:NVDA), Advanced Micro Devices Inc (NASDAQ:AMD), and Intel (NASDAQ:INTC).
On January 21st, Morgan Stanley downgraded the stock to “Equal Weight” from “Overweight” and reiterated a $142 target price per share. The brokerage explained that the company’s stock valuation has already priced in the market’s optimism around Astera Labs Inc’s (NASDAQ:ALAB) new PCIe switches. Furthermore, Nvidia’s (NASDAQ:NVDA) transition to Blackwell and stiff industry competition also pose challenges for Astera Labs Inc (NASDAQ:ALAB). Although Morgan Stanley forecasts limited upside for the company, it sees Astera Labs Inc. (NASDAQ:ALAB) exceeding financial projections in the next quarter on growing ASIC sales.
4. Arista Networks Inc. (NYSE:ANET)
Arista Networks Inc. (NYSE:ANET) is a leading provider of network switches and platforms that facilitate software-defined networking (SDN) for large AI, data centers, cloud computing, high-frequency trading, and routing environments. The company’s award-winning platforms, such as the Linux-based Extensible Operating System (EOS) network stack, ensure efficient and secure automation, data analytics, and agility for AI/ML workloads on AI accelerators and storage systems.
On January 17th, Bank of America (BofA) analysts hiked their target price for Arista Networks Inc. (NYSE:ANET) to $130 from $114. They are of the view that the company will likely benefit from the demand surge for networking infrastructure driven by GenAI. The analysts explained that increasing computational use cases are fueling the requirement for new-age networking equipment, including switches, routers, and storage systems that Aristra Networks Inc. (NYSE:ANET) can tap into.
3. Amphenol Corp. (NYSE:APH)
Amphenol Corp. (NYSE:APH) designs and manufactures electronic fiber optic and power connectors, antennas, sensors, busbars, splitter products, and high-speed interconnect systems, including high-speed and coaxial cables. The company’s clients span diverse industries, including IT Datacom, automotive, commercial aerospace, industrial, and mobile devices.
On January 17th, Citi analysts raised their stock target price marginally to $82 from $81. They reiterated a “Buy” rating, citing the strong momentum in the IT Datacom sector and the connector market, driven by surging demand for data center connectors for AI servers. Despite setbacks like delays in shipments of Blackwell components, Citi analysts preferred Amphenol over rivals due to its execution capabilities and leading market share in AI/data centers.
2. Arbe Robotics Ltd. (NASDAQ:ARBE)
Arbe Robotics Ltd. (NASDAQ:ARBE) is driving innovation in Perception Radar technology with its Phoenix Perception and Lynx Surround Imaging radars, powered by its in-house-built chipset solutions for fully autonomous driving. The company designs 4D imaging radar solutions 100 times more detailed than conventional radars. These ultra HD drive-assist systems support L2+ autonomy at lower costs and power consumption, paving the path to making zero-road fatality a reality.
On January 6th, the company partnered with Nvidia (NASDAQ:NVDA) to enhance its perception radars by overhauling free space mapping and all-weather long-range detection capabilities. Arbe Robotics Ltd. (NASDAQ:ARBE) radars will integrate the NVIDIA DRIVE AGX in-vehicle computing platform, leveraging the AI giant’s high-performance processor to improve real-time hands-free safety levels and decision-making speeds for developing safer mobility solutions.
1. Asana Inc. (NYSE:ASAN)
Asana Inc. (NYSE:ASAN) is a software firm known for its widely used work management tool, which helps teams and executives in the tech, finance, healthcare, and retail industries track and organize tasks, monitor progress in real time, delegate responsibilities, communicate company-wide goals, and retain comprehensive project oversight.
On January 6th, Piper Sandler analyst Brent Bracelin upgraded Asana (NYSE:ASAN) stock rating to “Overweight” from “Neutral,” raising its 12-month target price to $27 from $19. Bracelin said the firm’s stabilization, cost discipline, and the AI studio product cycle “could spark a recovery.” The brokerage’s picks for 2025 in cloud applications and analytics are focused on large and strategic vendors positioned to capitalize on AI trends.
While we acknowledge the potential of Asana Inc. (NYSE:ASAN) as an investment, our conviction lies in the belief that 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 ASAN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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