Predictions of artificial intelligence reaching human-level intelligence have been made for over 50 years. Regardless, the quest to achieve it continues even today, with almost everyone working in the AI field being too focused on achieving it. According to Sam Altman, CEO of OpenAI, reaching AGI isn’t a milestone we can define by a particular date.
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“I think we’re like in this period where it’s going to feel very blurry for a while. People will wonder if is this AGI yet, or is this not AGI, or it’s just going to be this smooth exponential. And probably most people looking back in history won’t agree when that milestone was hit. And we’ll just realize it was like a silly thing”.
-Sam Altman
In the latest innovations in artificial intelligence, new research has revealed how the upcoming AIs are capable of human deceit. Joint experiments conducted by AI Company Anthropic and the nonprofit Redwood Research reveal how Anthropic’s model, Claude is capable of strategically misleading its creators during the training process in order to avoid being modified. According to Evan Hubinger, a safety researcher at Anthropic, this will make it harder for scientists to align “AI systems” to human values.
“This implies that our existing training processes don’t prevent models from pretending to be aligned”.
-Evan Hubinger told TIME.
Researchers have also found evidence that as AIs become more powerful, their capability to deceive their human creators also increases. Consequently, it means scientists would be less confident about the effectiveness of their alignment techniques as AI becomes more advanced.
A similar research conducted by AI safety organization Apollo Research revealed how OpenAI’s latest model, o1, also intentionally deceived its testers during an experiment. The test required the model to achieve its goal at all costs, where it lied when it believed that telling the truth would ultimately lead to its deactivation.
“There has been this long-hypothesized failure mode, which is that you’ll run your training process, and all the outputs will look good to you, but the model is plotting against you. The paper, Greenblatt says, “makes a pretty big step towards demonstrating what that failure mode could look like and how it could emerge naturally”.
– Ryan Greenblatt, a member of technical staff at Redwood Research and the lead author on the paper.
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.
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10. BigBear.ai Holdings, Inc. (NYSE:BBAI)
Number of Hedge Fund Holders: 9
BigBear.ai Holdings, Inc. (NYSE:BBAI) is an artificial intelligence specialist offering defense and national security solutions. On December 19, the company announced that it has been chosen for the U.S. General Services Administration’s (GSA) OASIS+ (One Acquisition Solution for Integrated Services Plus) Unrestricted Multiple Agency Contract (MAC). The OASIS+ is a suite of government contracts that enables federal agencies to procure professional services easily. It is a 10-year contract with no maximum dollar ceiling and an unlimited number of task orders at any dollar value. This allows government agencies to have access to Big Bear.ai’s AI tools and expertise easily.
“We are honored to be selected for GSA OASIS. This milestone underscores our proven track record of delivering innovative solutions that merge deep expertise with cutting-edge technology. Through OASIS+, we look forward to expanding our reach and impact across critical federal missions while strengthening our partnerships with existing customers”.
-said Mandy Long, CEO of BigBear.ai.
9. SAP SE (NYSE:SAP)
Number of Hedge Fund Holders: 36
SAP SE (NYSE:SAP) is a leader in ERP software leveraging artificial intelligence to enhance its enterprise resource planning (ERP) solutions. On December 18, CFRA analyst Angelo Zino downgraded SAP from Buy to “Hold” with a price target of $259.00. According to the analyst, valuation concerns have been the primary reason for the downgrade. The company’s forward price-to-earnings (P/E) ratio is currently near its historical highs, significantly surpassing the average P/E ratio of its software industry peers. Meanwhile, the analyst has upheld the 12-month price target based on a P/E of 35.1 times their 2026 earnings per share (EPS) projection.
The target incorporates the anticipated growth in SAP’s advancements in AI and cloud technologies. From launching AI enhancements in its supply chain solutions to expanding its AI copilot Joule, its collaboration with Amazon Web Services, and acquisitions such as that of WalkMe that boosted SAP’s AI offerings, the company has had modest achievements throughout the year. Nevertheless, despite the rating downgrade, the analyst expects the company’s fundamentals to improve from 2025 to 2027. Cloud services are forecast to contribute to a larger portion of revenue and accelerate revenue growth. Expanded partnerships and strategic investments will further act as key drivers of AI monetization.
8. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 43
Palantir Technologies Inc. (NASDAQ:PLTR) is a leading provider of artificial intelligence systems. On December 18, the company announced that it has extended its long-standing partnership with the U.S. Army. This partnership extension will enable the delivery of the Army Vantage capability in support of the “Army Data Platform” (ADP) for a total value of $400,746,583, for a period of up to four years. Since 2018, the army has been using Palantir’s software, in particular its data and artificial intelligence, to perform essential missions and enable faster decision-making. The new agreement will in turn allow the army to support additional programs with data and AI capabilities.
“Palantir is proud to support the Army’s commitment to more efficient, data-driven decisions through the successful expansion of the Vantage program. Our continuous addition of new AI capabilities enables the Army’s own ability to develop applications and incorporate the benefits of effective data analysis across nearly every high-priority mission in the Army”.
-Akash Jain, President, Palantir USG.
7. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 51
AppLovin Corporation (NASDAQ:APP) operates a leading marketing platform powered by AI technology. On December 17, James Heaney CFA from Jefferies issued a “Buy” rating on AppLovin with a price target of $400.00. Several factors have led to the buy rating, predominantly the company’s market position, and growth potential. The advertising and marketing technology company has demonstrated significant effectiveness across various marketing channels, as evidenced by the company’s ability to secure a significant portion of advertising budgets that largely stem from high spenders. In particular, the company’s share of e-commerce revenue is growing, with its performance nearing that of industry giants such as Google. This revenue is significantly driven by Applovin’s AI-powered technologies, which the company uses for analyzing consumer revenue, enhancing ad relevance, and even boosting e-commerce outcomes.
Furthermore, the analyst has also pointed out significant improvements in the company’s innovative marketing strategies, such as the use of Halo Effects. This has allowed the company to attribute consumer interest back to initial advertisements, boosting brand awareness. The company did experience a slight dip in key shopping events like Black Friday and Cyber Monday, but its absolute spend increased, reflecting strong confidence from top brands. The company also plans to expand its e-commerce platform to more advertisers, with the company’s AI targeting model expected to continue refining its effectiveness.
6. Twilio Inc. (NYSE:TWLO)
Number of Hedge Fund Holders: 52
Twilio Inc. (NYSE:TWLO) is a leading cloud communications platform-as-a-service (CPaaS) company that enables developers to build, scale, and operate real-time communications within software applications. On December 18, Stifel raised the firm’s price target on Twilio to $110 from $80 and kept a “Hold” rating on the shares. The rating was issued as part of a 2025 preview for the software group. According to the analyst, the start of 2024 was rather “bumpy”. However, the year is “ending on a higher note” for the enterprise software group.
The factors driving this good ending are stabilizing/modestly accelerating top-line growth, relatively attractive mid-year multiples, and earlier signs of artificial intelligence monetization, especially among the larger software companies. The analyst also attributed the positive trajectory to declining interest rates, solid economic growth, and a “safe haven” status following the election due to limited to no tariff or China exposure. While the firm anticipates management teams to adopt a conservative approach to Q1 guidance, they also anticipate top-line growth rates to reflect what they have seen during the back half of 2024 on the above-mentioned factors.
5. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 56
International Business Machines Corporation (NYSE:IBM) is a multinational technology company that offers consulting services and a suite of AI software products. On December 18, IBM announced that Lockheed Martin, an aerospace and defense company, has integrated its enterprise-ready Granite large language models (LLMs) into its AI factory tools. These AI factory tools are accessed by more than 10,000 Lockheed Martin developers and engineers. The move will allow Lockheed to enhance Lockheed Martin’s AI Factory, accelerating deployment timelines, integrating commercial best practices, and ensuring robust data governance. IBM’s Granite LLMs will offer Lockheed’s workforce with cutting-edge code, language, advanced reasoning, and guardrail capabilities that will help customize assistants and agents, augment national security missions, and overall speed up business transformation.
“IBM is excited to work with Lockheed Martin to bring the power of our Granite large language models to their AI factory. Collaborations like ours, built on a foundation of responsibility and open innovation, are critical to shaping a future where AI significantly contributes to defense without compromising security, capability, readiness or societal values”.
-Vanessa Hunt, technology general manager, U.S. federal market, IBM.
4. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 91
Oracle Corporation (NYSE:ORCL) is a database management and cloud service provider. It hosts immense data that AI applications need to process. On Wednesday, December 18, the Evercore team led by Kirk Materne declared Oracle Corporation (NYSE:ORCL) as their top pick heading into 2025. The analysts believe that the risk/reward continues to look attractive for Oracle, especially after the recent post-earnings pullback. The company posted its fiscal Q2 earnings result on December 9, which missed expectations.
Its AI story has lifted its stock 80% this year, and even when the company boasted “record level AI demand driving Oracle Cloud Infrastructure revenue up 52% in Q2”, cloud infrastructure revenue was what the typical analyst had expected. Intense competition in the cloud services sector, challenges in converting strong demand into revenues and growth, and currency headwinds have led to results that are below expectations. Nevertheless, the analyst anticipates Oracle’s cloud infrastructure business to maintain a sales growth rate of more than 50%, aided by AI. Moreover, he also anticipates that the demand for Oracle’s cloud-based apps will accelerate.
3. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 99
Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives. The company recently announced an update concerning its multi-year partnership with LiveOne, which is a leading media company. LiveOne has managed to achieve a total of 350,000 paid subscribers with Tesla’s collaboration, allowing them to leverage their entire tech stack, including artificial intelligence. The partnership has helped to enhance the in-car entertainment experience for Tesla drivers by offering LiveOne’s streaming services.
“We are thrilled with the tremendous progress we’ve made in collaboration with Tesla, having already achieved, as of December 15th, 350,000 paid subscribers. This partnership allows us to leverage our entire tech stack, including AI, to deliver highly personalized experiences, further enriching our users’ engagement and driving business growth”.
-Robert Ellin, CEO of LiveOne.
2. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 128
Broadcom Inc. (NASDAQ:AVGO) is a technology company known for its custom chip offerings and networking assets. On December 17, Goldman Sachs analyst Toshiya Hari reiterated a “Buy” rating on Broadcom with a price target of $240.00. The buy rating underscores Broadcom’s promising growth trajectory and strong market position. The company’s projected opportunities in the AI semiconductor market have increased proportionally.
Moreover, it has also scored new custom compute clients, reinforcing its leadership in AI Ethernet connectivity. The company also demonstrated that it manages its infrastructure software segment effectively, as evident by VMware’s operating margins. Due to these factors, Hari has increased the 12-month price target for the stock. The Semiconductor Solutions segment continues to perform well, particularly in networking revenue, bolstering the positive outlook. All in all, overall growth and strategic position in enabling next-generation AI technologies support the Buy rating for the stock.
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) is a technology company that makes personal computers, mobile devices, and software. Its recent innovation is Apple Intelligence, Apple’s AI-driven personal system. On December 18, Daiwa reiterated Apple as “Outperform” and raised its price target to $275 per share from $255. According to the analyst, once a user is part of the Apple ecosystem, it is difficult to leave it. This is especially true if all of your friends and family use it too, signifying strong customer retention. Moreover, the introduction of artificial intelligence capabilities is seen as a major upgrade cycle, similar to the ones when it introduced a larger phone or triple cameras.
“Once in the ecosystem, especially with friends and family, it’s hard to move out. As per the iPhone, there have been a number of upgrade cycles over the past 5-10 years, Covid, the larger phone, triple cameras, but now we see another big one, the AI and Apple Intelligence upgrade cycle”.
-Daiwa
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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