In this article, we will take a detailed look at the 10 biggest AI stories and ratings updates you should not miss this week.
Are Growing Patents in AI from China a Threat to the US?
China and the United States continue to compete against each other as the AI boom continues to reign in the tech industry. On July 2, Reuters reported that China plans to develop 50 new national and industrial standards for artificial intelligence by 2026. The country aims to standardize systems in the artificial intelligence sector by providing thorough guidelines to companies and budding startups. Furthermore, on July 3, Reuters reported that China filed six times more patents than the United States for inventions in AI like chatbots. On a global scale, more than 50,000 patent applications were filed in the past decade, a quarter of which were filed in 2023 alone. China filed 38,000 generative AI applications between 2014 and 2023, while the United States only filed slightly over 6,200 applications during the same period. Of the total applications, ByteDance, Alibaba Group, and Microsoft filed the largest number of applications. The report added that Chinese patent applications covered a wider range of sectors such as autonomous driving, publishing, and document management. South Korea, Japan, and India were ranked third, fourth, and fifth with the highest number of patent applications.
The United States, on the other hand, has reportedly accumulated $55.6 billion in venture capital funding in the second quarter of 2024, the highest quarterly total in two years. On July 3, Reuters reported that the surge in venture capital funding is driven by developments in artificial intelligence. Such is a 47% increase from the $37.8 billion raised by startups in the first quarter of 2024. Significant investments include $6 billion by Elon Musk’s xAI and $1.1 billion raised by CoreWeave. Previously, venture capital funding took a hit, reporting $35.4 billion in the second quarter of 2023 amid high interest rates and sluggish economic growth. While venture capital and investment in AI are increasing, the IPO market remains sluggish.
OpenAI & Anthropic: A Comparative Analysis
While the threat of Chinese innovations looms over the United States, startups in the country are disrupting the industry with key innovations. OpenAI, the company behind ChatGPT, is a leading artificial intelligence company based in the United States. In February this year, OpenAI closed a deal with venture capital firm Thrive Capital, allowing it to buy some of its shares in a tender offer, bringing its total valuation to $80 billion. This is a threefold increase in its value from a few months ago in 2023.
On June 10, OpenAI and Apple announced a partnership to integrate ChatGPT into iOS, iPadOS, and macOS. Users will now be able to access ChatGPT’s capabilities on all these devices without having to switch tools. Siri will also be able to reach ChatGPT when a user asks a question and will present them with an answer directly from the chatbot. ChatGPT will be integrated into Apple’s writing tools, allowing users to create content when required. The development ensures that user security remains intact. Requests are not stored by OpenAI and IP addresses remain obscured. Users may connect to their ChatGPT account, allowing them to choose their data preferences. The integration will be executed later this year and can be accessed for free without having to create an account.
In another update, Apple is reportedly positioned to join OpenAI’s board. On July 2, Reuters reported that Apple is set to get an observer role on OpenAI’s board, part of the agreement made by the two entities a month ago. Phill Schiller, head of Apple App Store and former marketing chief, was selected for this position. The board agreement will take effect later this year. As of yet, Schiller has not attended any meetings.
Anthropic, OpenAI’s direct competitor, is an artificial intelligence startup founded in 2021. The company is led by Dario and Daniela Amodei as CEO and president. The safety and research company is popular for its safety-oriented language models that produce reliable interpretable, and steerable AI systems. On March 27, CNBC reported that Amazon invested an additional $2.75 billion in the startup, bringing its total investment to $4 billion. Anthropic’s valuation at that time was $18.4 billion and closed five different funding rounds worth $7.3 billion in the past year. Amazon will remain a minority stakeholder in the company. Last year, Alphabet’s Google announced an investment worth $2 billion into Anthropic adding to its $550 million funding from earlier.
Claude is the company’s AI platform able to conduct advanced reasoning, vision analysis, code generation, and multilingual processing. Anthropic recently launched Claude 3.5 Sonnet, its first release from the Claude 3.5 family. Claude 2.5 Sonnet has set a new benchmark for graduate-level reasoning, undergraduate-level knowledge, and coding proficiency. The new AI platform operates at twice the speed of Clause Opus. Based on an internal evaluation, Claude 3.5 Sonnet was able to solve 64% of problems. On the contrary, Claude Opus was able to solve only 38% of problems. On July 2, Anthropic announced the launch of a new initiative for a robust third-party evaluation ecosystem. The new initiative will be able to fund evaluations developed by third-party organizations to measure advanced features in AI models. The company strongly believes that the initiative will enhance AI safety level assessments, improve safety metrics, and develop infrastructure and tools for evaluations. The safety level assessments will encompass cybersecurity, chemical, biological, radiological, and nuclear risks, model autonomy, national security risks, and social manipulation.
A lot is going on in the AI space and several companies have emerged as interesting AI stories. We have compiled a list of the most interesting AI stories on Wall Street by studying many reports and publications and watching interviews. The list is sorted in ascending order of hedge fund sentiment, which was sourced from Insider Monkey’s proprietary database that tracks over 900 elite money managers.
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).
A software engineer coding at a computer, surrounded by a cluttered desk of hardware.
10 Biggest AI Stories and Ratings Updates You Should Not Miss This Week
10. Dell Technologies Inc (NYSE:DELL)
Number of Hedge Fund Holders: 82
Dell Technologies Inc (NYSE:DELL) ranks 10th on our list and is one of the biggest AI stories. The technology company is a pioneer in producing desktops, servers, storage solutions, monitors, and gaming products. As for AI, the company is making some strategic moves to establish dominance. Its new PowerEdge XE9680L is a GPU service that improves power efficiency by 2.5x. Recently, Dell Technologies Inc (NYSE:DELL) announced its new generation of AI PCs including the Qualcomm Snapdragon X and its Latitude 7455. These PCs can support 13 billion-plus parameter models, allowing users to run prominent models such as Llama 3 directly on the PC. Dell’s approach to making AI more efficient is to enable 83% of data on-premises and 50% is generated at the edge. According to the company, inferencing on premises will be 75% more cost-effective than the cloud.
The company’s position in the market is such that its AI-optimized server orders increased to $2.6 billion in Q2 2025, with shipments up 100% from the previous quarter to $1.7 billion. So far, the company has shipped over $3 billion in AI servers over the past three quarters. The company’s AI server backlog is currently at $3.8 billion, up by $900 million from the previous quarter.
At the close of Q1 2024, 82 investors held positions in Dell, with total stakes amounting to $2.98 billion. Of those, Panayotis Takis Sparaggis’ Alkeon Capital Management was the largest stakeholder with a position worth $616.36 million.
On July 1, Evercore ISI Group maintained an outperform rating on the stock and maintained its price target of $165.
Here are some comments about Dell from Scout Investments’ Q1 2024 investor letter:
“Dell Technologies Inc. (NYSE:DELL) reported results that exceeded earnings expectations and announced a better than expected AI-optimized server order pipeline. We expect Dell to participate in the growth of artificial intelligence hardware in its server, storage and personal computing franchises. Long-term, we like the company’s depth and breadth of products and services, as well as its focus on keeping costs low.”
9. Adobe Inc (NASDAQ:ADBE)
Number of Hedge Fund Holders: 108
Adobe Inc (NASDAQ:ADBE) ranks ninth on our list of the best AI stories. Adobe, the creative giant, has been disrupting the generative AI industry. The company’s AI tools allow users to add and remove images, generate high-quality images, create personalized content, and automate workflows. Some of the major products include Adobe Firefly, Adobe Express, Acrobat AI Assistant, and Adobe GenStudio.
The company’s roadmap to becoming an AI creative giant is fierce. On June 27, Adobe Inc (NASDAQ:ADBE) announced that its Adobe Content Hub is now generally available with the Adobe Experience Manager. The Adobe Experience Manager is a digital asset management system home to an entire database of images and videos, used by many Fortune 50 companies. The Adobe Content Hub, on the other hand, is transforming the content creation process and its usage, by providing users with every brand-approved asset at their fingertips. The hub is integrated with Adobe Express and Adobe Firefly, the company’s leading all-in-one design and generative AI tools.
Adobe’s AI products are highly popular in the market. Adobe Firefly has been used to generate more than 9 billion images since March 2023. In the second quarter of 2024, the company’s document cloud segment logged $782 million in revenue, up 19% year-over-year. Overall, the company expects its generative AI tools and products to gain momentum in the third and fourth quarters of 2024.
At the close of Q1 2024, 108 investors were bullish on the stock, with total stakes amounting to $9.03 billion. Of those, Ken Fisher’s Fisher Asset Management was the highest stakeholder with a position of $2.28 billion.
On June 17, Bernstein maintained an outperform rating on the stock and raised its price target from $653 to $660. Overall, the stock has a median price forecast of $625 based on price targets of 45 analysts. This represents an upside of 10% from its current price of $570.15.
Here are some comments about Adobe from Fred Alger Management’s Q1 2024 investor letter:
“Adobe Inc. (NASDAQ:ADBE) is a diversified software company that provides document and creative software to a wide audience, including creative professionals and enterprises. Its flagship products, such as Photoshop, Acrobat, and Creative Suite, set industry standards like PDF and Flash, supporting a broad range of Adobe applications. As such, we believe Adobe is a primary beneficiary of the digitization (i.e., converting analog information into digital format) spending theme. Recently, the company announced a generative Al (Gen Al) tool called Firefly which is a family of creative GenAl models which will be incorporated into Adobe’s product suite, which can be utilized by consumers and enterprises to potentially save time and effort by automating tasks like image and text generation. We believe Adobe has the potential to leverage Al by integrating software programs into its existing products and enhancing developer Application Programming Interfaces (APIs) to facilitate Al-driven workflows. While the company delivered strong fiscal first quarter operating results, shares detracted from performance after management lowered their fiscal second quarter guidance with Al related growth acceleration being pushed out into the second half of 2024 due to difficult year-over-year pricing comparison. particularly within their creative vertical segment.”
8. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 115
Broadcom Inc. (NASDAQ:AVGO) is one of the best AI stories on our list. The company produces a variety of semiconductor, enterprise software, and security solutions. The company’s AIOps platform includes a suite of products powered by AI and ML. These products help customers derive actionable insights from available data. Users can create customizable dashboards and collaborate across IT domains to make strategic decisions. Broadcom has a strong demand for its AI chips amid the AI boom. The company’s AI products and technologies are backed by its latest 100G/lane VCSEL and EML chips embedded in its first generation of AI networks.
On June 25, Broadcom Inc. (NASDAQ:AVGO) introduced innovations to its VMware Cloud Foundation. The new updates will allow customers to streamline innovation with modern infrastructure and enhanced developer productivity. The flagship cloud platform is also capable of managing artificial intelligence and machine learning workloads at an enterprise level and is more secure and reliable. The VMware Cloud Foundation 5.2 and VMware vSphere Foundation 5.2 will be made available in the fiscal third quarter of 2024.
12% of the company’s growth in revenue in Q2 2024 was driven by AI, which expanded by 280% year-over-year to $3.1 billion. Infrastructure revenue, on the other hand, reached $5.3 billion, up 175% year-over-year. This included $2.7 worth of revenue from VMware, up from $2.1 billion in the previous quarter. As for semiconductors, the company reported strong demand for AI networking and custom accelerators in the second quarter. Networking revenue reached $3.8 billion, up 44% year-over-year. Semiconductor revenue made up 53% of networking revenue.
115 investors were bullish on the stock at the close of Q1 2024, with total stakes amounting to $14.72 billion. Of those, Rajiv Jain’s GQG Partners held the largest stake with a position worth $3.97 billion.
On June 24, BofA Securities reiterated a buy rating on the stock and increased its price target from $2,000 to $2,150.
Here are some comments about Broadcom from ClearBridge Investments Q1 2024 investor letter:
“Among secular growth names, Broadcom Inc. (NASDAQ:AVGO) was another notable addition. Through organic growth and accretive acquisitions, Broadcom has developed into one of the largest global technology providers serving a number of industries with its semiconductor and software products. The company generates high levels of earnings and free cash flow, which will be driven in the coming years by revenue growth and margin expansion due to the acquisition of VMware and strong adoption of the Broadcom’s AI custom silicon chips. The acquisition of VMware is off to a good start and has shifted the business mix to 60% software and 40% semiconductors, enhancing growth prospects while also providing greater downside protection from higher recurring revenue.”
7. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 124
Advanced Micro Devices, Inc. (NASDAQ:AMD) ranks seventh on our list for its contributions to the AI industry. The semiconductor and IT company is behind the AMD Instrict MI300 Series accelerators, which are capable of managing complex AI workloads. These accelerators have high bandwidth memory and a huge memory density. The company’s efforts in AI do not stop here. On June 19, Advanced Micro Devices, Inc. (NASDAQ:AMD) announced the launch of an AI-backed smart parking solution for Sun Singapore Systems Ltd, one of the biggest smart parking solutions providers in Singapore. The new AI-based solution improves vehicle license plate recognition accuracy, parking spot vacancy detection, and accident detection.
The company is disrupting a wide array of industries using AI. The company logged $5.5 billion in revenue in the first quarter of 2024. Data center revenue expanded by 80% year-over-year and 2% from the previous quarter to reach $2.3 billion. The growth in data center revenue was driven by shipments of the AMD Instinct MI300X GPU and sales of its CPU. AMD’s MI300 became the fastest product to reach $1 billion in sales in less than two quarters. Based on current results, AMD raised its GPU sales forecast to $4 billion for the year from $3.5 billion guided in January. AMD’s chips are also a first choice among tech giants. Microsoft, one of the biggest technology companies, recently added AMD AI chips to its computing products.
Overall, at the close of Q1 2024, 124 hedge fund investors held stakes worth $15.63 billion in AMD. Of those, Ken Fisher’s Fisher Asset Management was the highest stakeholder with a position of $5.21 billion.
Here are some comments about AMD from Meridian Funds Q4 2023 investor letter:
“Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global semiconductor chip maker specializing in central processing units (CPUs), which are considered the core component of most computing devices, and graphics processing units (GPUs), which accelerate operations running on CPUs. We invested in 2018 when it was a mid-cap value stock plagued by many years of underperformance due to lagging technology and lost market hi share versus competitors Intel and Nvidia. Our research identified that changes and investments made by current management under CEO Lisa Su had, over several years, finally resulted in compelling technology that positioned AMD as a stronger competitor to Nvidia and that its latest products were superior to Intel’s. We invested on the the belief that AMD’s valuation at that that time did not reflect the potential for its technology leadership to generate significant market share gains and improved profits. This thesis has been playing out for several years. During the quarter, AMD unveiled more details about its upcoming GPU products for the AI market. The stock reacted positively to expectations that AMD’s GPU servers will be a viable alternative to Nvidia. Although we pared back our exposure to AMD into strength as part of our risk-management practice, we maintained a position in the stock. We believe AMD will continue to gain share in large and growing markets and is reasonably valued relative to the potential for significantly higher earnings.”
6. Salesforce Inc (NYSE:CRM)
Number of Hedge Fund Holders: 154
Salesforce Inc (NYSE:CRM) is a prominent AI story and a leading cloud provider, contributing to its ranking on our list. The cloud provider is on its way to becoming an AI powerhouse. The company’s AI cloud platform can support any large language model and is built on the Einstein GPT Trust Layer. Key AI products by the company include Sales AI, Customer Service AI, Marketing AI, and Commerce AI. In a recent development, MuleSoft, Salesforce’s software company that provides integration software to connect data and applications, launched AsyncAPI which is capable of building AI-powered customer experiences in real-time. The launch will facilitate the widespread adoption of event-driven architectures, allowing businesses to respond to real-time events faster.
Overall, the company is now responsible for 250 petabytes of data for its customers, crucial to the AI transition. The company’s Data Cloud is rapidly growing to become its next $1 billion cloud. Data Cloud streamlines AI insights and actions for its customers. Salesforce Inc (NYSE:CRM) claims that this is its first step to becoming an AI enterprise and is expecting a major tailwind in revenue due to AI adoption.
Overall, at the close of Q1 2024, 154 investors were bullish on the stock, with total stakes amounting to $16.62 billion. Of those, Ken Fisher’s Fisher Asset Management was the highest stakeholder with a position of $3.27 billion.
CRM is a Wall Street favorite. Its median price forecast represents an upside of 15% from current levels.
Here are some comments about Salesforce from Harding Loevner’s Q1 2024 investor letter:
“Leading software companies have the advantage of high switching costs and the ability to incorporate new features into products customers already use. For example, Microsoft has added its Copilot chatbot functionality to everything from search (Bing Chat, recently renamed to just Copilot) to coding (GitHub Copilot) and workplace applications (Copilot for Microsoft 365). Software sold by Microsoft and other companies such as Salesforce, Inc. (NYSE:CRM), SAP, and ServiceNow are also already deeply integrated into their customers’ operations and workflow.
As large enterprises search for the right balance, Salesforce’s Data Cloud, a flagship offering, is designed to address a critical issue for them so they can make better use of AI tools. After a hectic buildout over the last few years of “data warehouses” and “data lakes”—two types of repositories for storing and processing data—across the various business units of large companies, many companies are left with what feels like islands of trapped data. Data Cloud solves this by creating a single platform to access and leverage all of an enterprise’s data, eliminating the need to constantly duplicate large amounts of information across different platforms. Users are then able to apply generative-AI technology, such as Salesforce’s Einstein tool, to a more comprehensive dataset, which enables them to better glean customers’ intentions, personalize marketing messages, and automate the processing of customer-service requests. As users build these systems, Einstein’s copiloting functionality helps their programmers work more efficiently so that IT departments with limited budgets and manpower can still develop the necessary tools. Salesforce’s management projects that revenue and earnings will climb about 9% and 45%, respectively, in fiscal 2025, citing the company’s operating leverage and cost discipline. We think these figures are achievable given the renewed focus on profitable growth, and so we added to the stock during the quarter.”
5. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 186
NVIDIA Corporation (NASDAQ:NVDA) is one of the most popular AI stories at the moment. The company is pioneering AI software and hardware products. The company’s Advanced AI platform for Enterprise improves productivity, streamlines AI workflows, and ensures faster deployment and processing of AI. Earlier this year, the company introduced its Blackwell graphics processing unit (GPU), backed by six different technologies in data processing, design automation, drug design, quantum computing, and generative AI.
Overall, the company logged $22.6 billion in data center revenue, up 23% from the previous quarter and 427% year-over-year. The revenue growth was driven by strong demand for the NVIDIA Hopper GPU Computing platform. Compute revenue grew by 5x and networking revenue expanded by 3x compared to the previous year. The Hopper GPU is one of the world’s first accelerated computing platforms, built with over 80 billion transistors. Nvidia’s advancements in AI are accelerating at a rapid pace. On June 19, the company launched the NVIDIA Omniverse Cloud Sensor RTX, a set of microservices that enable the development of autonomous machines using AI.
Moor Insights & Strategy Founder, CEO, and Chief Analyst Patrick Moorhead, recently talked about NVIDIA (NASDAQ:NVDA) in an interview on Yahoo Finance. He positions Nvidia as the primary provider of AI infrastructure systems. He compares Nvidia’s position to Cisco, the driver of infrastructure from the internet age in the early 2000s. Moorhead highlights that the company’s dominant position is backed by sustained enterprise demand, and he sees nothing changing in the next six to nine months. However, he suggests that to maintain its dominance, Nvidia needs to emphasize growth in enterprise.
At the close of Q1 2024, 186 investors were bullish on NVDA, with total stakes amounting to $48.3 billion. Of those, Ken Griffin’s Citadel Investment Group was the highest stakeholder with a position of $18.74 billion.
On July 1, Morgan Stanley maintained an overweight rating on the stock and raised its price target from $116 to $144.
Here are some comments about Nvidia from the Meridian Funds Q1 2024 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) is a leading designer of graphics processing units (GPUs) for the gaming and professional markets, as well as system-on-a-chip units for the mobile computing and automotive markets. The company has experienced strong performance recently due to booming demand for its data center products, particularly those related to artificial intelligence. A major driver of Nvidia’s recent success has been the growing adoption of its GPU accelerators for AI training and inference across various end markets. The company’s GPUs have become an industry standard for training large language models (LLMs), and its networking solutions, such as NVLink and InfiniBand, are critical to maximizing the performance of AI systems. Nvidia’s latest Blackwell GPU platform is expected to further extend its lead in the AI accelerator market, with significant performance and total cost of ownership benefits over its predecessors. As the AI market continues to expand with growing adoption across enterprises and sovereign nations, we expect Nvidia to maintain its dominance and experience sustained growth in its data center business. Beyond data centers, Nvidia has also benefited from strong demand in its gaming business, which has recovered after a period of inventory digestion in 2022. The company’s gaming GPUs have been well-received, and its focus on the high-end market has supported growth in average selling prices. Looking ahead, we expect the gaming market to remain healthy with ongoing growth potential. Nvidia also sees opportunities to diversify its business and foray into new markets, such as automotive and robotics. We continued to hold our position in Nvidia.”
4. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 222
Alphabet Inc. (NASDAQ:GOOG) is one of the best AI stories in the market and is well-positioned to exploit the next wave of artificial intelligence and innovation. Google DeepMind, the company’s research lab is making moves to develop new models that will provide teams with a single access point to all the company’s models. The research lab is working relentlessly to improve the Gemini experience. Back in February, the company launched Gemini 1.5 Pro, with accelerated performance across text, audio, video, and code.
Overall, the company’s new AI models and algorithms are 100 times more efficient compared to 18 months ago. Additionally, over 60% of generative AI startups and 90% of generative AI unicorns are customers of the Google Cloud, backed by the company’s fifth-generation tensor processing unit. Additionally, more than one million developers are using its generative AI tools including AI Studio and Vertex AI. The company spent $12 billion on capital expenditures in the first quarter of 2024, twice as much as the expenditure in Q4 2023.
Alphabet Inc. (NASDAQ:GOOG) also launched its NVIDIA chip rival in May. Trillium is the company’s family of AI data center chips, almost five times faster than its previous models. While Google’s tensor processing units (TPU) only account for almost 20% of the market, its advancements promise higher market shares in the future. The sixth generation Trillium chips perform 4.7 times better in terms of computing performance. Moreover, they are also 67% more energy efficient compared to the previous generation of Trillium processors. The new chip will be made available to Google Cloud users by the end of 2024.
Overall, 222 investors held stakes worth $32.35 billion in Alphabet Inc. (NASDAQ:GOOG). Of those, Ken Fisher’s Fisher Asset Management was the highest stakeholder with a position of $6.99 billion.
Wall Street analysts are bullish on the stock. On July 3, Needham reiterated a buy rating on the stock and maintained its price target of $210.
3. Meta Platforms Inc (NASDAQ:META)
Number of Hedge Fund Holders: 246
Meta Platforms Inc’s (NASDAQ:META) moves in AI contribute to its ranking as the third biggest AI story on our list. Meta AI, built on Llama 3, is one of the most advanced AI models developed by the company. Meta AI is capable of complex reasoning, problem-solving, and understanding instructions. Like Microsoft, Meta Platforms Inc (NASDAQ:META) is also advancing its AI infrastructure capabilities. In April, the company introduced its next generation of custom chips to manage its AI workloads. The new chips will significantly enhance the company’s recommendation ads model on Facebook and Instagram. 30% of posts on Facebook and 50% of content on Instagram are delivered by the company’s AI recommendation system. The Meta Training and Inference Accelerator (MTIA) v1 is the company’s first inference accelerator designed in-house, capable of handling high-complexity and low-complexity ranking and recommendation models. The company expects expenditure on AI to expand. As per a recent update, the company looks forward to increasing its capital expenditure from $35 billion to $40 billion, driven by large investments in AI, in 2024.
Meta’s growth in producing responsible AI models can be attributed to its strong research capabilities. On June 18, Meta Platforms Inc (NASDAQ:META) launched new AI research models to boost innovation at a much larger scale than before. The company released five new models including image-to-text and text-to-music generation models, a prediction model, and a model that detects AI-generated speech. Meta Chameleon is a family of mixed-modal models capable of understanding, processing, and delivering both text and words at the same time. The AI can take any input of text and words to output any combination of text and words required. To replace standard text and idea generation, the company proposed a multi-token prediction approach that would make large language models significantly more efficient. This approach trains models to predict a variety of future words instantly, replacing the common one-at-a-time approach.
Justin Patterson, Keybanc’s managing director, recently talked about Meta’s position in the market in an interview on Yahoo Finance. He raised his price target from $475 to $540 amid Meta’s strong advertising growth. Patterson pointed out that Meta’s ad revenue is increasing every quarter which is a reflection of strong demand and he is optimistic about returns from the AI advertising cycle. Overall, Patterson has noticed stronger engagement across all of Meta’s platforms due to AI investments and improvements in its ad models.
META was held by 246 hedge funds at the close of Q1 2024, with total stakes amounting to $46.92 billion. Of those, Ken Griffin’s Citadel Investment Group was the highest stakeholder with a position of $7.07 billion.
On July 3, Loop Capital reiterated a buy rating on the stock and maintained its price target of $550. Based on price targets from 67 analysts, META’s median price forecast of $530 represents an upside of almost 4% from its current price of $509.65.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 293
Microsoft Corporation (NASDAQ:MSFT) ranks second on our list of the best AI stories from this week. The technology company owns multiple platforms backed by artificial intelligence including Microsoft Azure, Dynamics 365, Power platform, and Microsoft Cloud. Microsoft Corporation (NASDAQ:MSFT) is also reducing its reliance on AI hardware companies to produce efficient infrastructure systems for its AI products. Last year, the company introduced tailored AI chips including the Microsoft Azure Maia AI Accelerator and the Microsoft Azure Cobalt CPU. The Maia AI Accelerator is optimized to run artificial intelligence tasks and generative AI. The Cobalt CPU, on the other hand, is capable of running general-purpose compute workloads on the Microsoft Cloud.
Overall, Microsoft Cloud reported $35 billion in revenue, up 35% year-over-year. Like Amazon, Microsoft is also big on forging partnerships with groundbreaking startups. Earlier this year, the company partnered with Mistral AI, an artificial intelligence company based in France. Mistral AI is capable of bridging communication gaps across different languages. Under the partnership, Mistral AI will gain access to Azure’s AI infrastructure to help them develop the next generation of large language models.
The company’s efforts in AI do not end here. Two weeks ago, on June 17, Microsoft Corporation (NASDAQ:MSFT) announced its efforts to empower scientists with AI-augmented scientific discoveries at companies like Unilever. Its Azure Quantum Elements platform is a groundbreaking addition to Microsoft’s suite of AI products. The platform offers two distinct capabilities including Generative Chemistry and Accelerated DTF. The platform is capable of exploring novel molecular structures at groundbreaking speed and scale. Moreover, it can also dissect and simulate chemical and molecular structures. The platform will be able to expedite chemical research, compressing 250 years of research to only 25.
293 investors were bullish on Microsoft Corporation (NASDAQ:MSFT) at the close of Q1 2024, with total stakes amounting to $88.16 billion. Among them, Michael Larson’s Bill & Melinda Gates Foundation Trust was the largest stakeholder with a position worth $15.36 billion. Wall Street is bullish on the stock.
On June 21, Citigroup maintained a buy rating on the stock and increased its price target from $495 to $520.
Here are some comments about MSFT from Mar Vista Investment Partners’ Q1 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) continues to occupy a strong position, poised to capture market share as businesses navigate the transition to a digital-first landscape and embrace generative AI-driven solutions. The company’s commanding presence in the enterprise arena, combined with its comprehensive product portfolio encompassing Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), and Software-as-a-Service (SaaS), establishes it as a crucial provider of IT solutions for companies of all sizes.
Microsoft is effectively executing its strategy in a sizable market by offering a roadmap for digital transformation and adoption of AI-driven solutions, such as ChatGPT, while enhancing productivity and reducing costs. Consequently, we anticipate that Microsoft’s solutions should exhibit resilience even in a more challenging macroeconomic environment, supporting low double-digit growth in intrinsic value within our investment horizon.”
1. Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Holders: 302
Amazon.com Inc (NASDAQ:AMZN) has become one of the best AI stories on Wall Street. The company is poised for significant growth in AI, thanks to its generative AI tools in Amazon Web Services (AWS) such as Amazon Q, Amazon Bedrock, and Amazon SageMaker. In March, Amazon.com Inc (NASDAQ:AMZN) invested an additional $2.75 billion in Anthropic, an artificial intelligence safety and research company, bringing its total investment to $4 billion. The company is leveraging Anthropic’s models and just launched the Claude 3.5 Sonnet to Amazon Bedrock, Anthropic’s most powerful model yet. Claude 3.5 Sonnet is twice as efficient as Claude 3 Opus and is one-fifth of its price. The new AI can perform extremely complex tasks and is well-equipped with skills in producing high-quality and authentic creative content, understanding data and contextual relationships, and developing advanced codes with sophisticated reasoning.
Amazon is also making in-house AI chips such as the AWS Trainium, and AWS Inferentia for deep learning training of more than 100 billion parameter models. The company is on its way to becoming an AI powerhouse. AWS logged $25 billion in revenue, up 17% year-over-year. In 2023, the company spent $48.4 billion in capital expenditure. to advance its generative AI and non-generative AI workloads. As per a recent update, Amazon plans to spend more than $100 billion to fund its projects in artificial intelligence and data centers over the next decade.
Maxim Group’s managing director and senior consumer internet analyst Tom Forte talked about Amazon’s AI position in a recent interview on Yahoo Finance. Forte believes Amazon (NASDAQ:AMZN) is well positioned to exploit artificial intelligence at the cloud computing and fulfillment center level, especially compared to tech giants like Apple. The company is making advancements in AWS while also employing techniques to automate its operations, which is a positive sign for investors.
Overall, Amazon.com Inc (NASDAQ:AMZN) was held by 302 hedge funds at the close of Q1 2024 with total stakes amounting to $60.37 billion. Of those, Ken Fisher’s Fisher Asset Management was the highest stakeholder with a position of $7.68 billion.
On July 1, Needham reiterated a buy rating on the stock and maintained its price target of $205. Analysts’ median price target of $220 represents an upside of 11% from current levels.
Lakehouse Capital is also bullish on the stock. Here are some comments about AMZN from its Q1 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) delivered an impressive quarterly result that also came in well ahead of analyst expectations. Net sales increased 13% year-on-year to $143.3 billion and operating profits increased 219% year-on-year to $15.3 billion (vs the high end of guidance at $12.0 billion). As has been the case for several quarters now, the highlight of the result was the significant improvement in profitability metrics, as management continues to drive cost efficiencies across its retail operations and Amazon Web Services (AWS). Amazon delivered to Prime members at its fastest speeds ever. In March, across the top 60 largest U.S. metro areas, nearly 60% of Prime member orders arrived the same or next day, and in London, Tokyo, and Toronto, 3 out of 4 items were delivered the same or next day. Bigger picture, we continue to believe that the market underestimates the length of the runway ahead in the core retail business (note that e-commerce sales in the U.S. still only make up 15% of total retail sales) and that there is still significant margin expansion ahead as scale and efficiency benefits continue to come through.”
However, Amazon bears believe the stock is overvalued, trading at 43 times this year’s earnings estimate. For value-conscious investors, there are several other opportunities. If you are looking for an AI stock that is as promising as AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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