Is artificial intelligence a tool for the rich countries and the wealthy? Even if it is, Chinese President Xi Jinping warns that it shouldn’t be. At the Group of 20 Summit in Rio de Janeiro, Xi noted that AI shouldn’t be a game of the affluent, calling on more international governance and cooperation on the matter. In a separate meeting in Peru, Xi and Joe Biden also agreed that human beings, and not artificial intelligence, should be making decisions about nuclear weapons, as reported by The White House.
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The call for equitable AI development and responsible decision-making underscores the growing global focus on AI’s impact, and all the latest developments being made in the AI realm. As the global race to advance AI accelerates, one country striving to secure its position in this competitive landscape is Japan. The country is reportedly readying a $65-billion push in microchips and artificial intelligence, as revealed by Japanese Prime Minister Shigeru Ishiba this month. The move comes amid the country’s efforts to reclaim its status as a global tech leader.
News like these underscores how artificial intelligence continues to be a dominant theme in the business world. A Cisco 2024 AI Readiness Report reveals how companies around the world realize that the momentum for AI deployment is building fast, pulling up immense pressure on them in the process. However, only 13% of companies are ready to leverage AI and AI-powered technologies to their full potential. This is a 1-point decline from last year. Even though organizations are doing their best to leverage AI, the ROI is nowhere in the picture for many.
According to an AI consultant Rider Harris, some major reasons for companies failing to reap ROIs are that they probably invested in a bad tool, they weren’t trained enough (or at all), there’s a lack of excitement on the fear that AI may take their job away, or there may even be a lack of resources for employees to adequately make use of or navigate those tools. This is why focusing on aspects such as training employees, getting them excited about the AI tool, and providing adequate resources can go a long way.
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).
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10. Five9, Inc. (NASDAQ:FIVN)
Number of Hedge Fund Holders: 29
Five9, Inc. (NASDAQ:FIVN) is a technology company providing cloud software solutions for contact centers using AI to improve customer interactions, increase agent productivity, and optimize operational efficiency.
On November 21, Mizuho Securities analyst Siti Panigrahi reiterated a “Buy” rating on Five9, Inc. (NASDAQ:FIVN) with a price target of $55.00. Assessing the company’s performance and potential, the firm believes that Five9’s conservative guidance is a strategic move given that the management expects an acceleration in subscription growth driven by advancements in AI. Record-level turn-ups and AI-driven momentum have helped the company rise from its second-quarter setbacks. Strategic changes to the company’s go-to-market approach are a positive step taken by the company, and the firm is also optimistic about Five9’s AI opportunity. The company generates higher revenue per interaction from its AI software compared to traditional seat-based offerings.
9. Fortinet, Inc. (NASDAQ:FTNT)
Number of Hedge Fund Holders: 47
Fortinet, Inc. (NASDAQ: FTNT) provides enterprise-level next-generation firewalls and network security solutions, leveraging artificial intelligence across its cybersecurity products.
On November 20, Scotiabank analyst Patrick Colville raised the firm’s price target on Fortinet, Inc. (NASDAQ:FTNT) to $110 from $85 and kept an “Outperform” rating on the shares. Following investor day, the firm is optimistic about Fortinet and considers it a “validation moment” for the company’s story. Scotiabank is excited about Fortinet’s upcoming hardware refresh cycle and also anticipates a noteworthy acceleration in Fortinet’s billings growth by 2025. Fortinet’s management has indicated plans to boost investments in go-to-market strategies, which the firm considers as a key to capitalize on the hardware refresh cycle and promote Fortinet’s new AI-reliant security tools like SASE and SecurityOps.
8. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 51
AppLovin Corporation (NASDAQ:APP) is a leading marketing software company leveraging its AI-powered platform to provide targeted and automated marketing solutions.
On November 20, Wells Fargo raised the firm’s price target on AppLovin Corporation (NASDAQ:APP) to $360 from $250 and kept an “Overweight” rating on the shares. According to the firm, recent checks suggest strong e-commerce adoption as well as positive advertiser sentiment. Applovin leverages artificial intelligence to optimize ROAS (Return On Ad Spend) for advertisers. As such, the company has been demonstrating ROAS as strong as Meta and Google, leading to rapid budget growth.
7. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Holders: 64
Palo Alto Networks, Inc. (NASDAQ:PANW) offers AI-driven cybersecurity solutions for all apps, users, and devices.
On November 21, TD Cowen analyst Shaul Eyal reiterated a “Buy” rating on Palo Alto Networks, Inc. (NASDAQ:PANW) and raised the price target to $420.00. Several factors, such as the company’s impressive financial performance, and strategic growth initiatives, have led to the rating. The company’s next-generation security ARR has surged 40% year-over-year, reaching $4.5 billion. Meanwhile, its RPO has grown 20% to $12.6 billion. These metrics demonstrate the high demand for Palo Alto’s products. Moreover, the company’s focus on platformization on a unified AI-driven platform and product innovations, including Cortex and SASE, is driving substantial growth and paving the way for further opportunities.
6. Hewlett Packard Enterprise Company (NYSE:HPE)
Number of Hedge Fund Holders: 64
Hewlett Packard Enterprise Company (NYSE:HPE) specializes in high-performance computing (HPC) systems, AI software, and data storage solutions designed to support advanced AI workloads.
On November 20, Securiti, a Data+AI Command Center announced that it will be integrating its Securiti Gencore AI with HPE Private Cloud AI at HPE Discover 2024. The integration will enable users to accelerate the development of enterprise-grade generative AI systems, copilots, and AI agents with enhanced data security and governance. Gencore AI enables organizations to safely connect to hundreds of data systems and preserve data controls and governance. Meanwhile, the HPE Private Cloud AI is a unique turnkey private-cloud AI solution that helps accelerate the development and deployment of generative AI.
“HPE Private Cloud AI provides a compelling, fully integrated solution to help accelerate deployment of AI systems with a cloud-based experience within a controlled environment. We are excited to integrate with HPE Private Cloud AI, helping to safely bring data into these modern AI systems, while providing comprehensive security and privacy controls and system observability.”
– Rehan Jalil, CEO of Securiti AI.
5. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders: 71
Snowflake Inc. (NYSE:SNOW) is an artificial intelligence data cloud company.
On November 20, Snowflake Inc. (NYSE:SNOW) announced that it has teamed up with AI firm Anthropic to build up its cloud services. The multi-year partnership will enable enterprises to develop and expand AI tools, apps, and workflows powered by the most advanced AI models. Anthropic will allow its customers to use Snowflake’s large language models to develop and enhance their own AI applications. Using Anthropic’s technology, Snowflake’s AI agents will be able to analyze data, and generate visualizations, amongst other functions.
“Our partnership with Anthropic represents a massive leap forward in expanding on our promise to provide thousands of global customers with easy, efficient, and trusted AI for a holistic set of enterprise use cases. By bringing Anthropic’s industry-leading models to customers’ enterprise data where it already lives, within the security and governance boundaries of the AI Data Cloud, we will unleash new ways for businesses to harness this data for agentic use cases, coding assistants, document chatbots, unstructured data analytics, and more.”
– Christian Kleinerman, EVP of Product, Snowflake.
4. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 74
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a cybersecurity technology company harnessing artificial intelligence to streamline and strengthen cyber protection.
On November 20, Stifel raised the firm’s price target on CrowdStrike Holdings, Inc. (NASDAQ:CRWD) to $375 from $300 and kept a “Buy” rating on the shares. The rating comes ahead of the company’s Q3 earnings report, scheduled to be released on November 26. Recent checks on the company’s faulty update back in July demonstrate mixed trends. However, the impact of the issue is seen to be fading, and there is growing confidence in the company’s medium-term market opportunities. Despite facing legal action from Delta Airlines, there is optimism around the company’s performance, with growth expectations by the second half of 2026. The company has also formed a strategic partnership with Plurilock Security Inc. to enhance protection for critical infrastructure, leveraging AI-native cybersecurity solution Falcon.
3. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Holders: 91
Vertiv Holdings Co (NYSE:VRT) is a worldwide leader in digital infrastructure technology and services for data centers, communication networks, and commercial and industrial facilities.
On November 20, TD Cowen lifted its price target for Vertiv Holdings Co (NYSE:VRT) from $115 to $141 and maintained a “Buy” rating on the stock. According to the firm, Vertiv has promising long-term growth prospects. The company’s continued momentum in the artificial intelligence revolution has led to its continued upside potential throughout 2025.
“We view Vertiv’s long-term guidance as the bull case scenario as it assumes no degradation in the hyperscale demand environment for a five-year period, to which we are skeptical. That said, we remain encouraged by demand strength heading into 2025 as our most recent channel checks suggest that hyperscale data center demand for at least three of the five major hyperscalers will be similar year on year in 2025, with one hyperscaler’s demand set to accelerate.”
-TD Cowen analyst Michael Elias said in a client note.
2. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 123
Adobe Inc. (NASDAQ:ADBE), a digital marketing and media solutions provider, stands out as a key player in AI with its flagship products, Sensei and Firefly.
On November 20, Morgan Stanley analyst Keith Weiss maintained a “Buy” rating on Adobe Inc. (NASDAQ:ADBE) with an unchanged price target of $660.00. Highlighting Adobe’s strategic positioning in the GenAI landscape, the firm considers Adobe’s extensive workflows and datasets as key assets that are helping it capitalize on GenAI innovations. The firm states that the company’s differentiated position puts it in a good position for medium-term benefits from GenAI. Moreover, the company’s enhanced transparency and clear growth catalysts could boost investor confidence and help Adobe achieve significant GenAI-driven growth by FY26.
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) designs, manufactures, and markets smartphones, tablets, PCs, wearables, and accessories worldwide. It recently released Apple Intelligence, the company’s personal intelligence system.
UBS analyst David Vogt maintained a Hold rating on Apple Inc. (NASDAQ:AAPL) and set a price target of $236.00. According to the firm, the 78M sell-in unit estimate for the December quarter has limited upside. Data suggests that their demand is muted despite customers familiarizing themselves with Apple Intelligence.
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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