In this article, we will discuss the 10 Best Mid Cap AI Stocks to Buy Now.
In 2025, the technology companies continue to focus on developing AI platforms that meet their enterprise customers’ needs for optimized performance, profitability and security, says Morgan Stanley. In doing so, they have been partnering throughout the AI ecosystem of chips companies, hyperscalers, large language models, and data and software companies while grappling with the US trade policy unknowns and resource constraints. The firm believes that the top trends in new AI frontiers and the emphasis on enterprises consist of AI reasoning, cloud migrations, custom silicon, systems to measure AI efficacy, and developing an agentic AI future.
Key Themes Likely to Shape the Industry
Morgan Stanley, while quoting executives from companies designing and making chips, stated that AI reasoning happens to be one of the biggest drivers of higher compute demand, and thus, semiconductors. Notably, AI reasoning goes over and above the basic understanding and into advanced learning and decision-making, which needs additional compute for pre-training, post-training, and inference. As per Marco Lagos Morales (Head of U.S. Semiconductor Investment Banking at Morgan Stanley), for chip companies, customer demand remains in the breadth of AI workloads for programmable infrastructure.
The next theme revolves around LLMs seeing potential in AI reasoning for enterprises. Morgan Stanley highlighted that companies that have developed the world’s biggest LLMs focus on using the most effective chips and building the best software to provide AI services that become critical for companies and consumers. As per LLM executives, while the early use cases for LLMs revolved around content generation, summarization, and classification, the biggest untapped potential is in AI reasoning for the enterprise data.
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Software Companies Focusing on Agentic AI, Says Morgan Stanley
The software executives mentioned regarding their current use of AI for the purposes of productivity gains in marketing and engineering and their longer-term prospects in a bid to gain market share in an agentic computing future. Morgan Stanley further highlighted that such companies continue to aim to create large systems deploying AI agents to make decisions, take autonomous actions, and adapt to dynamic environments for real-world applications throughout various industries. According to Brittany Skoda, Global Head of Software Banking, software companies continue to compete to create larger operating systems that harness machine learning, natural language processing, LLMs, GenAI, and decision-making algorithms to move towards an agentic future.
Amidst such trends, let us now have a look at the 10 Best Mid Cap AI Stocks to Buy Now.
A scientist at a computer station, surrounded by a neural network of artificial intelligence code.
Our Methodology
To list the 10 Best Mid Cap AI Stocks to Buy Now, we used a screener and sifted through several media reports to shortlist the mid-cap companies catering to the AI industry. Next, we selected the stocks that are the most popular among hedge funds. We have mentioned the hedge fund sentiment 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 Best Mid Cap AI Stocks to Buy Now
10. SoundHound AI, Inc. (NASDAQ:SOUN)
Market Cap as of March 27: $3.6 billion
Number of Hedge Fund Holders: 21
SoundHound AI, Inc. (NASDAQ:SOUN) is engaged in developing independent voice artificial intelligence (AI) solutions that enable businesses throughout automotive, TV, and IoT, and to customer service industries to deliver high-quality conversational experiences to their customers. DA Davidson upped the price objective on the company’s stock to $13.00 from the prior target of $9.50 while maintaining a “Buy” rating. The higher demand for SoundHound AI, Inc. (NASDAQ:SOUN)’s solutions stems from its expansion into several industries, such as financials, healthcare, and energy.
The acquisition of Amelia was a strategic move for the company, significantly enhancing the total addressable market (TAM) and contributing to the diversification of its business. The expansion into new sectors remains a critical factor behind the increased target price. Furthermore, the analyst’s optimistic outlook stems from SoundHound AI, Inc. (NASDAQ:SOUN)’s capability to maintain a healthy growth trajectory. Notably, the company’s continued focus on innovation and market penetration seems to be bearing fruit.
The business combination because of the Amelia acquisition places SoundHound AI, Inc. (NASDAQ:SOUN) as the foremost provider of voice and conversational generative AI, with reach throughout multiple industries – such as retail, financial services, healthcare, automotive, smart devices, restaurants, and more. SoundHound AI, Inc. (NASDAQ:SOUN) can benefit as enterprise spending on generative AI is expected to gather more momentum.
9. C3.ai, Inc. (NYSE:AI)
Market Cap as of March 27: $3 billion
Number of Hedge Fund Holders: 25
C3.ai, Inc. (NYSE:AI) operates as an enterprise artificial intelligence (AI) software company. It has announced an expanded strategic partnership with Microsoft, which can significantly accelerate the former’s growth trajectory. The integration of C3.ai, Inc. (NYSE:AI)’s Enterprise AI application software on the Microsoft Commercial Cloud Portal is expected to open up a vast new distribution channel for the company’s products. Apart from providing C3.ai, Inc. (NYSE:AI) with enhanced visibility, it also lends credibility related to Microsoft’s brand, potentially making it easier to get large enterprise contracts.
Also, C3.ai, Inc. (NYSE:AI)’s comprehensive platform for building and deploying AI applications throughout numerous industries provides a competitive edge in the rapidly expanding sector. The enhanced focus on AI adoption throughout industries, mainly in federal, defense, and government sectors, remains in line with the company’s strengths. With enterprises recognizing the value of AI in optimizing operations and fueling innovation, C3.ai, Inc. (NYSE:AI)’s domain-specific AI capabilities and strategic partnerships place it well to capture an enhanced share of the growing market.
8. Insight Enterprises, Inc. (NASDAQ:NSIT)
Market Cap as of March 27: $4.9 billion
Number of Hedge Fund Holders: 26
Insight Enterprises, Inc. (NASDAQ:NSIT) is a critical player in the broader AI industry as it integrates AI into its core services and supports companies in implementing AI-driven solutions. The company has announced that it has signed a new Strategic Collaboration Agreement (SCA) with Amazon Web Services, Inc. to more effectively support clients in managing the cloud roadmap, which includes data and AI strategy. This agreement bolsters Insight Enterprises, Inc. (NASDAQ:NSIT)’s role as a leading provider of cloud, data, AI, cybersecurity, and intelligent edge solutions throughout multiple cloud ecosystems.
The new SCA consists of a dedicated AWS practice with technical and sales experts situated in the US, EMEA, and with Insight Public Sector. The practice is expected to focus on scalable offerings in cloud migration, AI (including GenAI ), data management, and the Internet of Things (IoT) for small and mid-market businesses, commercial enterprises as well as the public sector. Overall, the growth of the AI sector is expected to fuel growth for Insight Enterprises, Inc. (NASDAQ:NSIT) by increasing the demand for AI-powered solutions in automation, cloud computing, and data analytics, which are the critical areas of the company’s business. With businesses adopting AI for digital transformation, Insight Enterprises, Inc. (NASDAQ:NSIT)’s expertise in the integration of AI into IT infrastructure and services will place it as a critical partner.
Aristotle Capital Boston, LLC, an investment advisor, released its Q4 2024 investor letter. Here is what the fund said:
“Insight Enterprises, Inc. (NASDAQ:NSIT), is a global technology “solutions integrator” specializing in designing, building and managing complex IT solutions for businesses of various size and scale. Areas of expertise include data center, cloud, security, and AI. Over the next several years, NSIT is poised to benefit from increased demand from an increasing complex technology landscape, the continued transition of enterprise business to the cloud and the emergence of AI as a must have IT tool. They are also expected to realize improved financial performance over the next several years as the benefits of strategic investments that have expanded the company’s portfolio of IT solutions are realized as well as from the integration/cross-selling of acquisitions completed over the past couple of years.”
7. Upstart Holdings, Inc. (NASDAQ:UPST)
Market Cap as of March 27: $4.76 billion
Number of Hedge Fund Holders: 39
Upstart Holdings, Inc. (NASDAQ:UPST) operates a cloud-based AI lending platform in the US. B. Riley analyst Hal Goetsch upped the company’s stock to “Buy” from “Hold,” boosting the price objective to $105 from $49. The analyst anticipates the company’s revenue growth to improve because of an improvement in the macro environment and a scalable fee-based model. Elsewhere, Citi analyst Peter Christiansen upped the price objective to $108.00 from the previous target of $87.00, while reiterating a “Buy” rating. This analyst highlighted that Upstart Holdings, Inc. (NASDAQ:UPST)’s AI had previously shown success in risk separation, a trend that can continue with the integration of its Upstart Macro Index (UMI) and Parallel Timing Curve Calibration (PTCC) models. Such enhancements focus on improving the company’s ability to adjust to macroeconomic factors.
Overall, the new price target from Christiansen demonstrated a positive outlook on Upstart Holdings, Inc. (NASDAQ:UPST)’s ability to leverage the enhanced AI models to fuel future growth and manage risk effectively in the dynamic economic environment. The company’s core competitive advantage revolves around the AI-driven underwriting models, which demonstrated the ability to more accurately assess credit risk versus the traditional methods. Fred Alger Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Upstart Holdings, Inc. (NASDAQ:UPST) is a leading AI-powered lending platform that partners with banks and credit unions to improve access to affordable credit. By leveraging machine learning algorithms, the company evaluates non-traditional risk factors to provide more accurate credit assessments, enabling better loan approvals and pricing. Upstart aims to make the lending process more inclusive and efficient while helping its financial institution partners drive growth and manage risk effectively. Shares contributed to performance during the quarter after the company reported solid fiscal third quarter revenues that beat analyst estimates. In our view, the quarter highlighted recovering origination volumes, product expansion efforts, improved funding partnerships, and a return to positive adjusted earnings-before-interest-taxes-depreciation-amortization (EBITDA). Management emphasized that the volume growth stemmed from updated underwriting models rather than new funding partnerships. Additionally, Upstart’s funding profile has significantly improved compared to a year ago, supported by forward flow partnerships and a successful return to the asset-backed securities (ABS) markets with tightening credit spreads.”
6. UiPath Inc. (NYSE:PATH)
Market Cap as of March 27: $6.04 billion
Number of Hedge Fund Holders: 40
UiPath Inc. (NYSE:PATH) offers an end-to-end automation platform that provides a range of robotic process automation (RPA) solutions. The company uses AI in a bid to enhance automation capabilities, making it more efficient and smarter. Canaccord Genuity analyst Kingsley Crane has maintained the bullish stance on the company’s stock, providing a “Buy” rating on March 13. The rating was backed by factors demonstrating UiPath Inc. (NYSE:PATH)’s strategic positioning and growth potential. Its recent advancements in agentic automation highlight the competitive capabilities that can complement existing RPA deployments, says the analyst.
UiPath Inc. (NYSE:PATH)’s established reputation as a trusted automation partner, because of its healthy governance and compliance features, strengthens its appeal in the evolving landscape of AI and workflow automation. The analyst sees UiPath Inc. (NYSE:PATH) as a durable software asset that has orchestration capabilities between AI models, automation tools, and human workflows, providing a promising path for future value creation. The company announced the acquisition of Peak AI Limited, an AI-native agentic application company. When combined with the UiPath Platform™, Peak represents the introduction of UiPath Inc. (NYSE:PATH)’s first vertically specialized agents, which are optimized around industry-specific use cases, providing incredible time-to-value and bigger outcomes.
5. Lattice Semiconductor Corporation (NASDAQ:LSCC)
Market Cap as of March 27: $8.03 billion
Number of Hedge Fund Holders: 41
Lattice Semiconductor Corporation (NASDAQ:LSCC) is engaged in developing and selling semiconductor products. The company is a critical player in the broader AI space mainly due to its development of specialized semiconductor products, primarily FPGA (Field-programmable gate array), which are utilised in ML and AI applications. The company has launched 4 new solution stack updates in edge AI with Lattice sensAI™, embedded vision with Lattice mVision™, factory automation with Lattice Automate™, as well as automotive designs with Lattice Drive™. Such updates consist of improved performance with enhanced application-specific features and expanded IP, demo, and reference designs. With AI moving from centralized cloud computing to edge devices (such as smart cameras, autonomous vehicles, and industrial IoT devices), Lattice Semiconductor Corporation (NASDAQ:LSCC)’s high-performance, low-power FPGAs remain well-placed to ramp up AI workloads.
The company’s FPGAs, which can be reprogrammed as well as optimized for various AI workloads, place it as a leading player in AI inference at the edge. Notably, the Lattice sensAI™ platform provides a comprehensive solution for AI at the edge. Lattice Semiconductor Corporation (NASDAQ:LSCC)’s specialized FPGAs, power-efficient designs as well as customizable AI acceleration platforms place it favourably to exploit the opportunities provided by the higher demand for AI processing throughout diverse industries.
4. Credo Technology Group Holding Ltd (NASDAQ:CRDO)
Market Cap as of March 27: $7.1 billion
Number of Hedge Fund Holders: 43
Credo Technology Group Holding Ltd (NASDAQ:CRDO) plays a critical role in the AI infrastructure ecosystem. The company’s high-speed, low-latency connectivity solutions remain critical for helping the data transfer needs of AI workloads in data centers, IoT devices, as well as AI-powered industrial applications. The company remains well-placed to capture a significant share of the dynamic AI infrastructure market. Credo Technology Group Holding Ltd (NASDAQ:CRDO)’s AEC products continue to gain traction in AI cluster deployments, providing power-efficient solutions that remain important for large-scale AI operations. With the acceleration of AI adoption throughout various industries, the demand for high-performance, energy-efficient connectivity solutions is projected to increase.
With more companies making investments in AI infrastructure, Credo Technology Group Holding Ltd (NASDAQ:CRDO) possesses the potential to improve the customer base and enhance the market share. Its strong emphasis on innovation and its capability to offer products meeting the critical needs of AI applications can help it develop a strong and defensible position. The broader AI industry’s growth is expected to fuel strong demand for Credo Technology Group Holding Ltd (NASDAQ:CRDO)’s high-speed connectivity solutions, mainly as AI applications become more data-intensive, demand quicker communication between AI hardware systems, and need low-latency processing.
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.”
3. SentinelOne, Inc. (NYSE:S)
Market Cap as of March 27: $6.1 billion
Number of Hedge Fund Holders: 47
SentinelOne, Inc. (NYSE:S) operates as a cybersecurity provider. Its Singularity Platform provides AI-powered autonomous threat prevention, detection, and response capabilities throughout an organization’s endpoints, cloud workloads, and identify credentials, resulting in seamless and autonomous protection against a spectrum of cyber threats. The increased sophistication of cyber threats resulted in higher demand for advanced, AI-powered security solutions. SentinelOne, Inc. (NYSE:S)’s core strength revolves around its AI-driven architecture, placing it well to capitalize on this trend. With companies looking for effective ways to detect and respond to threats in real-time, the company’s Singularity Platform can see higher adoption.
Furthermore, SentinelOne, Inc. (NYSE:S)’s investments in emerging technologies such as Purple AI and Cloud Native Security remain in line with broader market trends. Such innovations can fuel increased customer engagement and upsell opportunities, enhancing the company’s revenue growth and market share gains. SentinelOne, Inc. (NYSE:S) remains on track to exceed $1 billion in ARR and revenue this year. For over a decade, the company has patented leading machine learning security models — now, it focuses on pioneering fully autonomous, agentic AI workflows.
Baron Funds, an investment management company, released its Q2 2024 investor letter. Here is what the fund said:
“We are huge believers in the practical uses of AI, and we have several investments in companies that adapt AI models to enhance their products and services. These include companies like GitLab Inc., Sentinelone Inc. (NYSE:S), and Couchbase, Inc., which were among our top detractors at one point in the second quarter (GitLab and SentinelOne recovered significantly in the last week of the quarter). As of the second quarter at least, the market has just not been ready to reward AI companies beyond those providing “picks and shovels.” This led to all three of these companies trading at or near all-time low valuation levels during the quarter. Nevertheless, we believe that in the coming quarters the market will broaden its level of interest from AI hardware to “adaptive AI” investments like GitLab, SentinelOne, and Couchbase. In that scenario, all three of these stocks have significant upside potential.
GitLab is a subscription software company that enables enterprise software developers to develop new software applications rapidly and securely for their firms. GitLab uses AI to help with code suggestions, to check for holes in security, and to automate collaboration among the many developers within an enterprise. GitLab recently launched a product called Duo that we believe will provide revenue upside for the company and enhance the competitiveness of their product of offerings. SentinelOne is a cybersecurity company that provides endpoint protection (a much more advanced version of legacy “anti-virus” software) both at customers’ physical sites and in the cloud. It uses AI to detect anomalous behavior on the network and to automate the remediation of the security flaws that led to the intrusion. Both companies are recurring revenue entities, with high gross margins (78% for SentinelOne and 90% for GitLab) and are growing rapidly (revenue growth of 25% or more). Yet both are trading at or near all-time low valuation levels. SentinelOne slightly beat full-year revenue guidance but guided to an operating loss that was $7.5 million worse than consensus (entirely accounted for by the increased operating expense pulled in from acquisitions – including PingSafe which allows SentinelOne to scan cloud-based workloads without the need to install a software agent). This led to a one-day stock drop of as much as 31% which we attribute purely to market skittishness. By quarter end, SentinelOne’s shares had fully recovered. We believe the company can grow revenues by 25% from 2024 through 2028 and that free cash flow will go up over 10-fold in this period. We see the stock at least doubling from its current price.”
2. ZoomInfo Technologies Inc. (NASDAQ:ZI)
Market Cap as of March 27: $3.6 billion
Number of Hedge Fund Holders: 51
ZoomInfo Technologies Inc. (NASDAQ:ZI) is a critical player in the AI business via the application of AI and ML technologies in a bid to enhance the core offerings in sales and marketing intelligence. The increased importance of AI in enterprise applications is expected to help the company over the long term. AI-powered features are expected to improve the accuracy and relevance of ZoomInfo Technologies Inc. (NASDAQ:ZI)’s data and intelligence, which can provide customers with actionable insights and improve the effectiveness of sales and marketing efforts.
Therefore, it can help to increase customer satisfaction and result in higher retention rates. ZoomInfo Technologies Inc. (NASDAQ:ZI)’s Go-To-Market Intelligence Platform offers the best GTM data, AI-powered applications, and agents for the most innovative and high-performing companies. The company’s AI innovation and commitment to customer success supported it in improving financial performance faster than expected, with strength continuing into 2025. With the company’s operational improvements taking hold, it continues to deliver better-than-expected revenue, profitability, and free cash flow. In FY 2024, the company’s GAAP revenue came in at $1,214.3 million, while unlevered FCF sat at $446.9 million. ZoomInfo Technologies Inc. (NASDAQ:ZI)’s industry-leading GTM Intelligence has paired with Salesloft’s strong revenue orchestration platform in a bid to turn real-time insights into action.
1. EPAM Systems, Inc. (NYSE:EPAM)
Market Cap as of March 27: $9.95 billion
Number of Hedge Fund Holders: 56
EPAM Systems, Inc. (NYSE:EPAM) has been using its software engineering expertise to become a leading global provider of digital engineering, cloud, and AI-enabled transformation services. With the demand for AI and machine learning solutions growing throughout several industries, the company remains well-placed to capitalize on this trend. EPAM Systems, Inc. (NYSE:EPAM)’s expertise in digital platform engineering and software development offers a healthy foundation for developing and implementing AI-driven solutions for clients.
Through investments in AI capabilities and integrating such technologies into the service offerings, the company can unlock new revenue opportunities and differentiate itself. EPAM Systems, Inc. (NYSE:EPAM)’s global presence and diverse client base offer significant opportunities to scale AI solutions throughout industries and geographies. The company’s partnerships with leading cloud and AI platforms offer access to cutting-edge technologies. EPAM Systems, Inc. (NYSE:EPAM) announced that it has expanded its strategic partnership with Google Cloud in a bid to deliver innovative industry solutions for clients throughout the media and entertainment, energy, and retail verticals. Its enhanced collaboration is expected to leverage Google Cloud’s Vertex AI platform to fuel measurable business outcomes for clients via generative AI, legacy modernization, and data analytics capabilities.
White Falcon Capital Management, an investment fund manager, released its Q4 2024 investor letter. Here is what the fund said:
“Our IT services holdings, Endava and EPAM Systems, Inc. (NYSE:EPAM), are showing positive inflections in key metrics. We believe these companies are entering a strong growth cycle, driven by the increasing need for businesses to modernize their core technology stacks in order to effectively implement AI solutions. Both holdings have significantly strengthened their operations through counter-cyclical acquisitions. In fact, EPAM made four acquisitions over the past 18 months, which, as the market cycle shifts, will substantially enhance their earnings potential.”
While we acknowledge the potential of EPAM 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 EPAM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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