In this article, we will be taking a look at the 10 best artificial intelligence (AI) stocks to buy according to financial media.
CEO Says AI is “Gonna Keep Providing Value”
Artificial Intelligence (AI) has now become a technology that most people are increasingly familiar with. With AI seeping into almost every aspect of life, from the ads you see on social media apps to the autonomous driving cars many consumers are shifting to. It’s not an overstatement to say that AI has become part and parcel of everyday life for every person using technology today. Considering the widespread use and application of AI technology, this area of the market has become an exciting area to invest in today.
With the recent big tech companies’ earnings being released, many investors are wondering what role AI is playing in the tech markets today, and how it will develop. On August 2, Databricks CEO Ali Ghodsi joined CNBC’s “The Exchange” to discuss this very development. Here are some of his comments:
“I think what’s happening is two things. On the one hand, it’s macroeconomy, which has been sort of turbulent for a long period of time, and it seems to be now coming to an end, where we see it on the job market and people are seeing it on inflation and the 10-year coming down and so on. On the other hand, we see AI. People are very excited, they know it’s gonna absolutely change the whole world, and that huge investments have been done by the hyperscalers in AI. But for us as a company, we’ve been investing in data and AI for the 10 years, and you know we see a steady growth revenue and customers getting value out of it, but theres been a huge deployment of capital… I think AI is gonna be amazing, it’s gonna keep providing value.”
Ghodsi’s comments clarify the market’s current opinion on AI, namely that this is an area of tech that cannot be ignored and must be invested in to the maximum. However, in light of such a market opinion, many investors may be beginning to wonder whether the huge amounts of investments being made in AI are justified or whether we are merely in what some may call an “AI bubble” that is definitely going to burst. Considering the immense value to be found in AI, though, many investors believe that such huge deployments of capital are, in fact, justified.
West Coast’s Smartphone Giant: AI Stock or Not?
Considering the above, it’s unsurprising that several big tech companies are part of the rat race to invest in and develop AI technologies. However, one notable absence in most lists of the best AI stocks to buy that are being made by financial media reporters is that of Apple. Many investors are beginning to take note of the fact that it is lagging behind other big tech companies that are rapidly developing AI tech. On August 6, Lightshed Partners’ Walter Piecyk’s shared his view on the smartphone maker’s AI moves on CNBC’s “Squawk Box”.
“I signed up as a developer for the latest development or the latest release of iOS 18. I’ve been using the intelligent series – not that much better… There’s a lot of work that’s obviously gonna be done between now and when this is formally released. I just don’t see it, for this year and for next year having some a big impact.”
Investors may be better served by shifting to purer AI plays. For this reason, we have compiled a list of the best AI stocks to buy according to financial media, to offer insights into what companies are actually doing well in the AI space today. Our list includes some of the best AI stocks to buy, according to analysts, and some of the companies offering the top AI SEO tools in 2024 as well.
A computer screen showcasing Artificial Intelligence and Machine Learning algorithms at work.
Our Methodology
We selected AI stocks that made the top AI stocks lists of various financial news reporters, such as Forbes, Motley Fool, Nasdaq, US News, and NerdWallet. We then shortlisted and ranked the stocks based on the number of hedge funds holding stakes in them, from the lowest to the highest, by using Insider Monkey’s hedge fund data for the first quarter of 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 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
10 Best Artificial Intelligence (AI) Stocks To Buy According to Financial Media
10. Intuitive Surgical, Inc. (NASDAQ:ISRG)
Number of Hedge Fund Holders: 79
Intuitive Surgical, Inc. (NASDAQ:ISRG) is a healthcare equipment provider based in Sunnyvale, California. The company is focused on improving robotic surgery procedures with artificial intelligence. In July 2023, the company launched its first AI-based digital tool, Case Insights, to enable surgeons to study their procedure data and adapt their approaches to improve performance for future patients. Upon the launch of this product, the company’s CEO, Gary Guthart, noted that Intuitive Surgical, Inc.’s (NASDAQ:ISRG) AI technologies could help in shortening surgeon training times and they could also improve the efficiency of surgical programs to reduce costs. Considering the revolutionary ideas being spearheaded by Intuitive Surgical, Inc. (NASDAQ:ISRG) in the field of medical AI, this stock is worth picking up for AI investors looking for a unique play in the market.
There were 79 hedge funds long Intuitive Surgical, Inc. (NASDAQ:ISRG) in the first quarter, with a total stake value of $6.4 billion. ARK Investment Management was the largest shareholder in the company, holding 33,280 shares.
Baron Funds mentioned Intuitive Surgical, Inc. (NASDAQ:ISRG) in its second-quarter 2024 investor letter:
“Intuitive Surgical, Inc. (NASDAQ:ISRG) manufactures the da Vinci Surgical System, a robotic surgical system used for minimally invasive procedures. The stock performed well due to excitement about the company’s new robotic surgical system, the da Vinci 5, which offers enhanced imaging, force feedback, and other improvements. We continue to believe Intuitive has durable competitive advantages and will remain the market leader in robotic surgery. We think the company has a long runway for growth as more procedures are performed with the company’s equipment.”
9. ServiceNow, Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 90
ServiceNow, Inc. (NYSE:NOW) is a systems software company based in Santa Clara, California. Over the past three years, the company has seen good EPS growth, with analysts expecting it to continue with growth of 20.9% over 2025. According to Forbes, ServiceNow, Inc. (NYSE:NOW) is a rare growth stock with the tendency to trade cheaply, making it a potentially lucrative and attractive investment for growth investors. The company should also be considered in light of its growing influence in the Asia-Pacific region, with a strong focus on leveraging AI to help various organizations orchestrate business processes across business functions. ServiceNow, Inc. (NYSE:NOW) is particularly emphasizing generative AI to help its customers streamline workflows and processes.
We saw 90 hedge funds long ServiceNow, Inc. (NYSE:NOW) in the first quarter, with a total stake value of $6.2 billion.
8. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 108
Adobe Inc. (NASDAQ:ADBE) is an application software company based in San Jose, California. The company’s focus is on the production of creative content software and applications for marketing and e-commerce. Adobe Inc. (NASDAQ:ADBE) is well known in the AI space for its Firefly generative machine learning model, which is generating significant customer interest across is other products, such as Photoshop and Illustrator. The company has also expanded the reach of its Sensei AI and machine learning tech to its Adobe Analytics, Campaign, and Target products, and it has also announced the arrival of the Acrobat AI assistant for its enterprise customers to help boost document productivity. Adobe Inc. (NASDAQ:ADBE) is an attractive AI stock to buy because of its practice of leveraging the growing market for AI products in the creative content software space.
Adobe Inc. (NASDAQ:ADBE) had 108 hedge funds long its stock in the first quarter, with a total stake value of $9 billion. Cantillon Capital Management was the largest shareholder in the company, holding 439,729 shares.
Here’s what Polen Capital said about Adobe Inc. (NASDAQ:ADBE) in its second-quarter 2024 investor letter:
“With Adobe Inc. (NASDAQ:ADBE), in some ways, we see it as a microcosm of the market’s “shoot first, ask questions later” approach to categorizing AI winners and losers. In the early part of last year, Adobe came under pressure with a perception that generative AI (GenAI) would represent a material headwind to their suite of creative offerings. In short order, the company introduced its GenAI offering, Firefly, which shifted the narrative to Adobe as a beneficiary with a real opportunity to monetize GenAI in the near term. Earlier this year, that narrative was again challenged as the company reported a slight slowdown in revenue growth. Results in the most recent quarter were robust as the company raised its full-year forecast across a number of key metrics and showcased better-than-expected results.”
7. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 124
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a semiconductor company based in Santa Clara, California. The company is the world’s second-largest producer of x86 CPUs and discrete GPUs. Its new MI300 Instinct chips are also offering significant competition to other semiconductor players in the market, such as NVIDIA Corporation (NASDAQ NVDA), and can even be said to have an advantage over its competitors, seeing as the MI300 chips are going for a fraction of the price of the H100 GPUs produced by NVDA, despite their performance being almost at par with each other. According to Motley Fool, the lower pricing of Advanced Micro Devices, Inc.’s (NASDAQ:AMD) chips are making this company a compelling alternative for data center customers, highlighting the fact that Advanced Micro Devices, Inc. (NASDAQ:AMD) may be a good AI stock pick for investors considering the high demand for its more reasonably priced chips in the market.
A total of 124 hedge funds were long Advanced Micro Devices, Inc. (NASDAQ:AMD) in the first quarter, with a total stake value of $15.6 billion.
6. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 135
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is another semiconductor company on our list of the best AI stocks to buy. It is based in Hsinchu City, Taiwan. The company is the world’s largest pure-play semiconductor foundry and is known for its manufacturing of all advanced AI semiconductors for other players in the market, such as NVIDIA. According to US News, the AI-driven demand being experienced by Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) at present can only be described as “insatiable,” especially in light of the growing demand for upgrades from traditional servers to AI servers. Considering this, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a stock that must be kept a close eye on in the AI space.
There were 135 hedge funds long Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in the first quarter, with a total stake value of $16.6 billion. Cantillon Capital Management was the most prominent shareholder in the company, holding 3,085,093 shares.
Wedgewood Partners mentioned Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its second-quarter 2024 investor letter:
“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was a top contributor to performance during the quarter. The Company’s revenue growth continued to accelerate due to the rollout of its leading-edge N3 manufacturing node along with strong demand for chips used in artificial intelligence applications. Unlike in traditional CPUs, the Company has blue-chip customers, monopoly market share for manufacturing AI chips, such as GPUs. The Company’s aggressive investment in capital equipment several years ago should continue to pay off as fabless chip designers proliferate and require a manufacturing partner to shoulder capex risk. The Company’s continued aggressive investment and deployment in semiconductor manufacturing equipment is not an easily replicable competitive advantage.”
5. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 186
NVIDIA Corporation (NASDAQ:NVDA) is a semiconductor company based in Santa Clara, California. The company is well known for its graphics cards and microchips for autonomous driving vehicles and AI applications. NVIDIA Corporation’s (NASDAQ:NVDA) exposure to the AI space is one of the main reasons behind the company’s stellar performance over the past several years, according to US News. Additionally, Nasdaq estimates that NVIDIA Corporation (NASDAQ:NVDA) holds about 70% to 95% of the AI chip market. As such, this is a stock worth picking up, especially in light of its evident domination of the AI space today.
NVIDIA Corporation (NASDAQ:NVDA) was spotted in the 13F holdings of 186 hedge funds in the first quarter, with a total stake value of $48.3 billion.
4. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 222
Alphabet Inc. (NASDAQ:GOOGL) is a big tech company based in Mountain View, California. The company uses artificial intelligence in almost every aspect of its business. In 2023, Alphabet Inc. (NASDAQ:GOOGL) also launched its own AI chatbot by the name of Bard, which was followed by the launch of the Gemini AI model in December 2023. In May 2024, Alphabet Inc. (NASDAQ:GOOGL) continued its AI product launches with the announcement of its AI Overview, a model that provides AI-generated summaries at the top of Google search results. These product offerings highlight the versatility of Alphabet Inc. (NASDAQ:GOOGL) in the AI space, which is an essential quality for any tech company operating in the AI space today. This makes Alphabet Inc. (NASDAQ:GOOGL) a particularly attractive AI stock to consider investing in today.
Alphabet Inc. (NASDAQ:GOOGL) was seen in the portfolios of 222 hedge funds in the first quarter, with a total stake value of $32.3 billion.
The London Company mentioned Alphabet Inc. (NASDAQ:GOOGL) in its second-quarter 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOG) – GOOG was a top performer this quarter as it reported strong Search revenue, tighter cost controls, and momentum in Cloud. Both direct and brand Search ads were better than expected and the strength in YouTube monetization continues. Expense controls have translated to 700bps of margin improvement. Management is removing layers to improve efficiency, which should drive margins higher. GOOG also provided details on paths to monetize Al for advertisers. GOOG initiated a dividend during the quarter to return additional cash to shareholders. It has a solid balance sheet, significant market share, and generates strong returns.”
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 246
Meta Platforms, Inc. (NASDAQ:META) is a communication services company based in Menlo Park, California. While the company has developed a stellar reputation for itself in the social media space, it has also been expanding its reach in the AI field. Meta Platforms, Inc. (NASDAQ:META) has been releasing free customer-help AI chatbots on its main social media platforms, such as Instagram and WhatsApp. This move highlights Meta CEO, Mark Zuckerberg’s strategy to make AI technology accessible to all. This strategy will also set Meta Platforms, Inc. (NASDAQ:META) apart from its competitors, since it will be providing AI technology to its customers for low to no cost.
In total, 246 hedge funds were long Meta Platforms, Inc. (NASDAQ:META) in the first quarter, with a total stake value of $46.9 billion.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 293
Microsoft Corporation (NASDAQ:MSFT) is a systems software company based in Redmond, Washington. Like other big tech companies, Microsoft Corporation (NASDAQ:MSFT) has been actively working on developing and investing in artificial intelligence technologies. For instance, the company has invested about $13 billion to date in OpenAI, the developer of ChatGPT. Microsoft Corporation (NASDAQ:MSFT) has also now integrated ChatGPT into its search engine, Bing. This May, the company announced its Responsible AI Transparency Report, which provided public information on its AI practices and goals as well. Considering these initiatives, many investors are viewing Microsoft Corporation (NASDAQ:MSFT) as a versatile player in the AI industry, with broad reach and much to offer.
Our hedge fund data for the first quarter shows 293 hedge funds long Microsoft Corporation (NASDAQ:MSFT), with a total stake value of $88.2 billion.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 302
Amazon.com, Inc. (NASDAQ:AMZN) is a broad-line retail company based in Seattle, Washington. Like several other companies on our list, Amazon.com, Inc. (NASDAQ:AMZN) has integrated AI into almost every facet of its business. The company’s targeted advertisements, marketplace search, and recommendation algorithms all make use of AI. AI is also heavily used in Amazon Web Services, with cloud customers being provided a diverse range of AI and machine learning services through this business segment.
We saw 302 hedge funds long Amazon.com, Inc. (NASDAQ:AMZN) in the first quarter, with a total stake value of $60.4 billion.
While we acknowledge the potential for Amazon.com, Inc. (NASDAQ:AMZN) as an AI play, its valuation is too rich right now. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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