10 Most Promising AI Stocks According to Analysts

7. Alphabet Inc. (NASDAQ:GOOGL)

Analyst Upside as of October 9, 2024: 26%

Number of Hedge Fund Holders: 216

Alphabet Inc. (NASDAQ:GOOGL) is one of the most promising AI stocks according to analysts. The company owns a range of products, including Google Search, Google Maps, YouTube, Google Cloud, and Waymo. Some of its AI products include Vertex AI, Gemini, Vision AI, Document AI, and Contact Center AI, to name a few.

The company is relentlessly working to improve the Gemini experience and is also actively involved in developing AI hardware, having launched its NVIDIA chip rival in May. While Google’s tensor processing units (TPU) only account for almost 20% of the market, its advancements promise higher market shares. It is to be noted that the company intends to spend $50 billion by the end of 2024 to enhance its position in AI.

Alphabet Inc. (NASDAQ:GOOGL) logged revenue worth $85 billion in the fiscal second quarter of 2024, driven by the growing momentum in cloud and search. Additionally, over 60% of generative AI startups and 90% of generative AI unicorns are customers of the Google Cloud. One can infer that the technology giant is well-positioned to exploit the next wave of artificial intelligence and innovation, making it a solid investment.

Analysts are bullish on GOOGL and their 12-month median price target of $204 points to a 26% upside from current levels. Overall, 216 investors held stakes worth $35.31 billion in Alphabet Inc. (NASDAQ:GOOGL). According to the Insider Monkey database, Fisher Asset Management was the highest stakeholder with a position of $8.86 billion.

Patient Capital Management mentioned Alphabet Inc. (NASDAQ:GOOG) in its Q2 2024 investor letter:

“Alphabet Inc. (GOOGL) was a top contributor in the second quarter, finally catching up to its peers in the Magnificent 7. The company gained 20.8% in the period following strong first quarter earnings, a new $70B repurchase program (3% of shares outstanding) and the initiation of a cash dividend ($0.20 per share; 0.42% yield). We continue to believe the market underappreciates Google’s exposure to AI with its Gemini model being integrated into search results, YouTube advertising and its cloud offering. We continue to think that the cloud players will be the AI winners in the long-term, with Google being well positioned to take advantage. While the company trades at 24x 2024 earnings, if you remove the money-losing and under-earning businesses, you realize that you are paying below a market multiple for the core Google business. We do not believe there are many other AI winners trading at such an attractive multiple.”