In this article, we will discuss the 10 AI Stocks that will skyrocket.
DWS, an expert in active, passive, and alternative asset management, believes that expectations around the usage of Artificial Intelligence (AI) across industries acted as one of the critical stock market drivers over the previous 2 years. In 2025, AI developments are expected to make significant strides throughout various domains. The firm anticipates a shift from generalized applications to industry-specific solutions. Notably, companies are expected to refine their strategies to target specific use cases providing measurable results.
Generative AI CapEx Will Continue to Increase, Says DWS
DWS, while quoting Bloomberg estimates, highlighted that some of the big technology firms can collectively increase capex to ~$200 billion in 2025. More than $90 billion in incremental capital spending in 2024-25 vs. 2023 is projected to be earmarked mainly for expanding Gen AI infrastructure. On a related note, Goldman Sachs Asset Management believes that the AI capex from well-established hyperscalers is projected to surpass $250 billion in 2025. This hints at optimism that hyperscalers remain confident in the ROI (Return on Investment) they will witness from such significant investments.
DWS sees the de-globalization movement spreading to data and AI, with countries spending a significant amount to subsidize “sovereign AI.” To provide a brief overview, it refers to a nation’s capabilities to establish, control, and deploy its own AI technologies. It spans both physical and data infrastructures. Notably, in the past year, the governments of the US and China have pledged $40 billion – $50 billion each dedicated towards AI investments.
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Key AI Trends to Watch Out
Appinventiv believes that conversational AI, Predictive Analytics, AI Democratization, Agentic AI, and Generative AI, among others, are some of the key trends to watch out for. While conversational AI focuses on streamlining customer interactions, generative AI has been revolutionizing content creation across fields including healthcare. Additionally, multi-modal Al remains one of the most popular AI trends in business. It focuses on leveraging machine learning trained on multiple modalities, including speech, images, and traditional numerical data sets. As a result, there will be a more holistic and human-like cognitive experience.
Appinventiv opines that companies can capitalize on multi-modal Al and develop intelligent systems analyzing diverse data streams, which can help improve natural language understanding and voice recognition for better user experiences.
Amidst such growth trends, let us now have a look at the 10 AI Stocks That Will Skyrocket
A close up of a circuit board, its microchips creating a powerful computing system.
Our Methodology
To list the 10 AI Stocks That Will Skyrocket, we sifted through several online rankings and shortlisted the companies catering to the broader AI sector. Next, we chose the ones that analysts see significant upside to. Finally, the stocks are arranged in ascending order of their average upside potential, as of February 24. We also mentioned hedge fund sentiments around each stock, 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).
10 AI Stocks That Will Skyrocket
10. Adobe Inc. (NASDAQ:ADBE)
Average Upside Potential: 33.0%
Number of Hedge Fund Holders: 117
Adobe Inc. (NASDAQ:ADBE) is involved in the broad-based AI business mainly via its development of AI-powered tools and technologies that are focused on enhancing creativity and productivity. Adobe Firefly is a suite of generative AI-powered features for creating image content. Analyst Keith Weiss from Morgan Stanley maintained a “Buy” rating on the company’s stock with a $660.00 price objective. As per the analyst, the rollout of the Firefly Video model with its tiered pricing remains a strategic step towards expanding user adoption and improving monetization opportunities as Adobe Inc. (NASDAQ:ADBE)’s functionality grows. This pricing strategy can fuel adoption and retention while, at the same time, helps in maintaining competitive advantages in areas such as copyright safety and integration with existing Adobe products.
Adobe Inc. (NASDAQ:ADBE)’s significant investments in AI technology, mainly via its Firefly platform, can open up new revenue streams and enhance its addressable market. Through the integration of AI capabilities across its product suite, the company will be able to enhance the value proposition of its existing offerings and attract new users. Overall, Adobe Inc. (NASDAQ:ADBE)’s strategy, AI innovation, and significant cross-cloud opportunity place it well for 2025 and beyond.
Polen Capital, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“We added to several existing positions in the quarter including Adobe Inc. (NASDAQ:ADBE), Workday, Shopify, MSCI, and Paycom Software. We feel Adobe is poised for re-accelerating revenue and earnings growth partially due to the monetization of its Firefly GenAI product embedded in its creative software.”
9. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Average Upside Potential: 34.6%
Number of Hedge Fund Holders: 186
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) remains a leading player in the broader AI industry mainly via its role as a leading semiconductor foundry. The company’s involvement remains important because AI systems need specialized, high-performance chips, and it happens to be one of the leading manufacturers of such chips. The ongoing AI boom provides a significant opportunity for Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s long-term growth.
With AI becoming more pervasive throughout different industries, spanning smartphones to data centers, the demand for AI-specific chips is projected to grow. The company’s expertise in manufacturing high-performance, low-power chips makes it a leading beneficiary of such a trend. Furthermore, the AI boom has been fueling innovation in chip design, resulting in new types of processors and accelerators. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s collaborative approach with customers and advanced packaging technologies help it stay in the advantageous position of such innovations, potentially resulting in new revenue streams and market opportunities. Bank of America Securities analyst Brad Lin reiterated a “Buy” rating on the company’s stock, setting a price target of $250.00.
As per the analyst, the revenue growth for 2025 is expected to be aided by strong demand in AI and high-performance computing sectors, together with increased average selling prices for leading-edge technologies and advancements in packaging. Also, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is projected to maintain peak utilization rates for its 3nm and 5nm technologies, courtesy of AI and smartphone applications. Baron Funds, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Semiconductor giant Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) contributed in the fourth quarter due to a cyclical recovery in semiconductors and significant incremental demand for AI chips. We retain conviction that TSMC’s technological leadership, pricing power, and exposure to secular growth markets, including AI/high-performance computing, automotive, 5G, and internet of things, will allow the company to sustain strong double-digit earnings growth over the next several years.”
8. Micron Technology, Inc. (NASDAQ:MU)
Average Upside Potential: ~34.6%
Number of Hedge Fund Holders: 94
Micron Technology, Inc. (NASDAQ:MU) has been playing a critical role in the AI business by providing high-performance memory and storage solutions important for AI workloads. The expansion of the AI industry will offer a significant opportunity for the company’s memory solutions. With AI applications becoming more prevalent throughout industries, the demand for high-performance, high-capacity memory can grow. AI workloads, mainly in areas such as machine learning and deep neural networks, need significant data to be processed quickly.
This fuels the demand for memory solutions which can offer high bandwidth, low latency, and large capacity. Micron Technology, Inc. (NASDAQ:MU)’s portfolio of advanced memory products, consisting of HBM, DDR5, and high-capacity NAND solutions, appears to be well-placed to meet such requirements. Furthermore, the strong AI momentum has been fueling investment in data center infrastructure. With cloud service providers and enterprises expanding AI capabilities, they will need more advanced memory solutions in a bid to support higher computational needs. Micron Technology, Inc. (NASDAQ:MU)’s enterprise SSD and server DRAM products appear to be well-placed to capitalize on this trend.
With AI continuing to spread across various sectors, spanning automotive to healthcare to industrial applications, Micron Technology, Inc. (NASDAQ:MU)’s diverse product portfolio and technological leadership place it well to benefit from long-term trends throughout multiple end markets.
