In this article, we discuss the 10 best stocks to invest in according to AI.
The rise of artificial intelligence in finance has led many investors to question whether AI-powered tools like ChatGPT can effectively pick stocks. While ChatGPT and similar large language models (LLMs) can process vast amounts of financial data, market news, and historical trends, their ability to consistently outperform human experts or quantitative models remains debatable. Instead, investors should look towards AI-driven hedge funds, such as Renaissance Technologies and Two Sigma, that have historically outperformed the market using machine learning models. For example, the Medallion Fund of the former achieved an annualized return of 66% before fees from 1988 to 2018. These funds rely on proprietary algorithms, high-frequency trading, and massive datasets.
Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.
One indicator of hedge funds being ahead of the curve when it comes to stocks and the broader market in general is a recent Goldman Sachs note to investors which details that top hedge funds navigated the recent tech selloff without significant losses, even managing to post nominal gains since the turn of the year despite a big dropoff in the market amid concerns over trade tariffs and an AI bubble. Per a report by news agency Reuters, US President Trump has delayed tariffs on Canada and Mexico by one month, fueling wild swings in currency, bond and share markets. Despite the turmoil, stock-picking hedge funds that take bets based on company fundamentals recorded an average 2.6% return, their best month since February 2024, given a broader market rally, the report claimed.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.
The stocks listed below were mentioned in articles by prominent finance publications as some of the best ChatGPT stock picks over the past six months. The return of each stock since the publication of these articles is mentioned as well. These stocks are also popular among hedge funds. 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 Stocks to Invest in According to AI
Best Stocks to Invest in According to AI
10. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 56
Stock Return Over Past Six Months: 36%
International Business Machines Corporation (NYSE:IBM) provides integrated solutions and services worldwide. The firm recently posted earnings for the fourth quarter of 2024, beating market expectations on earnings per share and posting in-line revenue. Analysts on Wall Street reiterated bullish views on the stock following the quarterly report. RBC Capital Markets kept an Outperform rating on the shares and raised the price target to $276 from $250. Analysts led by Matthew Swanson said that IBM delivered a solid quarter overall, but results were highlighted by strong outperformance in three focal metrics — free cash flow, or FCF, Generative AI, or GenAI bookings and subsidiary Red Hat’s growth. All three came in above expectations, building momentum into 2025 highlighted by guidance for $13.5 billion FCF, the analysts added.
9. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 56
Stock Return Over Past Six Months: 85%
Shopify Inc. (NYSE:SHOP) is a commerce company that provides a commerce platform and services worldwide. Analysts at investment advisory RBC Capital have backed the company to beat earnings expectations in the upcoming quarterly report. Analyst Paul Treiber recently said that data from several third-party sources indicates Shopify’s Q4 earnings numbers are likely to land above consensus expectations due to GMV and margin strength. Strong reads on e-commerce spending and job postings suggest an earnings beat, despite merchant growth appearing to have incrementally slowed, the analyst stressed in an investor note.
8. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 60
Stock Return Over Past Six Months: 40%
Cisco Systems, Inc. (NASDAQ:CSCO) makes and sells networking and other products. In mid-November, the company posted earnings for the first fiscal quarter. It posted revenue of $13.8 billion, a 6% decrease from the same period last year. GAAP net income was $2.7 billion, or $0.68 per share, marking a 24% decline year-over-year. On a non-GAAP basis, net income stood at $3.7 billion, or $0.91 per share, down 18% from the previous year. Ahead of the latest earnings report, investment advisory Citi has opened a Positive Catalyst Watch on the stock. Analysts led by Atif Malik said they opened a positive catalyst watch as they expect Cisco to benefit from improving dynamics in the campus switching market.
7. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 99
Stock Return Over Past Six Months: 94%
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company. In earnings for the fourth quarter of 2024, the company missed market estimates on earnings per share and revenue by $0.04 and $1.44 billion respectively. The stock has taken a hit recently amid slumping sales in China and Europe. However, CEO Elon Musk, during the fourth quarter earnings call, highlighted record vehicle deliveries in Q4 2024 at an annualized rate of nearly 2 million units, with the Model Y being the best-selling vehicle globally. He also shared ambitious optimism regarding Tesla’s potential to become the most valuable company in the world, driven by advancements in autonomy and robotics.
6. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 160
Stock Return Over Past Six Months: 17%
Alphabet Inc. (NASDAQ:GOOG) is a technology company that owns and runs the internet search engine Google. Latest reports suggest that the company plans to invest approximately $75 billion in CapEx for 2025, with $16 to $18 billion projected for Q1. Per CFO Anat Ashkenazi, who spoke during the company’s latest earnings call, the majority of this investment will go towards technical infrastructure, including servers and data centers, to support AI and cloud demand. Alphabet reported Q4 revenue of $96.5 billion, a 12% year-over-year increase, surpassing estimates of $96.67 billion. Adjusted EPS of $2.15 exceeded expectations of $2.13.
5. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 165
Stock Return Over Past Six Months: 36%
Visa Inc. (NYSE:V) is a payments technology firm. During the first fiscal quarter earnings call, Visa CEO Ryan McInerney highlighted the strong performance of his firm in Q1 2025, with $9.5 billion in net revenue, representing a 10% year-over-year increase, and EPS up 14%. He attributed the growth to improvements in global payments volume, which rose 9%, and cross-border growth of 16%. The firm also revised guidance numbers. It now expects EPS growth in the low teens, compared with its previous expectation for the high end of low-double digits. Net revenue is now expected to rise in low double-digits, versus its prior view of high single-digit to low double-digits.
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
Stock Return Over Past Six Months: 31%
NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. Morgan Stanley recently reiterated the stock as its Top Pick, noting that the DeepSeek selloff was a buying opportunity. Analysts led by Joseph Moore said that sentiment for the shares had worsened around potential longer term risks, but near term business continued to be firm, Blackwell supply visibility continued to build, and customer desire to spend was clearly on display. The analysts acknowledged that DeepSeek created some headwinds around export controls and longer-term investment. They noted that it was a strong evolutionary upgrade in the AI space, but one of many that had taken place in the last year.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 235
Stock Return Over Past Six Months: 47%
Meta Platforms, Inc. (NASDAQ:META) engages in the development of products that enable people to connect and share with friends and family. Latest reports published by news platform Business Insider suggest that the company is planning to launch half a dozen more AI-powered wearable devices this year. The plan was detailed in a memo to Meta staff by CTO Andrew Bosworth, per the report. In earnings for the fourth quarter of 2024, the company posted earnings per share of $8.02, beating estimates by $1.26. The revenue over the period was $48.3 billion, beating expectations by $1.4 billion.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Stock Return Over Past Six Months: 4%
Microsoft Corporation (NASDAQ:MSFT) is a technology company. In late January, the firm posted earnings for the second fiscal quarter, reporting earnings per share of $3.23, beating market estimates by $0.13. The revenue over the period was close to $70 billion, up more than 12% compared to the revenue over the same period last year and beating analyst expectations by $790 million. Latest reports suggest that tech behemoth Softbank plans to invest close to $40 billion into Microsoft-backed AI startup OpenAI. The startup has become the most valuable private firm in the world and is valued at close to $350 billion.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 286
Stock Return Over Past Six Months: 41%
Amazon.com, Inc. (NASDAQ:AMZN) operates as a technology conglomerate with core interests in the ecommerce business. The company recently posted earnings for the fourth quarter of 2024, reporting earnings per share of $1.86, beating analyst expectations by $0.38. The revenue over the period was $187 billion, up more than 10% compared to the revenue over the same period last year and beating estimates by $560 million. During the earnings call, CEO Andy Jassy noted advancements in AWS, with a $115 billion annualized revenue run rate and 19% year-over-year growth. He also outlined the company’s focus on custom AI silicon, including Trainium 2 and upcoming Trainium 3 and 4 chips, to enhance the cost efficiency of AI workloads.
While we acknowledge the potential of Amazon.com, Inc. (NASDAQ:AMZN) as an investment, our conviction lies in the belief that some stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a stock that is more promising than Amazon.com, Inc. (NASDAQ:AMZN) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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