As tools like ChatGPT by OpenAI become more popular, a larger debate has been ignited among AI businesses in the United States over content creation and copyrights. AI startup OpenAI, the most valuable private firm in the world, recently won an important battle in this regard when a New York federal judge on November 7 dismissed a lawsuit against the company that alleged that the startup had misused articles from news outlets Raw Story and AlterNet to train its large language models. A spokesperson for the startup said in a statement following the ruling that OpenAI had built their AI models using publicly available data, in a manner protected by fair use and related principles, and supported by long-standing and widely accepted legal precedents.
Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.
The win is likely to further boost the future prospects of OpenAI, a startup that is already investing in other AI ventures. Latest reports, published by news agency Reuters, claim that the company was part of a funding round for Physical Intelligence, a startup that is developing foundational software for robots, earlier this week. The robot startup managed to raise more than $400 million in funding through the round. This valued the firm at more than $2 billion. Jeff Bezos and venture capital firms like Thrive Capital and Lux Capital were also part of the funding round. Research by venture capital firm Accel suggests that funding of AI and cloud companies in the US, Europe, and Israel is estimated to hit $79.2 billion by the end of 2024.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.
For this article, we selected AI stocks by combing through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds.
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11. Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders: 38
Arm Holdings plc (NASDAQ:ARM) architects, develops, and licenses central processing unit products and related technologies for semiconductor companies and original equipment manufacturers. On November 7, Wells Fargo analyst Aaron Rakers raised the price target on the stock to $175 from $170 and kept an Underweight rating on the shares. The advisory noted the company delivered better-than-expected Q4 results plus Q1 2025 guide. However, it added that key tenets of its relative Underweight rating remained unchanged, namely a cautious stance on AI PC ramp with increasing competition, Apple 5G modem concern and Arm license dispute.
10. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 44
Palantir Technologies Inc. (NYSE:PLTR) is an American company that specializes in software platforms for big data analytics. On November 7, Jefferies analyst Brent Thill downgraded the stock to Underperform from Hold with an unchanged price target of $28. The advisory said that trading at 38-times estimated 2025 revenue made Palantir the most expensive software name while insider selling had picked up on 10b5-1 plans. The company’s fundamentals were alive, but it will have to accelerate growth to 40% for four years straight and trade at 12-times estimated 2028 revenue just to hold its stock price, which seemed unlikely, the advisory told investors in a research note.
9. Super Micro Computer, Inc. (NASDAQ:SMCI)
Number of Hedge Fund Holders: 47
Super Micro Computer, Inc. (NASDAQ:SMCI) develops and manufactures high performance server and storage solutions based on modular and open architecture. On November 6, Goldman Sachs slashed the price target on the stock to $28 from $67.50 and kept a Neutral rating on the shares. The reduction in the target reflects the increased risks to estimates due to disruption from Super Micro’s delayed annual filing and auditor resignation, the advisory told investors in a research note. The advisory added that the company’s Q1 preliminary results and Q2 outlook missed on lower than expected revenue. Combined with the absence of revenue guidance reiteration, it appears Super Micro may potentially be seeing some business challenges, contended Goldman.
8. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 100
QUALCOMM Incorporated (NASDAQ:QCOM) develops and sells foundational technologies for the wireless industry. On November 7, UBS analyst Timothy Arcuri raised the price target on the stock to $190 from $185 and kept a Neutral rating on the shares. In an investor note, the analyst underlined that the company posted strong guidance and, similar to MediaTek, was constructive on the flagship portion of the China market given new models and selling price growth from its new Snapdragon 8 Elite. The analyst added that Qualcomm’s mobile business continued to grow in a flattish overall unit market due to outsized exposure to the premium tier.
7. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 156
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) makes and sells integrated circuits and semiconductors. On November 7, news publication Financial Times reported that the chipmaker planned to stop the production of advanced AI chips for Chinese customers. Per the reports, the firm would no longer manufacture AI chips at advanced process nodes of 7 nanometers or smaller for Chinese firms. TSM is the most advanced chipmaker in the world and has previously supplied chips for Chinese tech giants like Alibaba and Baidu. Both the Chinese firms are part of larger Chinese plans to create an alternative for NVIDIA.
6. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 165
Alphabet Inc. (NASDAQ:GOOG) is a California-based technology company that owns and runs the internet search engine Google. On November 7, energy firm NRG Energy announced that it would be partnering with Renew Home, a leading virtual power plant company, and Google Cloud, to boost residential VPP capabilities. Under the deal, the companies plan to distribute hundreds of thousands of VPP-enabled smart thermostats by 2035 and create a nearly 1 GW AI-powered VPP – enabled by Google Cloud technology – to improve the grid resiliency in Texas and help households manage and lower their energy costs.
5. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. On November 5, the chipmaker announced that Rekor, a firm that works on mobility data collection, was using Nvidia Metropolis for real-time video understanding and Nvidia Jetson Xavier NX modules for edge AI in the US and internationally. The former is an application framework for smart infrastructure development with vision AI, while the latter is an accelerated computing platform used for embedded and robotics applications. Rekor uses the data it collects to provide traffic management solutions.
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 184
Apple Inc. (NASDAQ:AAPL) is a consumer electronics firm. On November 6, investment advisory UBS released an investor note on the tech titan, noting that App Store rising 14% year-over-year in October on a foreign exchange neutral basis was a solid result for Apple. Analyst David Vogt, who reiterated a Neutral rating on the stock with a price target of $236, noted that it was too early to attribute the strength to Apple Intelligence, given that iOS 18.1 was released on October 28, but the growth was a positive data point compared to Apple’s guidance for its Services segment. Apple Intelligence is a suite of AI features that Apple debuted earlier this year and recently added to its devices.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 219
Meta Platforms, Inc. (NASDAQ:META) engages in the development of products that enable people to connect and share with friends and family. On November 7, news publication Bloomberg reported that Baidu, the Chinese tech giant, was planning to unveil a pair of glasses with a built-in AI assistant rivaling Meta’s Ray-Bans that have seen success in AI-powered hardware. Per the reports, the Chinese firm plans to highlight the product, which is rumored to be equipped with built-in cameras to capture photos and video and will support voice interactions built atop Baidu’s Ernie model, at its annual Baidu World event in Shanghai next week.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based technology company. On November 7, the company announced that it would be rolling out the first major AI-powered toolbox for the popular Xbox gaming console. As part of the toolbox, an AI chatbot would be included that would handle support queries. News publication The Verge reports that the tech giant will also include AI features into the dashboard of the gaming console on top of the AI chatbot, with natural language search functions not far behind. The features are expected to roll out worldwide in the coming weeks.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) operates as a technology conglomerate with core interests in the ecommerce business. On November 7, the tech giant announced plans to invest up to $1.3 billion in Italy over the next five years as part of a long-term plan to boost data center business in the European country. The company aims to create more than 5,000 jobs in Italy through the investment. Per the ecommerce titan, these job opportunities will cover various sectors, including construction, facility maintenance, engineering, and telecommunications, and are also aimed at positively impacting the broader local economy.
While we acknowledge the potential of Amazon.com, Inc. (NASDAQ:AMZN) 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 Amazon.com, Inc. (NASDAQ:AMZN) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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