Unlike other companies, OpenAI does not struggle with market demand; noted Oliver Jay, managing director of international strategy at OpenAI. However, the challenge lies in converting the demand into real-world applications.
“The biggest challenge right now is … converting that enthusiasm into real-life production-ready use case,” he said. “The gap is AI fluency — to know how to turn these concepts into actual business products.”
– Oliver Jay at CNBC’s CONVERGE LIVE
Jay further noted that “working with large language models is a new paradigm. It’s not software. You need to build guardrails.” This will consequently ensure reliable performance.
READ ALSO: 10 High Flying AI Stocks This Week and 12 AI Stocks Making Headlines: Latest News and Ratings
As AI competition intensifies, particularly after the emergence of DeepSeek, leading companies are moving quickly to stay ahead. In its latest, OpenAI has launched new tools for developers to help them build advanced AI agents. This will be done via a few application programming interfaces (APIs). The new tool, known as Responses API, is available to all developers at no additional cost and replaces OpenAI’s Assistants API.
AI adoption and advancements, including those from OpenAI, are rapidly happening all at once, and almost everyone wants in on them. Speaking about the rapid uptick in ChatGPT usage at the two-day live event in Singapore, Jay noted how the city-state has the highest per-capita usage of ChatGPT in the world. Moreover, the advent of artificial intelligence technology is a special opportunity for all companies.
“This is the first time Asian companies, potentially, can take a leadership role on a global stage,” he said. “Traditionally, you see technology adopted in Silicon Valley first, and then Europe. … Now there could be a company from Asia that will be the most innovative.”
Even Asian companies have a chance to lead in global innovation through artificial intelligence. Countries like China, South Korea, and India, are investing heavily in AI and can equally well challenge Silicon Valley’s dominance in the next wave of technological advancements.
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. The hedge fund data is as of Q4 2024.
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).
An investor checking their portfolio on a laptop in a cafe full of other investors.
10. Fortinet, Inc. (NASDAQ:FTNT)
Number of Hedge Fund Holders: 61
Fortinet, Inc. (NASDAQ:FTNT) is a cybersecurity company that provides enterprise-level next-generation firewalls and network security solutions, leveraging artificial intelligence across its cybersecurity products. On March 11, the company announced that it has advanced its OT Security Platform to further support protection of critical infrastructure and industrial sites from evolving cyberthreats.
The updates include deeper OT-specific threat visibility with the FortiGuard OT Security Service, new ruggedized solutions for secure networking, and an enhanced OT SecOps portfolio for automated threat response and regulatory compliance tracking. Fortinet has also strengthened its AI-driven security operations (SecOps) capabilities for OT through updates to the FortiAnalyzer 7.6 and FortiDeceptor 6.1, improving threat insights and compliance reporting.
“Fortinet has been building an industry-leading OT Security Platform for 20-plus years and remains at the forefront of OT security innovation. As cyberthreats against critical infrastructure and across industries such as energy, transportation, and manufacturing continue to grow, Fortinet remains committed to delivering comprehensive security solutions tailored for operational technology environments. These latest enhancements give organizations the tools they need to improve their OT security posture and adhere to regulatory requirements—all managed through a single, unified platform.”
-Nirav Shah, Senior Vice President, Products and Solutions at Fortinet.
9. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 64
Palantir Technologies Inc. (NASDAQ:PLTR) is a leading provider of artificial intelligence systems. On March 13, Loop Capital analyst Mark Schappel lowered the firm’s price target on the stock to $125 from $141 and kept a “Buy” rating on the shares. Schappel has come away optimistic about the stock following a private meeting with the company’s CFO David Glazer and his finance team, boosting his view of Palantir as a leader in enterprise AI.
Offering insights into Palantir’s artificial intelligence platform (AIP) through a product demo, the meeting also incorporated current AI industry trends, competition, spending priorities, and PLTR’s “bootcamp” go-to-market strategy, which is a strategy focused on building deep relationships with clients.
The meeting concluded with Schappel even more confident about Palantir stock’s future. The analyst told investors in a research note that Palantir, an early software leader in enterprise artificial intelligence, is at a “tipping point” as small-scale pilot programs move into production and as AI use cases “grow exponentially across all industries”. To conclude, the firm believes Palantir’s innovative approach and expanding use cases for AI could boost its growth moving forward.
8. Eaton Corporation plc (NYSE:ETN)
Number of Hedge Fund Holders: 88
Eaton Corporation plc (NYSE:ETN) is a global power management company offering electrical, aerospace, vehicle, and eMobility solutions. On March 12, KeyBanc analyst Jeffrey Hammond upgraded the stock from “Sector Weight” to Overweight with a price target of $340.00. The rating follows Eaton’s investor day Tuesday afternoon.
The analysts said the stock’s recent pullback has created a “unique entry point into one of our highest-quality names.” Eaton, whose fast-growing data center business benefits from artificial intelligence investment spending, had tumbled in response to DeepSeek’s emergence. Despite AI spending fears still looming, the analysts are encouraged by Eaton management who noted that only 20% of their electrical backlog in their North and South American segment is tied to AI.
The firm is optimistic that Eaton’s data center business can sustain growth in the high-teens percentages and it likes the long-term growth targets outlined at Tuesday’s investor event. Eaton projected 6% to 9% organic growth through 2030. This is compared with the 5% to 8% target previously offered for the 2020 to 2025 period.
7. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 95
AppLovin Corporation (NASDAQ:APP) provides a leading marketing platform powered by AI technology. On March 12, Analyst Omar Dessouky from Bank of America Securities maintained a “Buy” rating on the stock with a $580.00 price target. Dessouky met with AppLovin’s CEO in New York City, coming out incrementally positive about how AppLovin’s management has effectively communicated the company’s strategic advantages, particularly in the in-app bidding industry.
Recent market conditions, including multiple short seller reports which claimed that AppLovin has misrepresented the benefits of its AI advertising platform, present a favorable opportunity for investors to purchase AppLovin shares. The firm stated that these shares are considered a steep discount compared to other high-growth tech stocks like Google and Meta. Its proprietary data and predictive models offer a robust moat, ensuring its ability to outbid competitors and maintain profitability.
6. Marvell Technology, Inc. (NASDAQ:MRVL)
Number of Hedge Fund Holders: 105
Marvell Technology, Inc. (NASDAQ:MRVL) engages in the development and production of semiconductors. On March 13, Bank of America reiterated the stock as “Buy”, stating that the stock looks “attractive” ahead of a slew of positive catalysts.
“We maintain Buy and continue to view MRVL as a top-3 vendor of AI silicon along with NVDA and AVGO. MRVL stock looks attractive at 25x NTM [next twelve months] PE vs 32x historical median, with catalyst in coming tradeshows (OFC) and June analyst day.”
Analysts on Wall Street currently have a consensus “Buy” rating on the stock. The average price target of $115 implies a 67% upside, however, the Street-high target of $140 implies an upside of 103.6%.
5. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 107
Advanced Micro Devices, Inc. (NASDAQ:AMD) develops semiconductors, providing processors and graphics technologies for gaming, data centers, and AI-driven high-performance computing. On March 13, JPMorgan reaffirmed its “Neutral” rating on the stock with a $130 price target. The firm issued the rating after its recent meeting with CEO Lisa Su.
“Overall, the key message is that the team’s strong and diversified data center/enterprise/client compute portfolio will drive strong growth in CY25 – combination of share gains, improving demand/cyclical trends, and growing momentum for its next-gen AI compute solutions.”
The company anticipates “strong double-digit growth” driven by increasing market share in server CPUs, particularly among cloud providers and hyperscalers, as well as “improving server demand trends.” It also expects to add more share in desktop and notebook CPUs, and anticipates growth in gaming and embedded businesses as well as its AI GPU segment. AMD is also preparing to launch its next-gen MI350 accelerator, with notable early momentum. Sur believes the company will “transition existing customers” like Microsoft, Meta, and Oracle, as well as new major cloud providers, to the MI350 platform by mid-year.
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) is a technology company. On March 13, KeyBanc analyst Brandon Nispel reiterated an Underweight rating on the stock with a $200.00 price target. The firm stated that their survey checks show spending “data overall appears negative as Apple is tracking below historical seasonality, and the y/y growth went from nicely positive to a sharp decline.”
They noted how demand for the iPhone 16e has been disappointing due to the higher price point, while “demand for the iPhone 16 Plus model remains the lowest as users who want a larger display usually opt for the Pro Max”. Meanwhile, “iPhone 16 Pro Max still seeing the highest relative demand, followed by the Pro, as customers seek camera upgrades.”
KeyBanc noted that growth is expected to remain sluggish in the future. They believe that iPhone 16 and Apple Intelligence have failed to drive meaningful changes.
“With 2025 iPhone growth expectations now 1% (down from 7% just two quarters ago), and with key catalysts around Apple (NASDAQ:AAPL) Intelligence Siri upgrades now delayed, we think bulls will lose confidence in any upgrade cycle hope.”
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 223
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions, offering platforms for data centers, self-driving cars, robotics, and cloud services. One of the most notable analyst calls on Thursday, March 13, was for Nvidia Corporation. Jefferies reiterated the stock as “Buy”, stating that the firm is bullish ahead of the company’s artificial intelligence conference next week. It also believes that the company is well positioned for CPO [co-packaged optics], which is a data transmission technology used in AI.
“NVDA – Remains Kingmaker; Quickly Becoming a Leader in CPO: Nvidia’s position as a full system provider serves as considerable strategic advantage during periods of technological transitions.”
Analysts on Wall Street currently have a consensus “Buy” rating on the stock. The average price target of $175 implies a 51% upside, however, the Street-high target of $236 implies an upside of 104%.
2. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 234
Alphabet Inc. (NASDAQ:GOOG) is an American multinational technology conglomerate holding company wholly owning the internet giant Google, amongst other businesses. On March 12, the company announced the launch of its latest open-source AI model, Gemma 3. The Gemma 3 Model is a collection of lightweight, state-of-the-art open models built from the same research and technology that powers Google’s Gemini 2.0 models.
According to the company, these are one of Google’s most advanced, portable and responsibly developed open models yet. They can run fast, directly on devices, helping developers create AI applications, wherever people need them. Gemma 3 comes in a range of sizes (1B, 4B, 12B and 27B), and developers can choose the model that best suits their hardware and performance needs.
“Gemma 3 is here! Our new open models are incredibly efficient – the largest 27B model runs on just one H100 GPU. You’d need at least 10x the compute to get similar performance from other models”
-CEO Sundar Pichai.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 317
Microsoft Corporation (NASDAQ:MSFT) provides AI-powered cloud, productivity, and business solutions, focusing on efficiency, security, and AI advancements. On March 13, DA Davidson upgraded the stock to “Buy” from Neutral with a price target of $450, up from $425. According to the firm, Microsoft has moved to a more rational capex strategy and is “the best positioned Mag6 for a slowing consumer.”
“Our September downgrade was partially predicated on the poor ROI of Microsoft escalating the AI infrastructure buildout wars.”
However, the company now anticipated a flat sequential capex over the next couple of quarters with slower growth going into FY26. The firm has also pointed to Microsoft’s shift in AI infrastructure investment. The company is offloading certain capex burdens to partners like CoreWeave, Oracle, and SoftBank.
“The recent disclosure by Coreweave that Microsoft was a 62% customer indicates Microsoft is using Coreweave as overflow for workloads it is either not ready for or is not interested in.”
While we acknowledge the potential of MSFT 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 time frame. If you are looking for an AI stock that is more promising than MSFT 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 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
