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.
7. Varonis Systems, Inc. (NASDAQ:VRNS)
Average Upside Potential: 35.3%
Number of Hedge Fund Holders: 38
Varonis Systems, Inc. (NASDAQ:VRNS) offers software products and services that continuously discover and classify critical data, remediate exposures, and detect advanced threats with AI-powered technology. The successful integration of GenAI into the company’s product suite can be a significant growth driver. With companies increasingly seeking AI-powered security solutions, Varonis Systems, Inc. (NASDAQ:VRNS)’s GenAI offering can differentiate itself in the market, resulting in increased customer acquisition and higher-value contracts.
Also, the increased adoption of MDDR services can offer a steady stream of recurring revenue and deepen customer relationships, resulting in faster ARR growth and improvement in customer retention rates. Varonis Systems, Inc. (NASDAQ:VRNS)’s strong position in data security, together with the higher prioritization of cybersecurity investments by organizations, continues to create a positive market environment. Overall, the growth in the AI industry will also support Varonis Systems, Inc. (NASDAQ:VRNS)’s growth prospects considering higher reliance on data, increasing demand for automation and intelligent analytics, and requirement for advanced threat detection. With more companies adopting AI, it is expected that they will manage and generate increasingly complex and large data sets. Therefore, the need for strong data governance, security, and compliance solutions is projected to grow, offering an enhanced market for Varonis Systems, Inc. (NASDAQ:VRNS)’s products.
6. NVIDIA Corporation (NASDAQ:NVDA)
Average Upside Potential: 35.6%
Number of Hedge Fund Holders: 223
NVIDIA Corporation (NASDAQ:NVDA) offers graphics and compute and networking solutions. Mark Lipacis, an analyst from Evercore ISI, maintained a “Buy” rating on the company’s stock with the same price objective of $190.00. As per the analyst, the company continues to be a preferred platform for hyperscalers because of its strong ecosystem, and demand for its GPUs has been outstripping supply. Additionally, the advancements in AI, including improved cost efficiencies and higher computational needs for multi-modal models, can fuel the adoption of NVIDIA Corporation (NASDAQ:NVDA)’s technology, aiding its long-term growth thesis. Elsewhere, DBS also maintained a “Buy” rating with a price objective of $160.00.
The build-out of AI infrastructure has been a major tailwind for the company. Cloud service providers, enterprises, and even sovereign states have been fueling demand for AI computing power. This trend can help NVIDIA Corporation (NASDAQ:NVDA) sustain its growth. The accelerated adoption of AI throughout industries, spanning healthcare to finance, can fuel strong demand for the company’s products and services. NVIDIA Corporation (NASDAQ:NVDA)’s dynamic position in the AI ecosystem places it well to improve its share of the growing market.
Baron Funds, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“NVIDIA Corporation (NASDAQ:NVDA) is a fabless semiconductor company specializing in compute and networking systems for accelerated computing and AI. Shares increased 10.6% for the quarter and were up 170.3% in 2024, on strong quarterly results, with record data center revenue, which surpassed $30 billion, driven by demand for its Hopper GPUs, while Gaming and Automotive also beat expectations. Key investor debates include the continued progress on improving the capability of AI models (e.g. scaling laws – see more in the outlook section below), transition from AI training to inference and the potential impact on competitive dynamics, and the pace of adoption of AI across industries. Despite near-term uncertainties, we maintain conviction in NVIDIA’s leadership in accelerated computing, driven by its ability to innovate and adapt to market shifts. With robust margins, a dominant data center presence, and a growing ecosystem across hardware and software, we believe NVIDIA is well positioned to capitalize on the structural growth in AI and high-performance computing.”
5. Marvell Technology, Inc. (NASDAQ:MRVL)
Average Upside Potential: 40.5%
Number of Hedge Fund Holders: 105
Marvell Technology, Inc. (NASDAQ:MRVL) is a critical player in the broader AI industry as it designs custom silicon solutions, which include AI accelerators that are optimized for hyperscale data centers and cloud providers. Vivek Arya, an analyst from Bank of America Securities, reiterated a “Buy” rating on the company’s stock with the same target price of $150.00. The analyst’s rating was mainly backed by Marvell Technology, Inc. (NASDAQ:MRVL)’s advancements in AI technology and strategic partnerships. The analyst sees strong financial performance in the upcoming quarters, stemming from its healthy presence in AI optics and custom AI ASICs, mainly with well-established cloud service providers such as AWS, Google, and Microsoft.
Furthermore, the analyst lauded Marvell Technology, Inc. (NASDAQ:MRVL)’s strong pipeline and execution capabilities, which are aided by increasing cloud capital expenditures and a growing total addressable market for AI. The company has the potential to enhance its share of the AI accelerator market, with Arya projecting strong growth in both compute and optics segments. If Marvell Technology, Inc. (NASDAQ:MRVL) can enhance its market share in such areas, it can result in significant revenue gains over the upcoming few years, says the analyst.
Carillon Tower Advisers, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Marvell Technology, Inc. (NASDAQ:MRVL) is a leading provider of semiconductor chips for data centers. This past quarter, management highlighted very strong orders coming from customers in the artificial intelligence (AI) space as well as design wins for future AI-related chips. Management shared a long-term view for a revenue target that was above expectation.”
4. C3.ai, Inc. (NYSE:AI)
Average Upside Potential: 42.4%
Number of Hedge Fund Holders: 25
C3.ai, Inc. (NYSE:AI) operates as an enterprise AI software company. The company’s platform for building and deploying AI applications, together with its pre-built solutions for numerous industries, places it well to improve market share. One of the critical developments for the company has been its expanded partnership with Microsoft. The collaboration focuses on accelerating enterprise AI adoption by integrating C3.ai, Inc. (NYSE:AI)’s suite of Enterprise AI application software on the Microsoft Commercial Cloud Portal.
Through this integration, the company can gain access to Microsoft’s significant global sales force and customer base. This collaboration can result in the acceleration of customer acquisition and revenue growth, mainly in enterprise markets where Microsoft has a healthy presence. Next, C3.ai, Inc. (NYSE:AI) appears to be well-placed for growth amidst elevated demand for AI in the federal sector. With government entities increasingly prioritizing AI investments, the company remains well-placed to capture an improved market share. Its existing relationships can offer a competitive advantage and fuel growth moving forward.
On a related note, C3.ai, Inc. (NYSE:AI) and Collins Aerospace, an RTX business, announced expanded joint initiatives to develop and deliver AI solutions throughout the defense and intelligence space. The initiatives focus on leveraging AI for critical defense operations, accelerating technology adoption in support of federal priorities.
3. Credo Technology Group Holding Ltd (NASDAQ:CRDO)
Average Upside Potential: 50.3%
Number of Hedge Fund Holders: 43
Credo Technology Group Holding Ltd (NASDAQ:CRDO) is a critical player in the AI ecosystem as it offers advanced semiconductor solutions supporting high-performance data transfer and interconnects that are important for AI-driven applications. The broader AI infrastructure market continues to experience strong growth, courtesy of higher adoption of AI technologies throughout various industries. Credo Technology Group Holding Ltd (NASDAQ:CRDO)’s emphasis on power-efficient solutions for AI clusters remains in line with the trend, with data centers seeking to balance performance with energy consumption.
As AI workloads grow in complexity and scale, there are expectations that the demand for high-speed, efficient connectivity solutions will increase. Credo Technology Group Holding Ltd (NASDAQ:CRDO)’s expertise in this area can place it as a critical enabler of AI infrastructure development, potentially resulting in sustained long-term growth with the expansion of the AI market. As per Credo Technology Group Holding Ltd (NASDAQ:CRDO)’s chief, the company is in the early stages of widespread market adoption and remains well-placed as the market leader. Notably, AI-driven demand for high-speed, power-efficient, and reliable connectivity has been accelerating.
TimesSquare Capital Management, an equity investment management company, released its Q2 2024 investor letter. Here is what the fund said:
“Among the wide variety of Information Technology companies, we prefer critical system providers, specialized component designers, systems that improve productivity or efficiency for their clients, and others that closely tie to increasing shares of corporate IT budgets. Credo Technology Group Holding Ltd (NASDAQ:CRDO), a supplier of high-speed connectivity solutions, surged ahead by 51%. The company reported inline April quarter results and management’s July quarter guidance met expectations; AI spending is a growth driver.”
2. Astera Labs, Inc. (NASDAQ:ALAB)
Average Upside Potential: 60.0%
Number of Hedge Fund Holders: 51
Astera Labs, Inc. (NASDAQ:ALAB) is engaged in designing, manufacturing, and selling semiconductor-based connectivity solutions for cloud and AI infrastructure. Its focus on high-performance connectivity solutions for data centers and AI applications placed it well in the dynamic technological landscape. With AI applications becoming increasingly prevalent throughout industries, the demand for high-performance computing and data processing capabilities is projected to significantly increase. Astera Labs, Inc. (NASDAQ:ALAB)’s specialized connectivity solutions are important in enabling the high-speed, low-latency data transfers needed in AI and data center environments.
Furthermore, the company’s close relationship with NVIDIA strengthens its position to benefit from this dynamic market. With the increased AI adoption, Astera Labs, Inc. (NASDAQ:ALAB) can see sustained demand for its products, fueling revenue growth and market expansion. Analyst Blayne Curtis of Jefferies maintained a “Buy” rating on the company’s stock with a price target of $125.00. As per the analyst, Astera Labs, Inc. (NASDAQ:ALAB) exhibited robust performance metrics, mainly with its ASIC ramps which involve major hyperscalers including Amazon and Google. Such developments, along with expected contributions from NVDA custom-Blackwell designs in H2 2025 paint an optimistic outlook.
Therefore, with the continued growth of the AI industry, Astera Labs, Inc. (NASDAQ:ALAB) is expected to benefit from the elevated demand for high-performance chips and connectivity solutions required to aid AI applications, mainly in edge computing and data centers. Fred Alger Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Astera Labs, Inc. (NASDAQ:ALAB) is a semiconductor company specializing in connectivity solutions for data-centric systems, including cloud computing, artificial intelligence, and machine learning. Its products optimize data flow and performance in servers, GPUs, and AI accelerators, addressing bottlenecks in high-performance computing environments. The company’s Intelligent Connectivity Platform (ICP) integrates advanced semiconductor hardware with the proprietary COSMOS software suite, delivering customizable and cost-effective solutions. Astera’s Platform-Specific Standard Products (PSSP) enhance flexibility with features such as predictive analytics, monitoring, and troubleshooting. Backed by strong relationships with leading cloud and AI providers, we believe Astera is well positioned in rapidly growing markets, demonstrating high profitability and industry-leading gross margins. During the quarter, shares contributed to performance after reporting better-than-expected fiscal third-quarter results, with revenues and gross margins exceeding analyst estimates. Specifically, revenue growth spanned all four product segments, led by accelerated custom silicon sales and robust GPU demand. Management also raised fiscal fourth-quarter guidance, citing expanding product ramps and a broader customer base.”
1. Semtech Corporation (NASDAQ:SMTC)
Average Upside Potential: 82.9%
Number of Hedge Fund Holders: 57
Semtech Corporation (NASDAQ:SMTC) is engaged in providing key semiconductor solutions that enable the infrastructure needs for AI applications. UBS initiated coverage of the company’s stock with a “Buy” rating and a price objective of $85. As per the analyst, it happens to be an analog company making inroads into AI data center networking due to a key content win for its CopperEdge product in Nvidia’s Blackwell platform. Semtech Corporation (NASDAQ:SMTC)’s CopperEdge product provides a cost-effective solution for reducing noise in AI data center networking, believes the analyst.
In Q3 2025, the company witnessed broad-based growth throughout each of its end markets, and mainly in a data center, where Semtech Corporation (NASDAQ:SMTC) expects AI-driven product demand to be a long-term and a transformational growth engine. As AI expands throughout different industries, the company’s role in offering key connectivity and power solutions has placed Semtech Corporation (NASDAQ:SMTC) well from increased demand for scalable and efficient AI infrastructure. Notably, AI models need specialized hardware which are required to be energy efficient and high-performance.
Heartland Advisors, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Technology. Semtech Corporation (NASDAQ:SMTC), which manufactures optical components and technology solutions used in data centers and IoT (Internet of Things) systems, is a position we initiated in the third quarter and increased our exposure to in the fourth.
Semtech, one of our Strategy’s best performers in the past quarter, is an example of a stock we’ve owned in the past and recently returned to as circumstances improved. We last held SMTC a few years ago, before it announced its acquisition of Sierra Wireless. The company levered up in late 2022 to make the purchase. Soon after the deal was completed, the stock sold off and the existing management team was replaced. The new management team is now seeking to divest some of Sierra Wireless’ assets to de-lever and regain focus on Semtech’s core business.
We’ve kept the company on our radar since the acquisition. Semtech’s signal integrity business, the company’s crown jewel franchise, is a backbone component of many data centers. With growing demand for data centers in the AI boom, we believe this could be a real opportunity for the company. New management has been clear they intend to divest non-core business lines to reduce leverage, which should unlock additional value. Yet the stock currently trades at a 20-25% discount to its peers based on EBITDA.”
While we acknowledge the potential of SMTC as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than SMTC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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