In this article, we will take a detailed look at 10 Trending AI Stocks to Watch in December.
Jared Cohen, Goldman Sachs president of global affairs, co-head of the Goldman Sachs Global Institute, said while talking to CNBC in a latest program that amid rising data center-driven energy demand because of AI, the US would need to collaborate with other countries via “diplomacy.”
“If you look at data centers for cloud workloads versus data centers for AI workloads, data centers for AI workloads require ultra-high density. They need a concentrated power source, and so intermittent power like wind and solar doesn’t fit the bill. You need base load power, so I think nuclear, coal, and natural gas are necessary, and we have plenty of that in the US. The problem is we can’t transport it from where it is through multiple jurisdictions because of the ‘not in my backyard’ issue. So, the US is going to need some kind of overflow option if it wants to continue leading in this space. There’s not a single geography that I would say represents a panacea to this problem.”
Answering a question about whether the return to relatively cheaper and reliable energy sources like coal could satisfy the AI-driven energy demand, the analyst said the US would still need to look beyond just relying on its own sources because the need for power is huge.
“We’re going to have to probably bring another 35-plus gigawatts of power online relative to the 17 gigawatts of power that are already online feeding these data centers in just the next couple of years. That’s not enough, that’s not enough time. So, you know, the US is going to continue to lead in the space, but it’s not going to be able to lead on its own.”
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For this article we picked 10 AI stocks that are getting investors’ attention on the back of latest news. With each stock we have mentioned the number of hedge fund investors. 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. Palantir Tech Inc (NYSE:PLTR)
Number of Hedge Fund Investors: 43
Jeff McClean, CEO of Solidarity Wealth, said while talking to CNBC in a latest program that in the latest scenario of rising Ukraine-Russia tensions, Palantir Tech Inc (NYSE:PLTR) is at less risk when compared with other defense names. He also said Palantir Tech Inc (NYSE:PLTR) has become the new face of the defense industry in the US.
“Just because we have a Trump presidency doesn’t necessarily mean that the world’s going to become less dangerous, but I think it favors certain defense stocks over others. When you think of what Palantir has been doing the past year, I think they’re going to be a favored defense stock compared to what we’ve seen historically from the traditional powers. If you’re looking at Lockheed Martin, they’re probably more at risk from Elon Musk and Viv, who are pushing their Department of Governmental Efficiency and no-bid contracts that Lockheed Martin wins all the time. I think they’re a bit more in danger than Palantir, which is the new face of defense.”
What makes Palantir Technologies Inc (NYSE:PLTR) one of the top AI stocks? Its technologies are actually solving the problems of businesses. Palantir’s data technology Ontology is solving the famous hallucination problem for AI systems, thanks to the company’s years of experience with military and defense systems. Earlier this year at an event with customers, Palantir Technologies Inc (NYSE:PLTR) shared some specifics on how its customers are being able to reduce costs and increase profits due to its artificial intelligence platform (AIP) that was launched about a year ago.
Airbus accelerated A350 production by 33%, BP reduced costs per barrel by 60%, and Jacobs Connect cut power usage by 30%. Panasonic decreased waste by 12%, ESI Group sped up ERP harmonization by 70%, and PG&E reduced transformer ignitions by 65%. Eaton boosted productivity by 25%, while Tyson Foods achieved $200 million in cost savings.
9. Dell Tech Inc (NYSE:DELL)
Number of Hedge Fund Investors: 60
Dell Technologies (NYSE:DELL) was added to the Evercore ISI Tactical Outperform list ahead of its latest quarterly results, partly due to its exposure to artificial intelligence.
“DELL is well positioned to report upside to consensus October-quarter revenue and EPS estimates of $24.69B and $2.07, driven by strength in the ISG segment, including storage, general-purpose compute, and AI server strength,” said Evercore analysts, led by Amit Daryanani, in a Wednesday note.
Evercore also anticipates Dell Tech Inc (NYSE:DELL) will report AI server revenue exceeding $3.1B for the third quarter, with an AI server backlog between $3.5B and $4B.
“While an increase in AI server sales could dampen margin expectations, we believe a better storage environment will help DELL more than offset these headwinds,” Daryanani added.
Dell posted mixed quarterly results with revenue missing expectations. What stands out is Dell’s Infrastructure Solutions Group (ISG), which posted an impressive 34% year-over-year growth, reaching $11.4 billion in revenue. The server business rose a whopping 58% increase YoY to $7.4 billion.
Dell Tech Inc (NYSE:DELL) experienced a shift in AI server demand toward the next-generation Blackwell architecture. Dell Tech Inc (NYSE:DELL)’s management highlighted that there was a dramatic shift in orders toward Nvidia’s (NVDA) Blackwell-based systems during Q3, which impacted short-term shipments as these products ramp up production. This shift shows Dell Tech Inc (NYSE:DELL)’s competitive position, as customers are willing to wait for the latest tech solutions. Dell secured $3.6 billion in AI server orders this quarter, an 11% increase from the previous quarter. Dell Tech Inc (NYSE:DELL) also signed over 2,000 enterprise customers for their AI solutions.
Carillon Scout Mid Cap Fund stated the following regarding Dell Technologies Inc. (NYSE:DELL) in its Q2 2024 investor letter:
“Dell Technologies Inc. (NYSE:DELL) was a top contributor despite reporting disappointing first-quarter earnings results, because investors looked through the near-term disappointment and expected strong growth from AI-related servers and personal computers. We expect Dell to participate in the growth of artificial intelligence hardware, especially as enterprises invest more aggressively. We like the company’s depth and breadth of products and services, as well as its focus on keeping costs low.”
8. Intel Corp (NASDAQ:INTC)
Number of Hedge Fund Investors: 68
Last month, Bernstein’s Stacy Rasgon, while talking to CNBC in a program ahead of Intel Corp (NASDAQ:INTC)’s earnings, explained why he is worried about Intel shares:
“I mean, we’ve got issues in the PC market. We’ve got a CPU channel that’s stuffed full in servers. Their competitors are still taking a good amount of share, and they don’t really have any AI story to speak of to help make up the difference. Now, I’m starting to get more and more worried about the trajectory for gross margins. They’ve kind of been suggesting that as they ramp some of their new products, which actually have a lot more outsourced content, it hurts the margins. They’ve been suggesting that may actually be an incremental headwind to margins as we get into next year. So, all that, and then you couple that with everything else around the process roadmap, burning cash, and everything else—it doesn’t feel like a good situation to be in. Clearly, they’re in a tough spot.”
In 2025, Intel Corp (NASDAQ:INTC) is expected to generate $4–$5 billion in operating cash flow against a projected $20–$23 billion in capital expenditures. Intel reported $5.1 billion in operating cash flow and spent $18.1 billion in the first nine months of this year.
Intel bulls are linking their hopes with Intel Corp (NASDAQ:INTC)’s foundry business. But the segment posted weak results in both the second and third quarters, with a third-quarter revenue drop of 8% and an EBIT loss that grew to $5.8 billion. Once seen as a potential competitor to Taiwan Semiconductor Manufacturing (TSM), Intel’s steep third-quarter decline raised serious doubts about its manufacturing competitiveness.
ClearBridge Large Cap Value Strategy stated the following regarding Intel Corporation (NASDAQ:INTC) in its Q3 2024 investor letter:
“While the market environment clearly was a headwind in the third quarter, several of our large positions also faced challenging conditions, which negatively impacted results. In the information technology (IT) sector, Intel Corporation (NASDAQ:INTC) has come under additional pressure due to continued softness in the company’s core PC and server markets as well as concerns on the company’s longer-term competitive position. While Intel’s turnaround is not happening overnight, we are constructive on the outlook into 2025: the company’s product positioning should be much improved and it should be positioned to gain market share in a cyclical upswing in which it has strong earnings power. A somewhat adverse spending environment due to AI myopia has weighed on shares, but we still think the market is undershipping PCs and general servers following a COVID normalization period that saw demand get pulled ahead and then languish as companies froze IT budgets. The installed base is now getting older, and we expect a strong refresh cycle into next year. The delay is actually beneficial to Intel, whose product positioning will be all the more improved. While our investment case is not predicated on an M&A transaction, and we believe one is unlikely, the expression of interest in the company speaks to the value of the assets, which we think still trade at a meaningful discount to fair value.”
7. Oracle Corp (NYSE:ORCL)
Number of Hedge Fund Investors: 91
Talking about tech stocks he currently likes, Dan Niles of Niles Investment Management said in a recent program on CNBC that he likes Oracle Corp (NYSE:ORCL).
“We like names like Oracle. We think next year it’s going to be about networking all of this AI infrastructure together and helping enterprises get access to it.”
Madison Sustainable Equity Fund stated the following regarding Oracle Corporation (NYSE:ORCL) in its Q3 2024 investor letter:
“The top contributors in the quarter were NextEra Energy, Oracle Corporation (NYSE:ORCL), Progressive Corporation, Equifax Inc., and United Healthcare. Oracle reported a strong first quarter with accelerating Cloud infrastructure demand. Oracle followed its solid first quarter with an upbeat analyst meeting which highlighted multi-year growth opportunities for the company.”
Oracle Corp’s (NYSE:ORCL) technology is critical for AI development, serving as a key foundation much like GPUs are for AI processes. Oracle says it has built large data centers with ultra-fast RDMA networks and massive 32,000-node NVIDIA GPU clusters, boosting its presence in AI training.
6. Tesla Inc (NASDAQ:TSLA)
Number of Hedge Fund Investors: 99
Dan Ives of Wedbush said while talking to Schwab Network in a latest program that Elon Musk’s “bet” on Trump will change the entire landscape for his EV company.
“Musk betting on Trump is going to change the whole landscape for Tesla Inc (NASDAQ:TSLA), autonomous AI, and regulation. I think while that gets accelerated, EV tax credits will probably get pulled in January, which is negative for the industry and negative for Detroit. Remember, Musk, when it came to the Biden administration, even Obama, was on the outside looking in. Right now, the Trump administration has a huge seat at the table, and it’s going to be very important when it comes to China tariffs. A lot of those discussions are almost like an AI ambassador. Look, I believe AI alone, the autonomous piece, is worth a trillion dollars alone for Tesla Inc (NASDAQ:TSLA).”
Tesla Inc (NASDAQ:TSLA) product lineup is showing signs of stagnation, with over 95% of sales still coming from the Model 3 and Model Y. Meanwhile, competitors are rolling out more advanced models. Even Rivian’s CEO suggested Tesla Inc (NASDAQ:TSLA) could be nearing market saturation for these models. According to Reuters, Tesla’s market share in Europe is slipping as legacy automakers like BMW post stronger sales. Chinese competitor BYD is also gaining ground in Europe, despite talk of tariffs.
The Tesla Inc (NASDAQ:TSLA) robotaxi event was short on details. Notably absent was the discussion of a “more affordable” model that Musk had previously mentioned to boost confidence in Tesla’s vehicle sales growth outlook.
What about the $30,000 price tag claim?
Musk has indicated that the Cybercab will have a production cost of approximately $30,000. Operating within the robotaxi fleet is projected to cost around $0.20 per mile. With a production cost of $30,000, the retail price of the Cybercab is likely to exceed this figure. For instance, if the Cybercab is priced at $30,000 per unit, that translates to $15,000 per seat. In contrast, the average price per passenger seat in Tesla Inc (NASDAQ:TSLA)’s most affordable long-range RWD Model 3—factoring in full self-driving (FSD) licensing—is under $10,000 ($29,990 post-incentive vehicle price plus $8,000 for the FSD license, divided by four passenger seats). Regarding operational costs, while the Cybercab is expected to cost $0.20 per mile, charging the Model 3 is estimated at under $0.10 per mile, leaving a significant margin to cover maintenance and downtime.
Polen Focus Growth Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q3 2024 investor letter:
“The largest relative detractors during the quarter were Apple, Airbnb, and Tesla (not owned). We’ve spoken at length about our rationale for not owning Tesla, Inc. (NASDAQ:TSLA). In short, the market seems to be pricing in a lot of positive optionality for this company in the near-to-intermediate term (and particularly a fully autonomous fleet of electric vehicles in the medium term). What exists today is an automobile manufacturer limited to the higher-income segment that is increasingly challenged to sell vehicles when interest rates are not zero. We continue to question the company’s long-term growth profile and governance.”
5. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 158
Earlier this month, Gene Munster from Deepwater Asset Management said while talking to CNBC that we are not going to see the impact of Apple AI on Apple Inc (NASDAQ:AAPL)’s numbers until the next “few quarters.”
He has revised his targets for growth but believes the stock has upside in the long term.
“I own it personally and think there’s still some upside. I’m always looking ahead, and I believe the numbers still have room to grow. However, one piece has changed. If you had asked me two weeks ago, I would’ve said the Street expected iPhone growth around 15% for fiscal 2025. I’ve revised that—I now think it’s closer to 10%. The Street is at 5%, so I still see upside, but not as much. I’m also shifting some of that revenue into 2026, so this represents a slight change in my perspective.”
Madison Sustainable Equity Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q3 2024 investor letter:
“Alphabet Inc., Eli Lilly and Company, Qualcomm Incorporated, Microsoft Corporation, and Apple Inc. (NASDAQ:AAPL) were the largest detractors. Apple has been volatile in the last quarter but ended on strength. Early in the quarter, Apple benefited from the introduction of their AI strategy, Apple Intelligence. They followed in September with the new iPhone 16, which also created some excitement. We are underweight to Apple, which has resulted in a headwind for performance.”
