Franklin Mutual’s Katrina Dudley appeared on CNBC on December 31 to discuss whether the sectors that powered the market’s gains in 2024 will continue to lead the way in 2025, particularly AI within the tech and communications sectors. Companies in these sectors, especially the MAG7 stocks, have experienced remarkable performance over the past year. She pointed out that alongside traditional tech stocks, companies providing essential infrastructure are crucial for supporting the rapid expansion of AI technologies. She expressed strong optimism about AI’s continued influence, stating that it represents a secular theme likely to propel the tech sector forward in the coming year.
When addressing concerns about market valuations, Dudley reiterated that high valuations, such as the S&P 500 trading at ~22 times earnings, should not deter investors. Instead, she argued that these valuations reflect robust earnings growth among technology companies, distinguishing this phase from past market bubbles. The network effects inherent in AI-driven companies contribute to their returns, suggesting that if these firms can exceed earnings expectations, their valuations could become more favorable over time. However, she cautioned that consistent performance is critical. Any failure to deliver on earnings growth could pose risks in a high-valuation environment.
Turning her attention to lagging sectors, Dudley discussed healthcare as an area ripe for AI-driven transformation. She noted that while healthcare has significant upside potential due to demographic trends, some healthcare service providers faced challenges in 2024 due to rising costs and consumer pushback against high pricing. The increased focus on transparency in healthcare pricing may benefit consumers but could complicate profitability for companies. She suggested that advancements in AI technology are enhancing productivity within pharmaceutical research and development. Although immediate benefits may not be visible, she believes that AI’s long-term impact on productivity will make healthcare an increasingly attractive sector for investment.
Dudley’s insights underscore the transformative potential of AI across both tech and healthcare sectors. As these industries continue to evolve, we’re here with a list of the 12 best artificial intelligence stocks under $50 according to analysts.
Methodology
We first sifted through internet lists to compile a list of the top AI stocks under $50. We then selected the 12 stocks with high analysts’ upside potential and that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of analysts’ upside potential (at least 10%), as of January 2. We’ve also added the hedge fund sentiment for each stock which was sourced from Insider Monkey’s database.
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).
12 Best Artificial Intelligence Stocks Under $50 According to Analysts
12. HP Inc. (NYSE:HPQ)
Share Price as of January 5: $33.14
Average Upside Potential as of January 5: 11.65%
Number of Hedge Fund Holders: 42
HP Inc. (NYSE:HPQ) is a technology company that provides a range of personal computers and other computing devices, printing solutions, and related technologies to consumers, businesses, and the public sector. It operates under 3 primary divisions: Personal Systems, Printing, and Corporate Investments.
The company’s Personal Systems segment made up ~68% of the total revenue in FQ4 2024, driven by commercial unit sales, particularly those with AI capabilities. HP Inc.’s (NYSE:HPQ) PC portfolio now features AI companions designed to enhance productivity and streamline tasks, such as content creation and file analysis. It also launched the EliteBook X, an AI-powered business notebook, powered by 55 TOPS of NPU performance. This means that its processor can perform 55 trillion operations per second for AI tasks
HP Inc. (NYSE:HPQ) holds the leading market share in AI PCs within the Windows ecosystem, representing a strong competitive position. IDC forecasts a 234% increase in GenAI PC sales by 2027. This aligns with the company’s strategic focus, as PCs accounted for over 15% of its total shipments in FQ4.
Greenlight Capital reported a significant increase in the company stock price in Q2, coinciding with a positive shift in PC sales and the potential for AI-driven PC growth. Here’s what it stated in its Q2 2024 investor letter:
“In addition to gold, we had four material winners in our long portfolio this quarter. HP Inc. (NYSE:HPQ) jumped from $30.22 to $35.02. After seven quarters of declines, PC sales turned marginally positive during the quarter. The industry appears to be in the early stages of an upcycle, perhaps to be enhanced by recently launched AI-enabled PCs that are expected to ramp up over the next several quarters.”
11. Cohu Inc. (NASDAQ:COHU)
Share Price as of January 5: $26.86
Average Upside Potential as of January 5: 11.69%
Number of Hedge Fund Holders: 10
Cohu Inc. (NASDAQ:COHU) supplies test, automation, inspection, and metrology products and services to the semiconductor industry. This enables the semiconductor manufacturers to accelerate yield, productivity, and the time-to-market for their advanced devices.
The company is capitalizing on the high-bandwidth memory (HBM) market, which develops and deploys high-speed memory technologies essential for AI applications and computing tasks. It’s a $23 billion market projected to grow 22% annually. Cohu Inc.’s (NASDAQ:COHU) Neon inspection metrology platform, which was designed for inspecting HBM devices, has recently secured an initial order from a leading semiconductor memory manufacturer.
The Neon platform offers vision systems for full 6-sided optical inspection and measurement of micro-pillars. This means that it provides 360-degree optical inspection and measurement capabilities for the tiny structures within HBM chips. This technology, coupled with the company’s AI inspection capabilities, provides a competitive advantage. It expects to secure follow-on orders in early 2025, positioning the company for substantial growth in the coming years.
10. DigitalOcean Holdings Inc. (NYSE:DOCN)
Share Price as of January 5: $35.72
Average Upside Potential as of January 5: 11.98%
Number of Hedge Fund Holders: 22
DigitalOcean Holdings Inc. (NYSE:DOCN) is a global cloud computing platform provider. It recently acquired Paperspace, a prominent provider of cloud infrastructure and AI software. This acquisition positions it to expand its capabilities in the rapidly growing AI and ML market, offering its customers enhanced tools and resources for developing and deploying AI applications.
The company’s AI/ML platform demonstrated growth in Q3 2024, with ARR surging by ~200%. The platform empowers customers to build sophisticated AI applications without deep expertise in AI/ML. This means that customers can create personalized AI agents using their own data and foundational models. For instance, Autonoma Cloud, a customer using this platform, has created AI agents that understand user-specific contexts and retrieve machine-specific data, enhancing the user experience.
DigitalOcean Holdings Inc. (NYSE:DOCN) is also developing AI-powered tools to streamline cloud computing operations. The AI SRE agent, a prime example, assists in troubleshooting issues within customer applications, reducing resolution times, estimated at ~35% based on internal testing data. This focus on AI-driven innovation positions the company for long-term success within the rapidly evolving cloud computing market.
9. Globalfoundries Inc. (NASDAQ:GFS)
Share Price as of January 5: $43.18
Average Upside Potential as of January 5: 13.48%
Number of Hedge Fund Holders: 22
Globalfoundries Inc. (NASDAQ:GFS) is a semiconductor foundry that produces integrated circuits (ICs) across a range of advanced and mature process technologies. With a global manufacturing footprint, it serves major chip designers and technology companies, providing them with cutting-edge semiconductor manufacturing capabilities.
The company is growing due to the strong demand for its 22FDX platform, which is a leading-edge technology optimized for AI applications. This is a 22nm Fully-Depleted Silicon-on-Insulator (FD-SOI) process technology that is optimized for low-power applications, particularly in areas like AI, IoT, and automotive. This technology delivers up to 50% higher performance and 70% lower power consumption compared to other planar technologies, making it ideal for AI/ML workloads. Planar technologies refer to manufacturing techniques that create ICs on a flat, 2D surface.
The 22FDX platform is attracting customer interest, as evidenced by the design win with NXP for AI-powered applications in automotive, IoT, and smart mobile devices. Globalfoundries Inc. (NASDAQ:GFS) is solidifying its position as a leader in the AI semiconductor market, capturing a significant portion of the estimated $300 billion AI chip market projected to emerge by 2028.
8. Flex Ltd. (NASDAQ:FLEX)
Share Price as of January 5: $40.06
Average Upside Potential as of January 5: 13.58%
Number of Hedge Fund Holders: 45
Flex Ltd. (NASDAQ:FLEX) is an electronics manufacturing services provider that offers solutions encompassing product development, engineering, manufacturing, and logistics. It serves a diverse clientele across key sectors, including healthcare, consumer electronics, automotive, and industrial applications. One growth driver is its focus on the expanding AI market.
The company delivers cutting-edge AI solutions using its core strengths, as evident by its growing data center portfolio, which includes cloud and data center power solutions. In FQ2 2025, this portfolio surged by 40% year-over-year, surpassing the company’s expected long-term CAGR of 20%. This growth is attributed to its ability to provide fully integrated data center solutions, spanning from facility power to server board components.
This approach helps the company develop advanced solutions for challenges in AI infrastructure, like mitigating power spikes and optimizing cooling systems. This is exemplified by partnerships with Musashi Energy Solutions and JetCool. Flex Ltd.’s (NASDAQ:FLEX) deep expertise in power and compute allows it to collaborate closely with customers early in their technology roadmaps.
7. Corning Inc. (NYSE:GLW)
Share Price as of January 5: $47.50
Average Upside Potential as of January 5: 15.79%
Number of Hedge Fund Holders: 46
Corning Inc. (NYSE:GLW) is a leader in materials science and specializes in advanced optics, ceramics, and specialty glass. It enables the AI revolution through its innovative solutions, which include high-performance fiber optic cables for high-speed data transmission and advanced materials for AI-powered devices.
The company is growing due to the demand for its optical connectivity solutions, driven by the expansion of the AI market. This is evident in the 55% year-over-year growth in the company’s Enterprise segment, a direct consequence of the rising need for high-speed data transmission and seamless interconnectivity within AI-powered data centers.
Its optical connectivity solutions, such as the cutting-edge GenAI fiber and cable system, are instrumental in facilitating the high-bandwidth communication required for AI applications. The partnership with Lumen Technologies, which involves reserving 10% of Corning Inc.’s (NYSE:GLW) global fiber capacity for the next 2 years, highlights its approach to capturing the AI market. By aligning with key players, the company is positioning itself to grow within the AI-driven data center landscape.
O’keefe Stevens Advisory highlighted the company’s strong Q2 2024 driven by AI demand, suggesting its “springboard” plan could unlock significant growth and margin expansion. It stated the following regarding Corning Inc. (NYSE:GLW) in its second-quarter investor letter:
“Corning Incorporated (NYSE:GLW), another long-time holding, announced Q2 results would come in better than anticipated due to outperformance in their optical connectivity products used for Generative AI. Corning has long been a disappointing investment; with leading-edge technology, it consistently underperforms expectations. Their “springboard” plan, which revolves around $3 billion of excess capacity, seems to be the first sign in a long time that they are ready for a surge in growth. Management has frequently discussed the potential for operating leverage in nearly every conference call, anticipating a return to normal business conditions. Margins should expand over the coming quarters, driving EPS growth. The $3B in incremental sales could be worth in excess of $900m in EBITDA.”
6. Verizon Communications Inc. (NYSE:VZ)
Share Price as of January 5: $40.26
Average Upside Potential as of January 5: 16.74%
Number of Hedge Fund Holders: 57
Verizon Communications Inc. (NYSE:VZ) provides communications and technology services, offering wireless, wireline, and broadband solutions. AI-powered solutions are integrated across various aspects of its business, including network management, customer service, and product development, which allow the company to deliver personalized and efficient service experience.
The company specializes in 5G network products, which power edge computing and AI infrastructure. These products allow for the processing and transmission of datasets for applications in AI including autonomous vehicles, remote surgery, and manufacturing automation.
Verizon Communications Inc. (NYSE:VZ) has recently partnered with NVIDIA to develop an AI-powered enterprise solution. This solution enables the seamless operation of several AI applications over its secure 5G private networks with private Mobile Edge Compute. It’s also exploring new AI-driven initiatives, such as network slicing and satellite connectivity, to create new revenue streams and enhance its competitive advantage.
5. Samsara Inc. (NYSE:IOT)
Share Price as of January 5: $45.91
Average Upside Potential as of January 5: 20.89%
Number of Hedge Fund Holders: 30
Samsara Inc. (NYSE:IOT) provides Connected Operations Cloud solutions that use AI and IoT to empower businesses in transportation, construction, and logistics for enhanced efficiency and safety. By connecting physical assets to the cloud, it collects and analyzes real-time data and enables data-driven decisions and predictive insights to optimize operations.
The company’s AI-driven platform delivers significant ROI (return on investment) for customers, with an average estimated savings of $2 million per customer per year, translating to over 8x ROI. This includes reduced insurance costs, improved fuel efficiency, and enhanced worker safety. The company’s ARR surged 35% year-over-year to reach $1.35 billion, driven by increased new customers, with 170+ companies joining the company with an ARR exceeding $100,000.
Furthermore, Samsara Inc. (NYSE:IOT) has introduced Samsara Intelligence, a new suite of AI offerings. This includes tools such as Samsara Assistant, which provides real-time insights and guidance, and Intelligent Experiences, which seamlessly integrates AI recommendations directly within the platform. This AI is built upon a massive dataset exceeding 10 trillion data points annually. This allows the company to develop sophisticated AI models that address varying challenges faced by businesses.
It uses AI to analyze massive datasets from connected devices, enabling customers to optimize operations, making it a compelling investment opportunity. For this reason, Baron Fifth Avenue Growth Fund stated the following regarding Samsara Inc. (NYSE:IOT) in its Q3 2024 investor letter:
“Lastly, we initiated a position in Samsara Inc. (NYSE:IOT), which provides a cloud software platform for commercial vehicle telematics, video-based driver safety, driver workflow automation, and industrial equipment monitoring. Its software collects and analyzes data from sensors and cameras installed in its customers’ commercial trucks, construction equipment, warehouses, and other assets, helping companies visualize and improve the state of their operations. More than 17,500 customers in the transportation, field services, construction, utilities, and other industries have adopted Samsara, and last year the company became one of the fastest software companies ever to reach $1 billion in annual recurring revenue (ARR).
Samsara has been winning share from competitors in the $51 billion connected fleet software market due to its superior cloud native architecture, ability to address multiple use cases in a single platform, and its rapid product release cycle. Importantly, as Samsara continues to expand its connected asset base, it is building an unmatched data asset that it is using to drive better outcomes for its customers relative to competitors. Capturing more than 10 trillion data points from over 70 billion miles driven, Samsara uses AI to help companies optimize their vehicle routes, prevent accidents, improve asset utilization, reduce fuel expenses, and lower insurance premiums. In 2023, across its customer base, the company prevented 200,000 accidents and reduced carbon emissions by 2.3 billion pounds. Seeing a fast and tangible return on investment, customers have renewed and expanded their Samsara subscriptions at a healthy rate.
We see a long runway for growth as Samsara expands in existing accounts and wins new logos. Samsara is less than 50% penetrated in its existing customers’ vehicle fleets and has a significant opportunity to cross-sell newer non-vehicle products into its base. As it has scaled, Samsara has delivered healthy operating leverage, and we think free cash flow can expand to more than 20% longer term.”
4. Five9 Inc. (NASDAQ:FIVN)
Share Price as of January 5: $41.04
Average Upside Potential as of January 5: 21.83%
Number of Hedge Fund Holders: 29
Five9 Inc. (NASDAQ:FIVN) provides cloud contact center software (CCaaS) and improves customer engagement through its Intelligent CX Platform. This platform supports seamless communication across various channels, including phone, email, and social media. The company serves 2,500+ customers and collaborates with 1,400+ partners worldwide.
Its core growth engine is its AI-powered CX platform called the Five9 Genius AI, which transforms how businesses interact with customers. In Q3 2024, AI products contributed to over 20% of enterprise new logo ACV bookings, which represent the total annual contract value of new business deals signed with new enterprise customers. Furthermore, the ARR of new logo deals incorporating AI surpassed those without AI by 5x. Overall, AI bookings surged over 50% year-over-year.
Five9 Inc. (NASDAQ:FIVN) has introduced its AI Blueprint program. This program provides a framework for businesses to utilize AI effectively within their CX strategies. By working closely with customers, its AI experts develop customized roadmaps for specific needs and objectives. Additionally, its consumption-based pricing model allows experimentation and innovation, where customers can scale their AI investments based on their needs.
Despite near-term challenges, including macroeconomic headwinds and potential AI disruption, Brown Capital Management Mid Company Fund believes Five9’s leadership in cloud-based contact center software, strong AI product suite, and long-term growth potential make it a promising investment. Here’s what the Fund stated in its first quarter 2024 investor letter:
“Five9, Inc. (NASDAQ:FIVN) is a leader in cloud-based contact center software, offering a comprehensive omnichannel solution that seamlessly incorporates inbound and outbound calling with email, chat, SMS and social media. With the growth of e-commerce, consumers are increasingly opting for digital interactions over physical visits, driving the need for world-class contact-center software solutions. These systems effectively become a virtual front door for customers, serving as indispensable, mission-critical gateways for customer engagement and support. Five9’s cloud-native platform is superior to traditional, on-premise legacy systems, offering lower costs, faster innovation and support for remote-working needs. These advantages are expected to significantly increase cloud adoption in the future, pushing it well above the current level of approximately 20%.
The company reported fourth quarter revenue results that were only modestly ahead of consensus expectations, with disappointing revenue-growth guidance for the first quarter of 2024. Management cited the macroeconomic impact of lower demand for services from the installed base, driven by headwinds within the consumer discretionary vertical, which is the company’s third-largest customer segment. In addition, there are ongoing concerns that new artificial intelligence (AI) technologies could disintermediate contact-center software and shrink the market for the company’s offering. However, AI also offers a significant opportunity for the company, a leader with eight currently marketed AI products that are providing a pricing uplift of as much as 2-3x. In addition, to fully leverage AI’s advantages, customers must first adopt cloud-based solutions, which should accelerate the shift to the cloud, benefiting Five9. The company has seen particularly strong adoption of AI solutions with larger enterprises, helping it expand beyond its earlier success with small and medium-sized customers. Despite the near-term headwinds, Five9 should have a healthy runway for durable double-digit long-term growth driven by industry-leading technology and market-share gains from legacy incumbents.”
3. Box Inc. (NYSE:BOX)
Share Price as of January 5: $31.49
Average Upside Potential as of January 5: 23.85%
Number of Hedge Fund Holders: 31
Box Inc. (NYSE:BOX) is a cloud content management platform that allows organizations to securely store, share, and collaborate on digital content. It offers a range of solutions, such as cloud storage, file sharing, synchronization, e-signatures, and other collaboration tools.
The increasing adoption of Box AI has led to higher demand in the company’s Enterprise Plus tier, which saw a 5% year-over-year increase in FQ3 2025. Box AI includes features like document summarization and custom AI agents. The company is also introducing a new era of Intelligent Content Management, incorporating AI-powered features like no-code app development (Box Apps) and automated document generation (Box Doc Gen). These innovations streamline workflows and unlock the full value of customer content.
Box Inc. (NYSE:BOX) expects these features to contribute to a projected 6% revenue growth in FQ4. Strategic partnerships with companies like Anthropic, OpenAI, and AWS allow it to further integrate cutting-edge AI models into its platform. These advancements indicate strong revenue potential.
2. Docebo Inc. (NASDAQ:DCBO)
Share Price as of January 5: $44.08
Average Upside Potential as of January 5: 36.12%
Number of Hedge Fund Holders: 15
Docebo Inc. (NASDAQ:DCBO) provides AI-powered learning platforms that help organizations train their employees, partners, and customers. Its cloud-based solutions, including its Learning Management System (LMS), offer features like personalized learning experiences, AI-powered content creation, learning analytics, and integrations with popular business tools like Salesforce and Microsoft Teams.
In Q3 2024, the company’s subscription revenue grew by 21% year-over-year, representing 95% of the total revenue. This is attributed to increased demand for its AI-powered solutions, which personalize learning paths, recommend relevant content, and provide real-time feedback to improve learner engagement and training outcomes.
Its partnerships with companies like Deloitte further solidify its position as a leader in AI-powered learning solutions, expanding Docebo Inc.’s (NASDAQ:DCBO) market reach. The recent 2024 AWS Rising Star Technology Partner of the Year award acknowledged the company’s innovative use of AI and its commitment to delivering cutting-edge learning solutions.
1. Tempus AI Inc. (NASDAQ:TEM)
Share Price as of January 5: $38.25
Average Upside Potential as of January 5: 47.71%
Number of Hedge Fund Holders: 7
Tempus AI Inc. (NASDAQ:TEM) is a healthcare technology company that provides services like advanced molecular diagnostics, access to a vast de-identified clinical and molecular data library, and AI-powered analytical tools. Its customer base includes healthcare providers, pharmaceutical companies, and researchers.
The company is growing by using AI to analyze medical information. To support this growth, the Centers for Medicare & Medicaid Services (CMS) approved reimbursement for assessments of cardiac dysfunction using the Tempus ECG-AF algorithm. This increases the accessibility and adoption of the company’s AI-powered technology, contributing to a projected $700 million in total revenue for 2024, which represents a 32% growth year-over-year.
Tempus AI Inc. (NASDAQ:TEM) also announced agreements with major insurers like Blue Cross Blue Shield, which means patients with insurance plans can access AI-enabled molecular profiling services easily and potentially reduce the cost of care. This showcases the company’s commitment to making innovative technologies widely available and improving healthcare outcomes for a larger population.
As we acknowledge the growth potential of Tempus AI Inc. (NASDAQ:TEM), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TEM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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