In this article, we will take a detailed look at the 10 Buzzing AI Stocks on Latest News and Analyst Ratings.
Investors are still digesting the Fed’s aggressive rate cut and charting the path forward. Roger Altman, Evercore founder and senior chairman, said while talking to CNBC in a latest program that the Fed was not “behind the curve” but it went with a higher-than-expected rate cut amid labor market concerns.
Asked if he thinks we are headed toward a soft landing scenario, Altman said yes, as he believes growth is “resilient” and corporate profit outlook is good. Altman said equity markets are headed to have their best year since 1960.
“If the landing is finished and the Fed hits its target, Powell will deserve an A and it would be a pretty miraculous achievement,” Altman said.
While the analyst believes currently it’s a “near perfect” overall environment for the market, he did point to “storm cloud” gathering over the international stage including the expanding crisis in the Middle East, Russia’s war on Ukraine and America’s overall fiscal situation.
For this article we chose 10 trending AI stocks based on latest news and analyst ratings. With each company we have mentioned its hedge fund sentiment. 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. Arm Holdings PLC – ADR (NASDAQ:ARM)
Number of Hedge Fund Investors: 38
William Blair analyst Sebastian Naji recently started covering Arm Holdings PLC – ADR (NASDAQ:ARM) with an Outperform rating.
The analyst said the chipmaker is seen as a “critical vendor” of computing intellectual property with “best-in-class” financials. He said the company generates revenue from over 29B chips sold in the mobile, automotive, IoT, and data center markets.
“Arm’s royalty/licensing revenue model drives best-in-class profitability— R&D is the largest expense, 35% of total revenue in fiscal 2024. With expanding royalty rates helping drive better operating leverage (long-term target of 60% non-GAAP operating margin), we see room for sustained EPS and free cash flow growth,” the analyst said.
Arm Holdings PLC – ADR (NASDAQ:ARM) has unveiled its latest processor design, v9, which features significant upgrades like enhanced encryption and vector processing. These improvements have allowed ARM to double its take-rate compared to the previous v8 design, which is expected to boost royalty revenue over the next few years, according to analyst Naji.
The company, led by Rene Haas, is also seeing growth from its mobile CSS and data center Neoverse subsystems, driving new licensing activity. Arm Holdings PLC – ADR (NASDAQ:ARM) is gaining traction in the data center market, traditionally dominated by Intel. With hyperscalers like Amazon, Google, Microsoft, and Meta developing their own chips and Nvidia leading the AI accelerator space, Arm Holdings PLC – ADR (NASDAQ:ARM) is positioned to benefit from this growing sector. Naji estimates ARM’s data center business could account for 15% of its royalty revenue by 2025.
9. Cloudflare Inc (NYSE:NET)
Number of Hedge Fund Investors: 39
Cloudflare Inc (NYSE:NET) is an interesting name in the AI race which often goes unnoticed. Thanks to its inference service for AI called Workers AI, the company is making forays to monetize the AI boom.
How can Cloudflare Inc (NYSE:NET) benefit from AI. Being a key internet and Cloud infrastructure company, Cloudflare is positioned to benefit from the huge spending in AI. For example, Apple is launching a Private Cloud Compute (PCC) infrastructure to integrate AI features into its devices. Apple’s PCC will use its own silicon and employ RSA Blind Signatures for secure connections, relying on third-party providers like Cloudflare Inc (NYSE:NET) for encrypted communication. Morgan Stanley analysts estimate Cloudflare could generate up to $100 million annually from handling Apple’s AI queries.
Last month the company posted strong quarterly results and outlook, prompting Guggenheim to raise its price target.
Analyst John DiFucci of Guggenheim noted that Cloudflare Inc (NYSE:NET) business showed signs of a turnaround after more than a year of slowing momentum. The company reported an 11% increase in adjusted new annual recurring revenue, following declines in the previous two quarters. DiFucci attributed the improvement to changes in Cloudflare’s go-to-market strategy and growth in its enterprise deals, particularly those involving Cloudflare Workers.
“We’ve always respected Cloudflare Inc (NYSE:NET) vision and product lineup but questioned if its product-led approach was right as it targeted larger markets,” DiFucci wrote. He added that while this quarter’s results are positive, it’s too early to call it a lasting trend.
However, DiFucci maintained a Sell rating on the stock but raised the price target from $50 to $57.
Baron Fifth Avenue Growth Fund stated the following regarding Cloudflare, Inc. (NYSE:NET) in its Q2 2024 investor letter:
“Cloudflare, Inc. (NYSE:NET) provides content delivery network services, cloud cybersecurity, denial-of-service mitigation, Domain Name Service, and ICANN-accredited domain registration services. Shares fell 14.4% during the quarter on remarks from the CEO about worsening macro conditions, citing the negative impact of geopolitical uncertainties on customer buying behavior. On the positive side, the company posted strong quarterly results with revenue growth of 30% year-over-year, showing evidence that the changes to the company’s go-to-market strategy were resonating with solid growth across its large customer cohorts (revenues from customers spending over $100,000 represented 67% of the total, up from 62% in the first quarter of 2023), double-digit improvement in sales productivity, and new pipeline attainment ahead of plan. Cloudflare reiterated revenue guidance for the year on resilience in cybersecurity spend. While we fine-tuned our model on the back of the company’s increased macro headwind commentary, pushing out revenue reacceleration estimates from the second quarter of 2024 to the first quarter of 2025, this is still ahead of guidance. We retain conviction in the long-term thesis: a strong founder-led business with a unique global network and significant pricing advantages powering a disruptive multi-product growth story with improving margins. We therefore remain shareholders.”
8. Applovin Corp (NASDAQ:APP)
Number of Hedge Fund Investors: 54
Citi has increased its estimates on APP, citing increased confidence in hitting revenue growth of 20% or more.
“We see multiple paths for AppLovin to achieve its targeted software revenue growth of 20% to 30% including incremental share gains of mobile gaming ad spend, higher take rates, and a likely expansion into ecommerce ad budgets,” analyst Jason Bazinet wrote in an investor note.
Ankur Crawford, Alger executive VP, while talking to CNBC in a latest program said that in about 3 to 5 years AI is going to provide us with superhuman intelligence.
“All of the CapEx being spent today is whole-heartedly justifiable because the opportunity to monetize that AI by that time is beyond what anyone has contemplated in the market so far.”
Ankur Crawford believes Applovin Corp (NASDAQ:APP) is one of the top underappreciated AI stocks.
She said that AppLovin is a gaming advertising platform.
“They are using AI to basically make you download more games and they can monetize inventory better than anyone else can. They have 70% market share, and they are going into ecommerce as well. So, instead of serving you up a game, they will serve you up a product and monetize their inventory better than they were able to before,” the analyst said.
Crawford said Applovin Corp (NASDAQ:APP) is “interesting” because their cost structure is already “embedded.”
“For every dollar they get, they get a almost a 100% fall through on the margin line. So, massively cash-flow generative. The Street has $6 in earnings (estimate) in 2026,” the analyst added.
Carillon Scout Mid Cap Fund stated the following regarding AppLovin Corporation (NASDAQ:APP) in its Q2 2024 investor letter:
“AppLovin Corporation (NASDAQ:APP) was another top contributor. The advertising technology platform, focused on mobile applications, reported strong earnings results in early May. Its AI-driven Axon 2.0 mobile advertising platform continues to produce strong returns for customers, which is leading to more than expected spending on the platform. Although the one-year anniversary of Axon 2.0’s release occurs this year, the company is already working to expand beyond mobile applications with opportunities in e-commerce and connected television. We believe AppLovin’s valuation, free cash flow, and leading market share remain attractive.”
7. Marvell Technology Inc (NASDAQ:MRVL)
Number of Hedge Fund Investors: 74
About a year ago, Brook Dane, Goldman Sachs Asset Management, said while talking to CNBC that the market was missing on the AI potential of Marvell Technology Inc (NASDAQ:MRVL).
“Marvell’s core business is doing connectivity in data centers and one of the key bottlenecks besides using GPUs is thi connectivity issue and we think as the big platforms continue to spend on AI they are gonna continue to invest behind Marvell Technology Inc (NASDAQ:MRVL) connectivity solutions.”
Artisan Mid Cap Fund stated the following regarding Marvell Technology, Inc. (NASDAQ:MRVL) in its Q2 2024 investor letter:
“During the quarter, we initiated new GardenSM positions in CCC Intelligent Solutions, Marvell Technology, Inc. (NASDAQ:MRVL) and Insmed. Marvell Technology is a semiconductor company offering networking, secure data processing and storage solutions to customers worldwide. We believe Marvell has among the broadest range of intellectual property in technological areas (e.g., high-bandwidth data switching and storage applications) that position it well for the growing requirements of data centers, wireless networks and autos. Several of the company’s product lines (e.g., custom silicon, optical connectivity and switching) are benefiting from the growth of AI data centers. And we believe a significant opportunity exists for the company to help design and manufacture cost-effective custom data center chips that would help cloud providers reduce their reliance on expensive graphics processing units (GPUs). Furthermore, like many other semiconductor companies, a portion of its business may be poised for a cyclical recovery after the industry’s recent inventory correction.”
6. Dell Technologies Inc (NYSE:DELL)
Number of Hedge Fund Investors: 88
UBS analysts recently said in a note that AI stocks will continue to grow on the back of strong capital spending and demand. Solita Marcelli, chief investment officer for Americas at UBS, said he expects global tech to see earnings growth of about 15-20%.
“We continue to like AI beneficiaries within the tech sector,” said Marcelli.
The firm named Dell Technologies Inc (NYSE:DELL) among these beneficiaries.
Carillon Scout Mid Cap Fund stated the following regarding Dell Technologies Inc. (NYSE:DELL) in its Q2 2024 investor letter:
“Dell Technologies Inc. (NYSE:DELL) was a top contributor despite reporting disappointing first-quarter earnings results, because investors looked through the near-term disappointment and expected strong growth from AI-related servers and personal computers. We expect Dell to participate in the growth of artificial intelligence hardware, especially as enterprises invest more aggressively. We like the company’s depth and breadth of products and services, as well as its focus on keeping costs low.”
5. Alibaba Group Holding Ltd – ADR (NYSE:BABA)
Number of Hedge Fund Investors: 91
Alibaba Group Holding Ltd – ADR (NYSE:BABA) is trying hard to catch up with peers in the AI race. The Chinese ecommerce and Cloud giant recently made headlines after reports that the company released 100 open-source artificial intelligence models. The company also released a text-to-video tool based on its AI models. Alibaba Group Holding Ltd – ADR (NYSE:BABA) open-source models are developed to be used in various industries including automobiles, gaming and science research.
O’keefe Stevens Advisory stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its Q2 2024 investor letter:
“We initiated two new positions during the quarter: Alibaba Group Holding Limited (NYSE:BABA) and Perrigo (PRGO). Both have seen their stocks decline over 70%+ from their all-time highs.
Alibaba is the largest e-commerce player in China, with 40% gross merchandise volume (GMV) market share through its Taobao and T-mall businesses. While the cloud computing business is relatively small, its 37% market share in China positions it well to capitalize on the increasing demand for AI-related products. In the most recent quarter, AI-related cloud revenue recorded triple-digit growth y/y, with the expectation that total cloud revenue will accelerate to double-digit growth in 2H 2025.
It’s rare to find a dominant market share business with significant tailwinds trading for ~10x adj. EPS. After accounting for their ~$60B net cash balance sheet, the stock is trading at 6-7x, which, we believe, is far too cheap. We understand this business would not trade at this price if it were a U.S. business. However, the valuation gap at a high single-digit P/E is pricing in a combination of the following risks – 1. China invading Taiwan. 2. Cash can never leave mainland China (disproven). 3. Increasing competition from Pinduoduo and Shien resulting in market share loss 4. China’s geopolitical tensions worsen. 5. Economic slowdown stemming from the recent housing market downturn. 6. VIE structure creates doubt over the actual ownership of the business. All risks have merit, with cash distribution restrictions at the lower end due to the recently announced dividend and special dividend. Cash returned to shareholders totaled $16.5B in FY24, up from $13.4B in FY23…” (Click here to read the full text)
4. Salesforce Inc (NYSE:CRM)
Number of Hedge Fund Investors: 117
Salesforce Inc (NYSE:CRM) is in the spotlight as the company held its Dreamforce event. Baird analyst Rob Oliver said that the conference highlighted positive developments in cloud and AI. Oliver also highlighted customers’ interest in Salesforce’s Agentforce and Data Cloud, both seen as critical to Salesforce Inc’s (NYSE:CRM) future. However, with Agentforce not becoming widely available until mid-October, financial impact is not expected until fiscal 2026 or 2027.
The analyst said customer conversations at the event showed high interest in the company’s product roadmap, with Agentforce being the standout topic. Early use cases are likely in sales and service, with opportunities for industry-specific applications. The platform is flexible, allowing customers to use pre-built templates or create custom agents.
Oliver has an Outperform rating and a $315 price target on Salesforce Inc (NYSE:CRM).
Ithaka US Growth Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its Q2 2024 investor letter:
“Salesforce, Inc. (NYSE:CRM) is the largest pure-play cloud software company, holding a leading market share in customer relationship management applications and a top-five market share position in the company’s other clouds (Marketing, Service, Platform, Analytics, Integration, and Commerce). The company’s software subscription term-license model differs from the traditional perpetual-license software model in two respects: (1) the software is hosted on centralized servers and delivered over the internet, as opposed to traditional enterprise software that is loaded directly onto customers’ hard drives or servers; and (2) the revenue model is subscription-based, typically charging monthly fees per user as opposed to charging one-time licensing fees. The stock’s weak relative performance followed its fiscal first quarter earnings announcement, where the company missed top-line and cRPO (current remaining performance obligations) estimates while also issuing weak forward guidance.”
3. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 179
Barclays Tom O’Malley recently said in a note that spending on AI chips must rise to meet even modest expectations from large language model (LLM) developers. The analyst noted that the recent sell-off in AI chip stocks, especially after NVIDIA Corp (NASDAQ:NVDA) earnings, has raised concerns about whether the market is nearing a peak. However, O’Malley emphasized that these fears overlook the significant compute needs required to power future AI models.
Barclays identified three key takeaways for the semiconductor sector:
First, the need for compute resources is expected to surge. For instance, by 2027, just three frontier models with 50 trillion parameters each could require around 20 million chips for training alone. The demand for compute is anticipated to outpace improvements in chip performance.
Second, a dual approach to AI accelerators is emerging. NVIDIA Corp (NASDAQ:NVDA), AMD, and startups are expected to dominate in training and inference for frontier models, while hyperscale companies will rely on custom silicon for specialized tasks.
Third, inference, where AI models apply learned knowledge, will play a significant role in monetizing frontier models. NVIDIA Corp (NASDAQ:NVDA) claims that 40% of its chips are already used for inference, with more providers focusing on this market to drive down costs and improve return on investment.
O’Malley concluded that the AI chip industry is still in its early stages, and higher investments in compute resources are critical to meet future demands.
Alger Spectra Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) is a leading supplier of graphics processing units (GPUs) for a variety of end markets, such as gaming, PCs, data centers, virtual reality, and high-performance computing. The company is leading in most secular growth categories in computing, and especially artificial intelligence and super-computing parallel processing techniques for solving complex computational problems. Simply put, Nvidia’s computational power is a critical enabler of AI and therefore essential to AI adoption, in our view. During the quarter, the company reported better-than-expected fiscal first quarter results driven by strong demand from data centers. Additionally, management noted that large cloud service providers, contributing approximately 45% of data center sales, recognize the high return on investment offered by Nvidia’s computing solutions, which are driving AI spending. The company also introduced its next-generation H200 chip, which nearly doubles the inference performance compared to the H100 chip, enhancing how trained AI models process new data. Lastly, management raised their fiscal second quarter guidance, noting that demand for their current H100 chips remains strong, and that demand for their next generation products is estimated to outstrip supply over the next year. We continue to believe the company is well positioned to potentially benefit from the growing AI data center workloads, which are driving demand for the increased interconnections and fully accelerated software stacks, thereby enabling leading application performance and fast result times.”
2. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 184
Wall Street has started to feel that the high expectations they had with Apple Inc (NASDAQ:AAPL) new iPhone might not materialize after all.
Shipments for Apple Inc (NASDAQ:AAPL) latest iPhone 16 appear to be lower than last year, according to data from UBS Evidence Lab. The lab tracks iPhone availability across 30 regions, and UBS analyst David Vogt noted that delivery wait times for the iPhone 16 Pro Max models are about two weeks shorter than last year in major markets like the U.S., China, and Europe.
“Wait times for the iPhone 16 lineup have been uninspiring since preorders began last Friday,” said UBS analyst David Vogt, in an investor note. “On average, delivery wait times for the Pro Max models are shorter by roughly 2 weeks across the US, China, Germany, Great Britain, France and Japan.”
In the U.S., wait times are 26 days, down from 40 days last year, while in China, they’re just 18 days compared to 36. Despite the upcoming Apple Inc (NASDAQ:AAPL) Intelligence features, initial pre-order sales for the iPhone 16 series are estimated at 37 million units, down 12.7% year-over-year.
Baron Technology Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q2 2024 investor letter:
“The Fund’s chief relative detractor was Apple Inc. (NASDAQ:AAPL), even though it was a meaningful contributor to absolute performance, as we added to our Apple position significantly during the period. We bought Apple well, but in 20/20 hindsight we didn’t buy enough. Because Apple has an oversized weight in the Benchmark (its average weight was 15.7% for the period), when Apple’s stock outperforms (it appreciated 23.0%), it has generally been a headwind to relative performance. Our Apple underweight accounted for 33% of our relative underperformance for the period.
This quarter we increased the size of our position in Apple Inc., a leading technology company known for its innovative consumer electronics products like the iPhone, MacBook, iPad, and Apple Watch. Apple is a leader across its categories and geographies, with a growing installed base that now exceeds 2 billion devices globally. The company’s attached services – including the App Store, iCloud, Apple TV+, Apple Music, and Apple Pay – provide a higher margin, recurring revenue stream that both enhances the value proposition for its hardware products and improves the financial profile. Apple now has well over 1 billion subscribers paying for these services, more than double the number it had just 4 years ago. The increasing services mix has led to healthy operating margin improvement, providing more free cash flow for Apple to reinvest in the business and to distribute to shareholders. Throughout its 48-year history, Apple has successfully navigated and capitalized on major technological shifts, from PCs to mobile to cloud computing. We believe the company’s leading brand and device ecosystem position it to do equally well in the AI age, and this was the driver of our decision to re-invest. “Apple Intelligence” – the AI strategy unveiled at Apple’s recent Worldwide Developer Conference – leverages on-device AI and integrations with tools like ChatGPT to enhance user experiences across its ecosystem. The AI suite enables users to create new images, summarize and generate text, and use Siri to perform actions across their mobile applications, all while maintaining user privacy and security. We think Apple Intelligence can drive accelerated product upgrade cycles and higher demand for Apple services. The combination of growth re-acceleration, increasing services contribution, and thoughtful capital allocation should continue driving long-term shareholder value.”
1. Microsoft Corp (NASDAQ:MSFT)
Number of Hedge Fund Investors: 279
Microsoft Corp (NASDAQ:MSFT) is trending after the company announced a dividend hike and a $60 billion stock buyback program. Mizuho Securities recently reaffirmed its Outperform rating on the stock with a $480 price target, with analyst Gregg Moskowitz noting that the buyback amount matches what was announced three years ago, and no change is expected in the repurchase pace.
Moskowitz highlighted Microsoft Corp (NASDAQ:MSFT) long-term growth potential, emphasizing the significant opportunities from generative AI adoption and the company’s ability to monetize it.
Mar Vista Focus strategy stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q2 2024 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) continues to occupy a strong position, poised to capture market share as businesses, both large and small, 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 scales. Microsoft is effectively executing its strategy in a sizable market by offering a roadmap for digital transformation and adoption of innovative, 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.”
While we acknowledge the potential of Microsoft Corporation (NASDAQ:MSFT), our conviction lies in the belief that under the radar 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 MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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