In this article, we will take a detailed look at 10 AI Stocks Wall Street is Talking About.
Defiance ETFs CEO and CIO Sylvia Jablonski said in a recent program on Bloomberg that there are trillions of dollars of cash waiting on the sidelines ready to be invested in AI amid demand that is at an all-time high.
“There’s a biggest wealth transfer of our generation happening as we speak. And you know, Gen Z, you know, Gen Z, Millennial, Gen X kind of, you know, the younger traders are, this is where they’re allocating their funds to. And, you know, retail has definitely spoken, and institutions have definitely spoken, and they’re looking for that, that fourth industrial revolution allocation.”
Sylvia also talked about the relationship between quantum computing and AI and explained how this technology would improve AI systems:
“So chatbot AI is, you know, kind of version one. Quantum is taking everything to the next level. So you need quantum in order for it to be efficient. You need to process that data quickly. It will help, you know, essentially health care, cryptography, aerospace and defense, you know, blockchain technology. Anything you can think of will be better, too, with quantum supercomputing power.”
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For this article, we chose 10 AI stocks that are currently buzzing on the back of latest news and analyst ratings. With each stock 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
New York Wall Street sign.
10. Palantir Technologies Inc (NASDAQ:PLTR)
Number of Hedge Fund Investors: 43
James Demmert from Main Street Research recently said during a program on Schwab Network that Palantir Technologies Inc (NASDAQ:PLTR) stock can keep going higher. The analyst mentioned the possible growth catalysts for the stock beyond just the government contracts:
“They’ve already done their work on the government side of it, and now they’re starting to expand the commercial side of their business. That’s where I see a bigger growth area moving forward. …We have to think about Palantir Technologies Inc (NASDAQ:PLTR) as a company that helps enterprises, not just the U.S. government, which is obviously a huge and very consistent contract, particularly with this administration. They’re delving into the commercial sector—54% of their sales came from commercial, which was a huge number back in November when they reported. Industries like healthcare are embracing Palantir for disease tracking, and in the industrial sector, they’re using Palantir Technologies Inc (NASDAQ:PLTR) for applications like supply chain management.”
What makes Palantir Technologies Inc (NYSE:PLTR) one of the top AI stocks? Its technologies are actually solving the problems of businesses. Palantir’s data technology Ontology is solving the famous hallucination problem for AI systems, thanks to the company’s years of experience with military and defense systems. Earlier this year at an event with customers, Palantir Technologies Inc (NYSE:PLTR) shared some specifics on how its customers are being able to reduce costs and increase profits due to its artificial intelligence platform (AIP) that was launched about a year ago.
Airbus accelerated A350 production by 33%, BP reduced costs per barrel by 60%, and Jacobs Connect cut power usage by 30%. Panasonic decreased waste by 12%, ESI Group sped up ERP harmonization by 70%, and PG&E reduced transformer ignitions by 65%. Eaton boosted productivity by 25%, while Tyson Foods achieved $200 million in cost savings.
However, Palantir’s revenue growth is expected to slow over the next two years, with estimates suggesting a 22% YoY growth rate, potentially bringing revenues to around $4 billion by fiscal 2026. If Palantir Technologies Inc (NYSE:PLTR) can improve margins by 100 basis points annually, it would be able to generate about $1.5 billion in adjusted operating income by FY26, with a present value of $1.3 billion when discounted at 8%. Applying an S&P 500-like growth multiple of 2.5 to 2.75 times earnings, Palantir Technologies Inc (NYSE:PLTR) would have a P/E of 46, translating to a price target of $27, significantly down from its current price.
Fidelity Growth Strategies Fund stated the following regarding Palantir Technologies Inc. (NASDAQ:PLTR) in its Q3 2024 investor letter:
“Untimely ownership of Palantir Technologies Inc. (NASDAQ:PLTR) (+47%) also hurt the fund’s relative result. This software and services firm, which operates in both government and commercial segments, saw strong growth during the quarter, largely driven by its “AIP” – or Artificial Intelligence Platform – offering. In early August, the company reported Q2 financial results that mostly met somewhat lofty expectations. We established a sizable holding in Palantir Technologies during the quarter, and at quarter end it was the second-largest position and a slight overweight.”
9. Reddit Inc (NYSE:RDDT)
Number of Hedge Fund Investors: 52
Morgan Stanley recently upgraded Reddit (NYSE:RDDT) to Overweight and set its price target for the stock at $200. The analysts noted the company’s engagement and advertising pipelines as key drivers for expected industry-leading growth in users, time spent, and ad revenue.
“We’ve been wrong on the sidelines with RDDT year-to-date,” Morgan Stanley analysts said. “But as we look ahead to 2025, we believe we haven’t fully accounted for this scaling platform that is rapidly implementing its pipeline of engagement and advertising initiatives.”
Morgan Stanley also sees Reddit Inc (NYSE:RDDT) outsized 33% compound annual growth rate (CAGR) for revenue from 2024 to 2027 and high incremental margins driving $1 billion in EBITDA by 2026.
With over 80 million daily active users, Reddit Inc (NYSE:RDDT) remains one of the fastest-growing social media platforms in the world. While Facebook and Twitter show signs of maturing growth, Reddit Inc (NYSE:RDDT) still has huge upside potential as more and more people flock to Reddit discussion boards for authentic opinions and discussion. User input from millions of people on various topics freely accessible to anyone is Reddit Inc (NYSE:RDDT)’s moat. As of 2023, users posted 16 billion comments on the platform, according to the company. That’s why companies are flocking to pay money to Reddit to use its data to train their AI models. Reddit Inc (NYSE:RDDT) has a licensing agreement with Alphabet Inc.’s Google worth $60 million to help train large language models. Reddit Inc (NYSE:RDDT) has signed licensing agreements totaling $203 million, with terms lasting two to three years. The company generated approximately $20 million from AI content deals last quarter and expects to exceed $60 million by year-end. Reddit Inc (NYSE:RDDT) has signed licensing agreements totaling $203 million, with terms lasting two to three years.
8. Intel Corp (NASDAQ:INTC)
Number of Hedge Fund Investors: 68
Chris Grisanti, MAI Capital Management chief marketing strategist, said while talking to CNBC in a recent program that it’s becoming difficult for Intel to gain back its dominance in the industry. The analyst explained Intel Corp (NASDAQ:INTC) problems using an analogy of ICE to EV transition.
“We’ve done a lot of work on it, and we just think the transition from the CPU—Intel’s bread and butter—to the GPU, the graphics processor, which is Nvidia’s bread and butter, is profound. It’s almost like going from the internal combustion engine to the electric car. I don’t think it’s realistic to expect the companies that led the internal combustion revolution to lead the next revolution. That’s what’s happening with Intel Corp (NASDAQ:INTC). We just didn’t see in our research a way for them to reclaim the ascendance they had lost, and I think that’s becoming further and further in the rearview mirror.”
Intel’s (NASDAQ:INTC) challenges are far from over. Revenue saw a slight improvement in Q3 2024, but other aspects appear set to worsen over the next 12 to 24 months. Investors should be mindful that in 2025, Intel Corp (NASDAQ:INTC) is expected to generate $4–$5 billion in operating cash flow against a projected $20–$23 billion in capital expenditures. Intel reported $5.1 billion in operating cash flow and spent $18.1 billion in the first nine months of this year.
Intel bulls are linking their hopes with Intel Corp (NASDAQ:INTC)’s foundry business. But the segment posted weak results in both the second and third quarters, with a third-quarter revenue drop of 8% and an EBIT loss that grew to $5.8 billion. Once seen as a potential competitor to Taiwan Semiconductor Manufacturing (TSM), Intel’s steep third-quarter decline raised serious doubts about its manufacturing competitiveness.
Despite short-term efforts to revive growth, Intel Corp (NASDAQ:INTC) is facing a harsh reality. It lags significantly behind its competitors in developing mobile CPUs and GPUs. Intel’s missed opportunities in the mobile sector and delayed entry into AI GPUs have further eroded its market position, causing it to lose substantial ground to rivals.
ClearBridge Large Cap Value Strategy stated the following regarding Intel Corporation (NASDAQ:INTC) in its Q3 2024 investor letter:
“While the market environment clearly was a headwind in the third quarter, several of our large positions also faced challenging conditions, which negatively impacted results. In the information technology (IT) sector, Intel Corporation (NASDAQ:INTC) has come under additional pressure due to continued softness in the company’s core PC and server markets as well as concerns on the company’s longer-term competitive position. While Intel’s turnaround is not happening overnight, we are constructive on the outlook into 2025: the company’s product positioning should be much improved and it should be positioned to gain market share in a cyclical upswing in which it has strong earnings power. A somewhat adverse spending environment due to AI myopia has weighed on shares, but we still think the market is undershipping PCs and general servers following a COVID normalization period that saw demand get pulled ahead and then languish as companies froze IT budgets. The installed base is now getting older, and we expect a strong refresh cycle into next year. The delay is actually beneficial to Intel, whose product positioning will be all the more improved. While our investment case is not predicated on an M&A transaction, and we believe one is unlikely, the expression of interest in the company speaks to the value of the assets, which we think still trade at a meaningful discount to fair value.”
7. Oracle Corp (NYSE:ORCL)
Number of Hedge Fund Investors: 91
Talking about Oracle Corporation (NYSE:ORCL) and its latest results during a program on Schwab Network, The Futurum Group’s chief market strategist Cory Johnson talked about an AI offering of the database company and said it beat AWS and Microsoft in this domain:
“Oracle is going to offer 30,000 Nvidia Blackwell chips—131,072 in total—to customers who use their infrastructure of service, their cloud services. This will allow them to have supercomputing performance through Oracle Corp (NYSE:ORCL). This is just unimaginable and something nobody else has.
Amazon Web Services doesn’t have it, Microsoft Azure doesn’t have it, and Google Cloud doesn’t have it. Oracle is really stepping up with a service they had been building for many years, and they now realize that AI is the killer app.”
Johnson was talking about Oracle’s announcement in September when the company revealed its zettascale cloud computing clusters accelerated by the NVIDIA Blackwell platform. The company at the time was Oracle Cloud Infrastructure (OCI) and was taking orders for the largest AI supercomputer in the cloud—available with up to 131,072 NVIDIA Blackwell GPUs.
Mar Vista Global Strategy stated the following regarding Oracle Corporation (NYSE:ORCL) in its Q3 2024 investor letter:
“Oracle Corporation (NYSE:ORCL) is seeing revenue acceleration as it benefits from several years of investing in cloud-based solutions, which are now driving demand. The company is seeing broad-based demand for multiple of its cloud offerings, including its Fusion ERP Suite, its NetSuite offering and the Oracle Database. In addition to those anchor products, Oracle is also gaining traction with its OCI Gen 2 platform-as-a-service offering, which is winning mindshare from leading cloud customers, including Open AI, due to its favorable performance and cost metrics. This OCI Gen 2 solution is well-positioned to become a viable hyper scaler offering, furthered by Oracle’s recently announced partnerships with Microsoft Azure, Google Compute Platform, and Amazon’s AWS, which have all agreed to host Oracle’s flagship database in their respective hyper-scaler cloud environments. We believe this could support a third leg of growth for Oracle as its large installed base of database customers shift from on-premises to cloud deployments. As database customers migrate to a Cloud subscription model, Oracle could increase database software support revenues by 3-to-5 times. We continue to believe Oracle is well-positioned to grow intrinsic value strong double-digits over our investment horizon.”
6. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Investors: 107
Bank of America recently downgraded Advanced Micro Devices, Inc. (NASDAQ:AMD) citing lower estimates for artificial intelligence and PC-related revenue in 2025.
In a note to clients, Bank of America analyst Vivek Arya highlighted the competitive environment, particularly from Nvidia (NVDA), as well as the “growing” cloud preference for custom chips from Broadcom (AVGO) and Marvell Technology (MRVL), which could limit Advanced Micro Devices, Inc. (NASDAQ:AMD) potential to gain market share. Arya lowered his rating on AMD to Neutral from Buy and cut his 2025 and 2026 earnings estimates by 6% and 8%, respectively. He also lowered his price target to $155 from $180.
“While our forecast suggests solid 54% year-over-year growth, the limited opportunity to exceed higher street estimates could continue to weigh on AMD’s stock,” Arya wrote. “AMD’s pipeline remains more than a year behind NVDA’s (which is accelerating) and lacks a competitive networking (switching, optics) portfolio.”
Advanced Micro Devices (NASDAQ:AMD) bulls believe the market should stop comparing the company’s chips with Nvidia and focus on its data-center growth and its competitive edge over other players like Intel. Advanced Micro Devices (NASDAQ:AMD)’s strong growth in the data center segment is indeed impressive, driven by Instinct GPU shipments and strong sales of EPYC CPUs. Advanced Micro Devices (NASDAQ:AMD) will continue to benefit from organic growth catalysts in this segment despite the competition from Nvidia. According to Goldman Sachs Research, global data center demand could surge by 160% by 2030. In the U.S., data centers are projected to use 8% of total power by 2030, up from 3% in 2022. McKinsey estimates that adding the required U.S. capacity will need over $500 billion in infrastructure investment by the decade’s end.
Advanced Micro Devices (NASDAQ:AMD)’s forward adjusted PEG ratio is about 40% lower than the median for the tech sector (XLK).
Columbia Threadneedle Global Technology Growth Strategy stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q2 2024 investor letter:
“Shares of Advanced Micro Devices, Inc. (NASDAQ:AMD) lagged the market after the company reported earnings results that, while generally strong, left the market wanting more. The company reported AI revenue of ~$600 million and increased its forward-looking outlook for AI revenue growth, but shares took a breather, as results missed elevated expectations after the stock’s strong performance. Despite the stock’s underperformance during the quarter, the company’s AI story remains very much intact. The growth outlook for the company is supported by better cloud demand, enterprise recovery and continued share gains ahead of the company’s new AI product launch.”
5. Salesforce Inc (NYSE:CRM)
Number of Hedge Fund Investors: 116
Gene Munster, Deepwater Asset Management managing partner, said while talking to CNBC in a latest program that Salesforce’s latest guidance wasn’t as good as it seemed but the stock shot up mostly because of the company’s CEO comments during the earnings call that gave an insight to investors about the potential of Salesforce Inc (NYSE:CRM).
“I think the substance of why this stock is moving like it is basically comes down to Marc Benioff. He put on a lecture—call it 20-plus minutes—on the potential around AI. You could go to that transcript, throw a dart at it, and land on some incredible comment about how AI is going to reshape the world and ultimately reshape Salesforce.
The punchline is that they believe in this digital workforce, these agents, and they’re the only Salesforce Inc (NYSE:CRM) that can really bring it all together—across data, across different segments of a business. That’s the point. I think the light has gone on for some software investors today.
Even with that punky guidance, the move in the stock is evidence that the AI trade is alive and well.”
Polen Focus Growth Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its Q3 2024 investor letter:
“In the third quarter, we purchased new positions in Apple and Oracle and eliminated our small positions in Nike and Salesforce, Inc. (NYSE:CRM). We exited our position in Salesforce to fund better opportunities in Shopify and MSCI. Salesforce is seeing slower revenue growth than we would have expected, given the weakening macroeconomic environment. Furthermore, since its core end markets in customer relationship management (“CRM”) and Service are fairly mature, a lower growth level versus our expectations could persist for some time.”
