This year, artificial intelligence played a key role in two Nobel Prizes for scientific achievement. One prize was awarded for developing the technology, while the other was for its application. These two Nobel Prize wins clarify that AI is here to stay. However, key issues such as regulations, ethical use, and other potential risks, still need to be resolved for responsible and sustainable integration into society.
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On Saturday, December 7, Physics Nobel Prize winner Geoffrey Hinton and Chemistry laureate Demis Hassabis asserted the need for strong regulation of artificial intelligence, having played a key role in their awards.
“AI is a very important technology to regulate but I think it’s very important that we get the regulations right and I think that’s the hard thing at the moment is it’s such a fast moving technology”.
-Hassabis told a news conference in Stockholm.
According to Hassabis, having jointly won the Nobel Prize with Americans David Baker and John Jumper for revealing the secrets of proteins through AI, the main issue is defining the purpose, deployment, and making sure that artificial intelligence benefits all of humanity.
In this regard, British-Canadian Hinton, considered the “Godfather of AI”, said he wished he had thought about safety earlier, reflecting his worries about how AI could potentially escalate the arms race. He gained attention last year after he left Google to warn against risks of AI outsmarting people someday, and was awarded a Nobel Prize along with American John Hopfield for work on artificial neural networks.
President-elect Donald Trump has vowed deregulation and also shared his views to rescind President Joe Biden’s executive order on AI after he takes office in January. Nevertheless, it is still yet to unfold how he will approach AI regulation in particular. Trump has already appointed David Sacks as the AI and crypto czar, showcasing his proactive stance on advancing artificial intelligence and cryptocurrency innovation.
In light of this, Axios reported that the US government has approved the export of advanced artificial intelligence chips to a facility in the United Arab Emirates as part of the company’s highly-scrutinized partnership with Emirati AI firm G42. There were concerns raised about the transfer of sensitive technology to China, and the approved export license includes strict conditions to prevent access to the facility by personnel from nations under U.S. arms embargoes or those listed on the U.S. Bureau of Industry and Security’s Entity List.
A macro view of a 5G/4G chips and modules, displaying the cutting edge technology of the company.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. 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. Veritone, Inc. (NASDAQ:VERI)
Number of Hedge Fund Holders: 6
Veritone, Inc. (NASDAQ:VERI) is engaged in the provision of artificial intelligence (AI) computing solutions and services. On December 5, the company announced that its Artificial Intelligence Solutions Group’s (AISG) offerings are now available on the AWS Marketplace. This availability in AWS Marketplace allows organizations to adopt AI by accessing, purchasing, and deploying Veritone’s AI solutions directly within the AWS cloud environment. Leveraging these solutions will enable enterprises to drive innovation, efficiency, and scale enterprise AI initiatives.
“Our mission at Veritone is to empower organizations with transformative AI solutions tailored to their unique business problems. Expanding our AI Solutions Group’s offerings to the AWS Marketplace broadens our reach, enabling Veritone to deliver AI solution development services and immersive bootcamps to more organizations, unlocking new opportunities for growth and innovation”.
-Ryan Steelberg, president and chief executive officer, Veritone.
9. PROS Holdings, Inc. (NYSE:PRO)
Number of Hedge Fund Holders: 6
PROS Holdings, Inc. (NYSE: PRO) is a leading provider of AI-powered SaaS pricing and selling solutions. On December 6, the company announced it has been named a Leader in the IDC MarketScape: Worldwide CPQ Applications for Commerce 2024-2025 Vendor Assessment. The recognition highlights PROS Holdings’ strong AI leadership, unique position as an end-to-end platform with advanced pricing capabilities, and deep integration with core partners. CPQ applications are crucial for companies to configure products and services, execute pricing strategies, manage deal construction, and generate quotes for customers. In particular, they help maneuver complex B2B sales environments where the accurate customization of offerings and pricing to customer needs can greatly impact sales success and operational efficiency.
“PROS approach to CPQ is unique in today’s complex B2B sales environment, where the need for efficient and accurate sales processes has never been greater. With robust AI-driven pricing capabilities and self-service environment packing a 1-2 punch, PROS continues to drive product innovation that supports sellers’ needs as they embrace multichannel sales strategies and deliver better buyer experiences”.
-Heather Hershey, Research Director, IDC.
8. Perfect Corp. (NYSE:PERF)
Number of Hedge Fund Holders: 9
Perfect Corp. (NYSE:PERF) is a leader in AI and AR-powered beauty technology solutions. The company is celebrating the holiday season with its exciting AI-powered features. The company’s YouCam app, an AI-driven photo editing application, is merging advanced technology with festive cheer. From AI-powered holiday outfit inspirations to photo transformations into festive masterpieces and holiday-themed AI avatars, these updates aim to make celebrations of the seasons more creative, vibrant, and memorable.
“Our goal is to make creativity accessible to everyone. These features empower users to transform everyday moments into extraordinary memories, adding a personal and festive touch to their celebrations. Especially during the holiday season, we aim to inspire creativity and connection through innovative, easy-to-use tools”.
-Alice Chang, Perfect Corp. Founder and CEO.
7. Docebo Inc. (NASDAQ:DCBO)
Number of Hedge Fund Holders: 15
Docebo Inc. (NASDAQ:DCBO) functions as a learning management software company and provides an artificial intelligence (AI)-powered learning platform for features such as personalized learning and intelligent content recommendations. On December 3, Docebo Inc. and Class Technologies, a global leader in virtual classrooms, announced a strategic partnership for transforming virtual instructor-led training (VILT). The partnership will enable customers to use their Docebo training content within Class, creating a better learning experience. Class will also be providing Docebo customers with AI capabilities and analytics for measuring learner engagement in real-time as well as empowering L&D leaders to deliver more effective upskilling and reskilling, onboarding, and leadership development programs.
“We are proud to partner with Class and bring our AI-powered learning platform’s efficiency and automation directly to virtual classrooms. Together, we share a vision for a more learner-centric future of learning that is focused on true engagement and more impactful outcomes for our global users.”
-Travis Burke, Executive Vice President of Corporate Development & Partnerships at Docebo.
6. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 43
Palantir Technologies Inc. (NASDAQ:PLTR), having surged more than 300% this year, is a leader in artificial intelligence systems. On December 5, Shield AI, a defense technology company focused on building autonomous systems, announced that it is expanding its work with Palantir Technologies Inc. (NASDAQ: PLTR) for the development and delivery of large-scale command and control of autonomous uncrewed systems. Shield AI will use Palantir’s Warp Speed, its manufacturing OS for American re-industrialization, to deliver AI-powered solutions that protect service members and civilians. In particular, the partnership will combine the strengths of both companies, Shield AI’s advanced Hivemind software development kit, along with Palantir’s suite of powerful software solutions; for solving the most critical defense challenges.
“Shield AI and Palantir have both built technology products proven in the most demanding environments. Our partnership is about bringing together Palantir’s software dominance and Shield AI’s expertise in autonomy to deliver the best possible outcomes for customers. It’s exciting to scale up what we’ve been working on together in this next chapter of our partnership”.
-Brandon Tseng, Shield AI’s President, Co-founder, and former Navy SEAL.
5. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 51
AppLovin Corporation (NASDAQ:APP) operates a leading marketing platform that’s powered by AI technology. On December 6, Citi raised the firm’s price target on AppLovin (APP) to $460 from $335 and kept a “Buy” rating on the shares. The firm is bullish on the company’s growth prospects, particularly in mobile gaming and eCommerce. As a result, it has slightly raised its forecast and recalibrated its target multiple to accurately reflect the company’s peer group and growth prospects. The management has also pointed out the company’s model enhancements, which is supported by AppLovin’s AI-driven tools like Axon 2.0, the company’s advertising platform that optimizes ad targeting and performance. In addition, early traction from the firm’s push into eCommerce, also heavily reliant on AI, and the potential scope to improve conversion rates, were also highlighted.
4. Accenture plc (NYSE:ACN)
Number of Hedge Fund Holders: 60
Accenture plc (NYSE:ACN) offers strategy and consulting, industry X, song, and technology and operation services. The company’s artificial intelligence consulting services and industry-specific solutions are high in demand. On December 6, Goldman Sachs analyst James Schneider upgraded Accenture plc (NYSE:ACN) to “Buy” from Neutral with a price target of $420 up from $370. The firm said that the professional services company has the best-in-class artificial intelligence use. Accenture has experienced substantial growth in its generative AI (Gen AI) business throughout the fiscal year 2024, achieving $3 billion in new Gen AI bookings that demonstrate its leadership in the Gen AI space.
3. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 116
Salesforce Inc (NYSE:CRM) is a cloud-based CRM company that has gained traction after the launch of its AI-powered platform called Agentforce. On December 4, Stifel analyst J. Parker Lane raised the firm’s price target on Salesforce (CRM) to $425 from $390 and kept a “Buy” rating on the shares. Lane considers Salesforce as “the best way to play AI” owing to its sizable, multi-cloud customer base and its strategic advantage with established ownership of relevant agent workflows and data within the Customer 360 ecosystem. He further stated that the company’s cRPO growth remains in double-digits for the second consecutive quarter, even though Agentforce and Data Cloud failed to contribute meaningfully as of now.
“With the story now centered around the Agentforce/AI opportunity, we believe management’s disclosure of 200 Agentforce deals (GA late in the quarter) and a significant pipeline served as solid initial proof-points in the company’s ability to capture AI workloads and it’s positioning relative to enterprise competitors”.
– Stifel analyst J. Parker Lane.
2. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 128
Broadcom Inc. (NASDAQ:AVGO) is a technology company that provides custom chips for AI applications. On December 5, the company announced a new chip packaging technology developed by its custom chip unit which makes AI processors for cloud providers. The technology aims to enhance semiconductor speeds considering the swelling demand for generative artificial intelligence infrastructure. The technology, 3.5D XDSiP (short for eXtreme Dimension System in Package), will enable custom-chip customers to increase the amount of memory inside each packaged chip and enhance performance by directly connecting critical components.
“Broadcom’s 3.5D platform enables chip designers to pair the right fabrication processes for each component while shrinking the interposer and package size, leading to significant improvements in performance, efficiency and cost”.
-Frank Ostojic, senior vice president and general manager of Broadcom’s ASIC Products Division.
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) is a technology company that has strengthened its mark in the AI realm with the launch of Apple Intelligence, its personal intelligence system. On December 5th, TF International Securities analyst Ming-Chi Kuo said in a Medium post that Apple has delayed the mass production of a smart home-focused, display-equipped HomePod until after WWDC 2025 or 3Q25. The delay, mainly stemming from software development, is anticipated to feature an A18 processor, a 6-7 inch display, and support for Apple Intelligence, Kuo said. He further added that is expected to ship around 500,000 units in 2H25. Given that the market response is positive, the product’s annual shipments could reach the million-unit level.
While we acknowledge the potential of AAPL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AAPL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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