Technology is advancing unprecedentedly, and physical AI seems to be the next leap forward. That’s right, physical AI is going to be an incremental moment for mankind, where intelligent machines will have the ability to interact and manipulate their environment. Manifesting in robots and machines, these advanced systems can analyze their surroundings, use data to make decisions, and even physically interact with the world around them.
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This makes robotics makers, auto suppliers, and specialty semiconductor companies the next big winners in AI. While it initially started with search bots, technology is now moving to agentic AI, such as research assistants and customer service representatives. Naturally, the next focus is going to be technology that can interact with the physical world and act independently through artificial intelligence. According to analysts, this is where all the “big money” is going to be.
“As you go into 2025, agentic AI is that next inflection point here before you hit that physical AI moment … like with everything else in the world, you have to crawl before you can walk and then run. Gen AI hasn’t really seen much monetization thus far. So when you start thinking about agentic AI and robotics and what have you, there’s a real kind of belief out there — and expectation. You’ll see those use cases start to come about this year”.
-CFRA senior equity analyst Angelo Zino.
According to CNBC, Wall Street anticipates realistic AI-enabled agent applications to start appearing this year. Innovations in physical AI could begin coming out later, most likely beginning with self-driving cars.
Physical AI has created “an additional leg to the stool” to the AI build-out phase. “There’s an additional driver now that augments what’s going on today and AI broadly”.
-Goldman Sachs analyst Toshiya Hari.
According to CEO Jensen Huang, “the ChatGPT moment for general robotics is just around the corner”. He said that the company anticipates enabling the development of three key robots in the coming years: agentic agents, self-driving vehicles, and humanoid robots. In this respect, he has also introduced Nvidia’s Cosmos platform for companies looking to train and develop physical AI systems. According to a recent Nvidia press release, the Cosmos platform can generate physics-based videos from several inputs, like video, image text, as well as robot sensor and motion data.
Here is what Oppenheimer analyst Colin Rusch thinks about Physical AI:
“We see physical AI as a nascent interdisciplinary field poised to transform the industrial complex through increased asset productivity and labor efficiency. We see outsized investment return potential in sensing, sensor fusion, compute hardware & software architecture, connectivity, controls, and AI training strategies”.
-Oppenheimer analyst Colin Rusch
All in all, analysts believe AI is going to be a multi-trillion-dollar Total Addressable Market opportunity, particularly on the physical side of things.
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10. Datasea Inc. (NASDAQ:DTSS)
Datasea Inc. (NASDAQ:DTSS) is a software company offering innovative products and solutions in acoustic high-tech and 5G-AI multimodal digitalization. On January 6, the company announced a major milestone related to its acoustic high-tech business. It revealed that the company has signed agreements with 14 beauty industry service and management companies, such as Tianjin Chuangfukang Consulting Service Co., Ltd. and Tianjin Haideci Technology Co., Ltd. The agreements will allow Datasea Inc. to introduce its acoustic high-tech products in 263 beauty salons and body care stores across China, as well as offer its 5G AI Digital Beauty System to partnered stores. The company aims to sell 140,000 acoustic high-tech products by the calendar year-end of 2025. The acoustic products included are acoustic air sterilizers, sleep products, and the Company’s 5G AI Digital Service System specifically developed for beauty industry stores. The 5G AI Digital System will also enable Datasea to provide independent technical services to these stores.
“We are both pleased and excited to announce these partnerships with multiple beauty salons and body care retail stores in northern China. With these new partnerships, we believe we are strategically positioned to market our acoustic high-tech products and advance the adoption of our Digital System for Beauty industry, which opens up a new sales channel for our products. We expect the new cooperation agreements to contribute a total of approximately 140,000 units in sales of acoustic high-tech products by the end of 2025, potentially driving the sales of the Company’s acoustic high-tech products to over $11.0 million (Approximately RMB 77 million) in 2025. Over the next 2-5 years, we plan to further expand our customer channel to up to 10,000 beauty and body care stores, covering provinces in Tianjin, Hebei, Beijing and Inner Mongolia”.
– Ms. Zhixin Liu, CEO of Datasea
9. Orangekloud Technology Inc. (NASDAQ:ORKT)
Orangekloud Technology Inc. (NASDAQ:ORKT) is a technology company and a pioneer in AI-driven no-code application development. On January 16, the company announced the Beta launch of its new platform, eMOBIQ® AI. The launch, set to take place on February 3, 2025, is said to revolutionize how applications are built. The eMOBIQ AI is powered by advanced AI agents and proprietary orchestration techniques which allows simplifying key parts of app development, capturing business and technical requirements, and generating UI wireframes. Users can communicate their requirements in natural language, following rapid app development, and that too, with precision. Software developers, business professionals, and even individuals can now create applications without coding. These applications can then be compiled and deployed across various web and mobile platforms. Ultimately, users have the power to deliver solutions to the market faster.
“We are proud to empower developers, businesses, and individuals to seamlessly turn ideas into real applications using natural language. eMOBIQ AI streamlines the entire development process, making it faster and more accessible than ever before. This marks a major step forward in simplifying software creation and accelerating innovation across industries”.
– Alex Goh, CEO of Orangekloud.
8. ImmunoPrecise Antibodies Ltd. (NASDAQ:IPA)
Number of Hedge Fund Holders: 1
ImmunoPrecise Antibodies Ltd. (NASDAQ:IPA) is a biotechnology company leveraging multi-omics modeling and complex artificial intelligence to discover and develop therapeutic antibodies. On January 17, the company announced the launch of its AI-powered drug development pipeline designed to revolutionize how new treatments are discovered and optimized. IPA is leading the pack in AI-powered drug discovery, with the BioStrand pipeline transforming drug discovery and offering unmatched speed, precision, and transparency. Unlike traditional drug discovery methods that rely on outdated frameworks, IPA’s approach rebuilds processes from scratch. This has led to the creation of LENSai, IPA’s proprietary AI platform. The LENSai™ platform enables AI-driven drug discovery and organizing complex biological data for speeding up discoveries and eliminating inefficiencies. Powered by LENSai’s, the IPA pipeline enables AI-enhanced therapies that in turn ensure the delivery of treatments is groundbreaking, highly effective, and reliable.
“Our AI-powered pipeline represents a major leap forward for IPA. By harnessing AI and rethinking drug discovery from the ground up, we are not just improving the process—we are fundamentally changing what’s possible. This pipeline lays the foundation for groundbreaking advancements in therapeutic development, embodying our vision of innovation driven by clarity, precision, and purpose”.
-Dr. Jennifer Bath, CEO of ImmunoPrecise Antibodies.
7. Bridgeline Digital, Inc. (NASDAQ:BLIN)
Number of Hedge Fund Holders: 3
Bridgeline Digital, Inc. is a leader in AI-powered marketing technology solutions. On January 9, the company announced that HawkSearch, an AI-powered search engine that helps businesses power digital experiences, has been chosen by a leading distributor in the Janitorial and Sanitation (JanSan) industry to enhance their digital customer experience. The collaboration will allow users to utilize HawkSearch’s advanced search capabilities, auto-complete suggestions, unit conversions, and product recommendations to find products. The platform will also provide advanced promotional tools to enable keyword-based banners and featured content, as well as robust merchandising capabilities to support larger cart sizes and higher conversion rates. Finally, concept and image search features will allow for enhancing long-tail and visual product searches.
“We are thrilled to support a leading distributor in the cleaning supplies industry. HawkSearch is designed to empower businesses with intelligent tools that connect their customers to the right products quickly and efficiently, helping them achieve both operational success and revenue growth. This partnership further solidifies HawkSearch’s reputation as a trusted provider of tailored AI-powered solutions for specialized industries”.
-Ari Kahn, CEO of Bridgeline Digital.
6. Global Mofy AI Limited (NASDAQ:GMM)
Number of Hedge Fund Holders: 4
Global Mofy AI Limited (NASDAQ: GMM) is a generative AI-driven technology solutions provider offering virtual content production, digital marketing, and digital assets development for the Metaverse industry. On January 16, the company relayed the key role it played in delivering the visual effects (VFX) for the internationally acclaimed fantasy-action television series Guardians of the Dafeng. The company utilized its generative AI technology, a high-precision 3D digital assets bank, and advanced VFX techniques to develop impressive battle sequences, intricate magical effects, and visually striking environments. Global Mofy AI Limited’s work underscores its ability to deliver top-notch projects supported by its team of professionals as well as its cutting-edge technology.
“Guardians of the Dafeng has received widespread acclaim for its high-quality visual effects, and we are deeply proud of this achievement. This recognition not only highlights the exceptional capabilities of our team in creative design and cutting-edge technology but also reaffirms Global Mofy’s pivotal role in driving industry advancement and setting new standards. By enhancing the visual storytelling and resonating deeply with global audiences, we are opening new possibilities for the entertainment industry. The success of this project inspires us to continuously innovate and deliver higher-quality solutions to meet the demands of future premium productions, solidifying our leadership in the industry”.
-Haogang Yang, CEO of Global Mofy.
5. Brand Engagement Network, Inc. (NASDAQ:BNAI)
Number of Hedge Fund Holders: 11
Brand Engagement Network, Inc. (NASDAQ:BNAI) is a provider of conversational AI assistants. On January 17, the company announced that it is finalizing preparations to launch its Automotive AI Agent. The AI Agent is said to integrate with major automotive data and service platform providers and supports over 13,000 dealerships nationwide. Automotive operations will be streamlined through improved lead conversion, automated scheduling, and advanced analytics. The company also plans to enhance its efforts through pilot programs in the Midwest, stronger reseller partnerships in Mexico, and collaborations with Canadian dealership groups.
4. Guardant Health, Inc. (NASDAQ:GH)
Number of Hedge Fund Holders: 28
Guardant Health, Inc. (NASDAQ:GH) is a leading precision oncology company offering critical insights for cancer detection and treatment through advanced blood and tissue tests, real-world data, and artificial intelligence (AI) analytics. On January 16, the company announced that it had entered into a collaboration with ConcertAI, a leading oncology real-world evidence data and AI SaaS technology company. The collaboration has allowed the companies to come up with a data solution integrating comprehensive patient electronic medical record (EMR) data with detailed tumor profiling information. The joint RWD solution will allow biopharma collaborators to interpret disease biology in an enhanced manner as well as identify the causes and timing of tumor evolution and the intrinsic and acquired resistance mechanisms involved. Through the use of advanced data and AI tools, the collaboration aims to improve cancer treatment and help design better clinical trials.
“Realizing the potential of precision medicine requires a comprehensive, multi-dimensional understanding of the tumor, the clinical environment and the patient’s response to therapy. This partnership between Guardant and ConcertAI gives evidence and outcomes researchers access to extensive, robust data and AI-based modeling that can provide unprecedented insight into a patient’s cancer journey, including a tumor’s complex systemic interactions, to help them accelerate the development of much-needed cancer therapies. It represents another milestone in Guardant’s mission to conquer cancer with data”.
-Helmy Eltoukhy, Guardant Health co-CEO.
3. Zeta Global Holdings Corp. (NYSE:ZETA)
Number of Hedge Fund Holders: 31
Zeta Global Holdings Corp. (NYSE:ZETA) operates an AI-driven marketing technology company. On January 3, RBC Capital lowered the firm’s price target on Zeta Global to $40 from $43 and kept an “Outperform” rating. The rating, issued as part of a 2025 outlook for the software sector, reflects the firm’s optimism for the year 2025. The firm believes that 2025 is likely another good year for software as the group “could benefit from multiple catalysts”. The analysts told investors in a research note about these catalysts, namely, stabilizing spending trends, generative artificial intelligence having the opportunity to drive innovations, and the first half of 2025 estimates benefitting from easy compare as management teams “lean into growth”.
2. GitLab Inc. (NASDAQ:GTLB)
Number of Hedge Fund Holders: 43
GitLab Inc. (NASDAQ:GTLB) is a comprehensive AI-powered DevSecOps platform that streamlines software development for organizations. On January 15, Macquarie analyst Steve Koenig reiterated an “Outperform” rating on GitLab Inc. (NASDAQ:GTLB) with a price target of $90. Naming it his top software pick for the year, Koenig’s optimism stems from multiple factors. For starters, there is the perception of a significant valuation discount that makes the company “a valuable and strategic financial asset”. Moreover, the analyst believes that GitLab should also benefit from the continued enthusiasm for AI. Its Duo offering, which includes a suite of AI-powered tools within the GitLab platform, helps developers with various tasks like code writing and security checks. The company has also partnered with Amazon Web Services back in December. Since 2025 is going to be “the year of agentic AI”, GitLab will benefit from having the partnership. Koenig said that the joint offering takes the company a step ahead, with GitLab’s “agentic AI agenda” going beyond code creation to a range of use cases, such as testing, security reviews, and code modernization.
1. Lam Research Corporation (NASDAQ:LRCX)
Number of Hedge Fund Holders: 58
Lam Research Corporation (NASDAQ:LRCX) is a semiconductor stock that offers semiconductor equipment and services used in the making of integrated circuits. One of the biggest analyst calls for Friday, January 17, was for Lam Research Corporation (NASDAQ:LRCX). KeyBanc analyst Steve Barger upgraded Lam Research to “Overweight” from Sector Weight with a $95 price target. The firm is focusing on companies involved in artificial intelligence-related devices and leading-edge transitions like gate-all-around and technologies that support improving device performance. The analyst also told investors in a research note that investor expectations and embedded return expectations have improved for the front-end semiconductor capital equipment names. Particularly for Lam Research, KeyBanc said that the semi-company has “immediate growth drivers”. Some of these growth drivers include the transition to new technologies and the rise of generative AI. With AI continuing to permeate industries, the demand for advanced semiconductors is also going to rise, in turn fueling Lam’s growth.
“We are upgrading AMAT & LRCX to OW from SW as we reposition our Semicap coverage toward immediate growth drivers including AI-related devices and leading edge technology transitions”.
While we acknowledge the potential of LRCX 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 LRCX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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