In this article, we will take a look at the 10 most promising AI stocks according to analysts.
The General Outlook for Tech and AI is Positive
While 2024 has been a solid year for defensive stocks and utilities, the technology sector, on the other hand, experienced significant headwinds. However, the general outlook for technology and AI is starting to improve as we near the end of 2024. On October 9, Dominic Rizzo, T. Rowe Price portfolio manager, appeared in an interview on Yahoo Finance to discuss his thesis for the AI industry.
Most investors were disappointed after they failed to generate higher returns for their investments in AI during the second quarter of 2024. While Rizzo expects the theme to prevail for the next few quarters, he suggests that the technology and AI sector is on track to earn better returns, especially companies using artificial intelligence to improve their businesses.
As for the Magnificent Seven, while all companies have distinct business models and offerings, these companies have grown at a 50% to 100% faster rate than the rest of the market, making it reasonable to group them. Overall, Rizzo reiterates that while the group has been under immense pressure, it is well-positioned to leverage AI to its benefit.
Rizzo believes that AI is an innovation that is here to stay rather than a mere disruptive technology, meaning that companies using it to their benefit will most likely perform better than the ones that are not. Therefore, most if not companies have no other option but to direct investments in AI chips and GPUs. He expects the AI chip market to reach $400 billion by 2027.
Jamie Dimon is Not Worried about AI Taking Over Jobs
Technology has been altering the world since humans came into being. On October 8, Jamie Dimon, JPMorgan CEO appeared in an interview on Bloomberg Television where he discussed the role of artificial intelligence, initial public offerings, and the easing cycle by the Fed.
According to Dimon, technology was previously limited to certain regions and countries, but now we have tech centers in almost every part of the world including Berlin, Glasgow, and Edinburgh. According to Dimon, the acceleration in technology is great and he is glad that innovation is taking precedence, especially in Europe.
Speaking of AI, Dimon suggests that artificial intelligence is going to change a lot of things that are common elements of our world. As far as job losses go, technology has always been changing the job market and is mostly responsible for taking away jobs. However, he emphasizes the need to look at the bigger picture.
Overall, Dimon suggests that jobs will likely be more enhanced and researched-oriented. As for sectors like finance, people have been using it to detect fraud and minimize risk already. Similarly, AI has limited a lot of marketing jobs but at the same time, it has left a positive impact on productivity. Dimon shares he is not worried about AI changing the job landscape and that we should focus on re-training and re-educating workers losing their jobs as new technologies keep springing.
Now that we have studied the outlook of the AI industry, let’s take a look at the most promising AI stocks to buy according to analysts.
A scientist at a computer station, surrounded by a neural network of artificial intelligence code.
Our Methodology
To come up with the most promising AI stocks according to analysts, we sifted through multiple ETFs, our own rankings, and similar rankings on the internet. We then ranked the most promising AI stocks based on the Analyst upside as of October 9, 2024. We also included the hedge fund sentiment for each stock. It is to be noted, that we only considered stocks with a market capitalization of over $1 billion, as of October 9, 2024.
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 Most Promising AI Stocks According to Analysts
10. Microsoft Corporation (NASDAQ:MSFT)
Analyst Upside as of October 9, 2024: 21%
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is one of the biggest technology companies in the world that develops productivity and business suite applications, cloud products, and personal computing products.
Microsoft Corporation (NASDAQ:MSFT) reported revenue worth $64.7 billion in FQ4 2024, up by 15% year-over-year. During the same quarter, Microsoft Cloud had $36.8 billion in quarterly revenue, up by 21% year-over-year, and posted record bookings. The company is a leading investor in artificial intelligence technology. Its AI-backed cloud service, Azure OpenAI service witnessed an increase in customer base by 60%, reaching 60,000 clients in the second quarter of 2024.
Previously in July, Microsoft and Lumen Technologies signed a partnership to enhance and modernize Lumen’s workloads to Microsoft Azure. Earlier in August, Microsoft Corporation (NASDAQ:MSFT) partnered with Palantir Technologies, a data software company, to deploy Palantir’s suite of products in Microsoft Azure. In the past few weeks, the company initiated investments in other countries, signed new partnerships, and nurtured existing strategic partnerships. On October 8, Microsoft (NASDAQ:MSFT) announced that Microsoft Azure is the first cloud to be running on NVIDIA’s Blackwell system backed by AI systems, further strengthening its position in AI.
Overall, Microsoft Corporation’s (NASDAQ:MSFT) outlook toward AI coupled with its strong cloud ecosystem makes it one of the most promising AI stocks according to analysts. In the second quarter, 279 hedge funds held positions in Microsoft (NASDAQ:MSFT) and their stakes amounted to $89.068 billion.
Baron Opportunity Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q2 2024 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) is the world’s largest software and cloud computing company. Microsoft was traditionally known for its Windows and Office products, but over the last five years it has built a $135 billion run-rate cloud business, including its Azure cloud infrastructure service and its Office 365 and Dynamics 365 cloud-delivered applications. The stock contributed to performance because of continued strong operating results and investor enthusiasm regarding Microsoft’s leadership across the secular megatrends of AI and cloud computing. Recent business momentum continued to show evidence of the strength and attractiveness of Microsoft’s product portfolio among its customer set: (1) Azure OpenAI – its suite of AI services – is now used by 65% of the Fortune 100 and contributed 7% of Azure revenue (an annualized run rate of $5.2 billion); (2) GitHub Copilot – its AI code writing service – is bending the productivity curve for developers (reports of 40%- plus improvements in developer efficiency) and now has 1.8 million paid subscribers, with growth accelerating to over 35% quarter-over-quarter; and (3) Copilot Studio – its AI application service that makes it easier for anyone to build an application, automate a workflow, or create a Copilot using natural language. 30,000 organizations across every industry have used Copilot Studio to customize Copilot for Microsoft 365 or build their own, up 175% quarter-over-quarter. In the March quarter, Microsoft again reported better-than-expected financial results, highlighted by Microsoft Cloud growing 23% year-over-year, with the fastest commercial bookings in six quarters, and Azure accelerating to 31% constant currency growth, up from 28% in the previous quarter. June quarter guidance came in-line with consensus, but the company provided higher guidance for the most important segment, Intelligent Cloud, on the back of continued strong trends across Azure and Azure OpenAI. We remain confident that Microsoft is one of the best-positioned companies across the overlapping software, cloud computing, and AI landscapes.”
9. Amazon.com Inc (NASDAQ:AMZN)
Analyst Upside as of October 9, 2024: 22%
Number of Hedge Fund Holders: 308
Amazon.com Inc (NASDAQ:AMZN) ranks ninth on our list of the most promising AI stocks according to analysts. Amazon.com Inc (NASDAQ:AMZN) is a technology company that specializes in e-commerce, online retail, streaming, and data cloud services.
Its proprietary cloud service, Amazon Web Services (AWS), increased its revenue by 18.8% in Q2 and has reported 30% plus operating margins consistently for the past five quarters. Coming to its dominance in AI, Over the past few months, the company has not only forged partnerships with AI startups and the government but it has also been actively involved in the development of AI hardware. Recent chips produced by the company include Trainium and Inferentia.
In addition to that, AWS is now housing the next generation of Llama models from Meta, giving customers more choices to build, deploy, and scale generative AI applications. On September 19, Amazon.com Inc (NASDAQ:AMZN) launched Project Amelia, a selling assistant backed by generative AI, allowing sellers to offer better customer assistance and reach.
Overall, AWS has close to 31% market share in cloud computing, indicative of its dominance in the market. Now that AWS is increasingly adopting AI-backed systems, the company is poised to become a fully AI-run company in the next few years.
Analysts are bullish on AMZN and their 12-month median price target of $220 points to a 22% upside from current levels. According to our Insider Monkey database, AMZN was held by 308 hedge funds at the close of Q2 2024 with total stakes amounting to $65.85 billion.
Diamond Hill SelectStrategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Among our top individual contributors in Q2 were Amazon.com, Inc. (NASDAQ:AMZN), Texas Instruments and Mr. Cooper Group. Internet retail and cloud infrastructure company Amazon is benefiting from strong profitability, particularly in its Amazon Web Services (AWS) business. Shares also received a boost amid growing optimism around the demand for AWS as Amazon customers’ investments in generative AI projects continue growing.”
8. Marvell Technology, Inc. (NASDAQ:MRVL)
Analyst Upside as of October 9, 2024: 23%
Number of Hedge Fund Holders: 74
Marvell Technology, Inc. (NASDAQ:MRVL) ranks eighth on our list of the most promising AI stocks to buy now. The company is based in California and engages in the development and production of semiconductors.
During the fiscal second quarter of 2025, the company’s revenue grew by 10% sequentially, driven by its strong demand from the AI industry, and expects its data center market to accelerate significantly in the coming quarters. For the fiscal year ended 2024, the company generated over 10% of its revenue from AI-related chips, at $550 million, up from 3% in FY 2023.
Over the next five years, data center operators are expected to invest capital expenditure worth $2 trillion in AI infrastructure. This offers a huge opportunity to Marvell and believes it is well-equipped to meet the growing demand for AI compute infrastructure. In July, the company shipped its flagship ethernet switch chip for cloud data centers. The chip is capable of supporting inference, computing, training, and other workloads, positioning MRVL as an important stakeholder in the AI wave.
Last year, the company held a 10% market share of the data center market for accelerated custom compute, connectivity, and storage, a $21 billion industry. The company estimates that the industry will reach $78 billion by 2028 and aims to capture a larger chunk of the market.
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.”
6. QUALCOMM Incorporated (NASDAQ:QCOM)
Analyst Upside as of October 9, 2024: 26%
Number of Hedge Fund Holders: 100
QUALCOMM Incorporated (NASDAQ:QCOM) is one of the most promising AI stocks to buy now. The semiconductor company produces hybrid AI architecture applicable to most generative AI applications and devices including phones, laptops, XR headsets, cars, and IoT. QUALCOMM Incorporated (NASDAQ:QCOM) engages in the production of AI hardware, AI software, and AI algorithms.
QUALCOMM Incorporated (NASDAQ:QCOM) is one of the largest producers of mobile systems-on-a-chip (SoCs). Speaking of AI, during the fiscal third quarter of 2024, the company launched its Snapdragon X series chips for PCs capable of power efficiency and personalized AI experiences. The launch of these chips positions QUALCOMM as a growing intelligent computing company.
Recently, Honeywell announced that the company is working on the development of an AI multi-modal agent for its mobile devices that will be powered by QUALCOMM’s chips. In addition to that, QUALCOMM Incorporated (NASDAQ:QCOM) announced the launch of its new Networking Elite platform, capable of revolutionizing networking connectivity with Edge AI. Last week, the company also collaborated with STMicroelectronics to develop the next generation of industrial and consumer IoT solutions backed by Edge AI.
Overall, QUALCOMM Incorporated (NASDAQ:QCOM) is well-positioned to exploit the AI wave and become a market leader. As for its supposed Intel acquisition, if it comes through, the company will have access to multiple foundries, allowing it to compete with giants like Taiwan Semiconductor.
5. ASML Holding N.V. (NASDAQ:ASML)
Analyst Upside as of October 9, 2024: 29%
Number of Hedge Fund Holders: 81
ASML Holding N.V. (NASDAQ:ASML) is a semiconductor equipment company headquartered in the Netherlands. Companies use ASML’s extreme ultraviolet (EUV) lithography machines to develop AI chips. EUV bookings for ASML increased by 56% year-over-year and total bookings increased by 24% year-over-year.
ASML Holding N.V. (NASDAQ:ASML) believes 2024 is a transition year and will continue to invest in increasing its capacity and improving its technology to meet the surging demand for AI in 2025. In June, the company partnered with Imec, a leading research and innovation hub in nanoelectronics and digital technologies, to launch a new High NA EUV lithography lab in Veldhoven, built to develop equipment for developers of edge logic and AI chips from across the globe.
For its 2030 guidance, ASML Holding N.V. (NASDAQ:ASML) projected between EUR 44 billion and EUR 60 billion in revenue, in its investor day meeting in November 2022. The company has an 83% market share in lithography, explaining why 81 hedge funds were long on the stock at the end of Q2 2024. Of those, Fisher Asset Management was the largest shareholder with a position worth $3.23 billion. Analysts’ median price target has an upside of 28% from its current level.
Polen Capital Polen International Growth Strategy stated the following regarding ASML Holding N.V. (NASDAQ:ASML) in its fourth quarter 2023 investor letter:
“Netherlands-based ASML Holding N.V. (NASDAQ:ASML) and Japan-based Lasertec play dominant roles within different segments of the global semiconductor industry. In both cases, shares rallied significantly in the fourth quarter of 2023, prompting our positions to grow as a percentage of the overall portfolio. We believe both companies will see demand for their products as extreme ultraviolet (EUV) lithography and soon high-numerical aperture lithography must be utilized to manufacture the world’s smallest chips. However, in our estimation, 2024 could deliver a year of less exciting growth for the semiconductor industry, which prompted us to trim these positions back.”
4. Adobe Inc. (NASDAQ:ADBE)
Analyst Upside as of October 9, 2024: 30%
Number of Hedge Fund Holders: 107
Adobe Inc (NASDAQ:ADBE) ranks fourth on our list of the most promising AI stocks to buy now according to analysts. 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, a digital asset management system with a database of images and videos. 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 September, the company introduced advancements to its Adobe Experience Clouds allowing brands to personalize and assess the performance of AI-generated content. Previously in August, Adobe Inc (NASDAQ:ADBE) announced the general availability of Adobe Journey Optimizer B2B Edition, on its Adobe Experience Cloud. The optimizer will help brands identify and personalize experiences for buying groups using AI.
Overall, the company expects its generative AI tools and products to gain momentum over the coming years. The company is increasingly leveraging AI to help brands reach more customers and offer personalized experiences. The company already works with large B2B corporations from across the globe including Accenture, Amazon Web Services, Cisco, IBM, Microsoft, and Nvidia.
3. Super Micro Computer, Inc. (NASDAQ:SMCI)
Analyst Upside as of October 9, 2024: 33%
Number of Hedge Fund Holders: 47
Super Micro Computer, Inc. (NASDAQ:SMCI) is an information technology company based in California, United States. The company provides computing, storage, networking, and green computing technology solutions. It specializes in developing enterprise, cloud, AI, Metaverse, and 5G Telco/Edge infrastructure.
With operations in more than 100 countries, Super Micro Computer, Inc. (NASDAQ:SMCI) ranks third on our list of the most promising AI stocks according to analysts. The fiscal year 2023 was a turning point for the company in financial terms. SMCI logged its first $2 billion in quarterly revenue and its first $7 billion in yearly revenue in 2023, driven by its expansions in Asia and value-added AI solutions.
The company is thriving in the server segment. Last week, it introduced high-performance Intel-based servers for AI, Cloud, and Edge. Earlier in June, Super Micro Computer, Inc. (NASDAQ:SMCI) added 3 new manufacturing facilities in Silicon Valley and globally to support the accelerating demand for AI and Enterprise solutions. According to the company’s CEO, the new servers will help SMCI develop customized solutions for their clients.
In the fiscal year 2024, Super Micro Computer, Inc. (NASDAQ:SMCI) logged $14.94 billion in revenue, up by 110% year-over-year, driven by its new AI infrastructure. Note that the company’s FQ4 2024 revenue alone exceeded the revenue for the complete fiscal year 2022. Such testifies to SMIC’s growth potential amid the AI boom, and why it is one of the best AI stocks to buy now.
2. SoundHound AI, Inc. (NASDAQ:SOUN)
Analyst Upside as of October 9, 2024: 50%
Number of Hedge Fund Holders: 15
SoundHound AI, Inc. (NASDAQ:SOUN) is one of the most promising AI stocks. The voice recognition company was founded in 2005 and has been growing to become an AI entity, serving various industries including automotive, TV, and the Internet of Things. Its independent voice AI platform is used by prominent companies from across the globe including Hyundai, Chipotle, Vizio, White Castle, Papa Johns, LG, Samsung, and Motorola, among others.
Brands can use the company’s Houndify platform to create conversational voice assistants. The platform also allows businesses to customize commands, texts, and voice queries. Other applications by the company include SoundHound Music App and SoundHound Chat AI. As of the second quarter of 2024, SoundHound AI, Inc. (NASDAQ:SOUN) hit a milestone after its voice assistant reached an annual run rate of 5 billion, up by 90% year-over-year. In addition to that, the company has a backlog of $723 million, as of Q2 2024, and logged $13.5 million in revenue, growing by 54% year-over-year.
SoundHound AI is growing, but not just in terms of revenue. During the second quarter, SoundHound AI, Inc. (NASDAQ:SOUN) signed plenty of partnerships and acquisitions to keep its expansion strategy alive. The company acquired Amelia, an enterprise AI software company, to enhance its footing in different verticals and improve its customer service. In addition to that, the company took one of the largest pizza chains in the world as a client and also signed the acquisition of key assets from Allset, an online ordering platform. The partnership will add more restaurants to SoundHound’s client roster. During the same quarter, the company partnered with Perplexity to bring online LLMs to SoundHound Chat AI, allowing users to ask more complex questions across devices.
Overall, SoundHound AI, Inc. (NASDAQ:SOUN) is one of the leading AI stocks and holds strong growth potential with all its partnerships in the pipeline. While its growth trajectory is significant, the threat of springing competitors must be considered.
1. Bloom Energy Corporation (NYSE:BE)
Analyst Upside as of October 9, 2024: 56%
Number of Hedge Fund Holders: 29
Bloom Energy Corporation (NYSE:BE) ranks first on our list of the most promising AI stocks according to analysts. The green energy company designs, manufactures, and sells solid oxide fuel cells. These fuel cells are capable of running on different energy sources including natural gas and hydrogen. Bloom Energy also owns the Bloom Electrolyzer which produces hydrogen using electricity and helps companies reduce their emissions.
Bloom Energy is one of the most promising AI stocks and we say that because of its growing stakes in the industry. The company is crucial to the digital economy. Data centers account for nearly 2% of the global electricity use and could reach 9% by 2030. As of now, there are a multitude of challenges encompassing energy grids in the United States, part of which include wear and tear and obsolescence. To counter such, Bloom Energy Corporation (NYSE:BE) is creating a solution that would provide reliable power to AI data centers. The Bloom Energy server is not only capable of providing high power availability but it is also able to operate independently off the grid.
Bloom Energy’s (NYSE:BE) presence in AI is not limited to energy. In the past few months, the company has partnered with several AI startups and companies, taking up space in the domain. In July, the company partnered with CoreWeave to produce advanced AI data center power solutions. Bloom Energy will deploy its fuel cells to generate on-site power for CoreWeave at a data center in Illinois. The cells are set to be commissioned by Q3 2025. Aman Joshi, Bloom Energy’s Chief Commercial Officer, stated:
“Bloom Energy is thrilled to have been selected by CoreWeave. This validation from CoreWeave, a leader in AI, is a testament to our leading-edge technology and its importance to AI.”
Previously in May, the company joined hands with C3 AI, an enterprise AI application software company, to create AI-based solutions. These solutions will enhance the precision of Bloom’s product monitoring technology. Bloom will leverage C3 AI’s Reliability Suite to improve operational activity, enhance reliability, and increase energy. Here is what Thomas M. Siebel, Chairman and CEO of C3 AI, stated:
“A pioneer in the clean energy industry and a trusted expert on sustainability, KR is an important addition to the C3 AI Board of Directors. Climate and energy security are some of the greatest challenges of our time, and his unique experience and vision will strengthen our company as we support organizations across sectors on their sustainability journeys through use of enterprise AI.”
Overall, the company logged revenue worth $335.8 million in the second quarter of 2024, up by 11.5% year-over-year. Here is what the founder and CEO, KR Sridhar, of Bloom Energy Corporation (NYSE:BE) stated in the earnings call for Q2 2024:
“In my view, most of this load growth will be location specific. Let me highlight a few. To minimize latency, AI and other data centers need to be close to the customer, edge data centers will be the dominant users of power. They will be in economic nerve centers that are already power constrained.”
Overall, BE ranks first among the 10 safe stocks to invest in now. While we acknowledge the potential of energy companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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