In this article, we will look at the 12 Cheap AI Stocks to Buy in 2025.
Artificial Intelligence (AI) was a buzzword around Wall Street for most of 2024. AI has shown immense promise but comes with significant risks. Big AI players are dominating the broader market, but there will be opportunities for other companies to explore as the AI market continues to expand. For instance, the new administration is keen on technological advancement, and recently, President Donald Trump announced a $500 billion AI initiative, a joint venture known as Stargate between OpenAI, Softbank, and Oracle.
However, DeepSeek’s introduction shocked the U.S. companies after it released a new AI model, a much better alternative to GPT-4. DeepSeek claims to have designed the AI model in just two months and at around under $6 million using Nvidia’s less-advanced H800 chips, as reported by Reuters on January 27. Since the news broke out, NVIDIA Corporation (NASDAQ:NVDA) shares have plunged over 16%, wiping away $600 billion in market capitalization, the biggest one-day loss in U.S. history.
Moor Insights & Strategy founder, CEO, and chief analyst Patrick Moorhead, speaking to Market Domination, shared his views on DeepSeek. Moorhead was impressed by the efficiency of DeepSeek’s AI. He pointed out that the Chinese have used different techniques compared to American developers, where they were able to parse or train maybe 5% of the data, which is a 95% reduction.
However, Moorhead also addressed the U.S. market drop as an “overreaction.” “I think the market overall should be going crazy because [this is the] uplift of what we were looking for [from AI],” said Moorhead. He added that the investors’ focus should be on the progress in inference.
It might be a good time to invest in AI stocks, especially cheap AI stocks during the market’s overreaction. Here is a list of 12 Cheap AI Stocks to Buy in 2025.
Source: unsplash
Our Methodology
To determine the list of cheap AI stocks, we went through various news articles and stock analyses. We shortlisted the AI stocks with the minimum analyst upside of 30%, as of January 27. Cheap, in the context of this article, means stocks that Wall Street analysts believe are undervalued and will surge to higher share prices. We have ranked the cheap AI stocks to buy based on their popularity among hedge funds, as of Q3 2024, in ascending order.
Why do we care about what hedge funds do? 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 Cheap AI Stocks to Buy in 2025
12. Docebo Inc. (NASDAQ:DCBO)
Analyst Upside (as of January 27): 38.86%
No. of Hedge Fund Holders: 15
Docebo Inc. (NASDAQ:DCBO) is a provider of AI-powered learning management software (LMS) and offers a comprehensive cloud-based platform to support workforce training. The company’s solutions include Docebo Learn LMS for personalized learning, Docebo Shape for AI-driven content creation, Docebo Flow for integrating learning into daily work, and Docebo Learning Impact for measuring learning effectiveness. In addition to that, the company also provides tools for mobile learning and extended enterprise education.
In December 2024, the company entered into a partnership deal with Class Technologies Inc. This collaboration will enhance Docebo Inc.’s AI tools and analytics efficiency, allowing real-time measurement for learner engagement and assisting L&D leaders in driving success. Moreover, this deal will help Docebo’s clients to easily integrate its existing training content into Class.
Docebo Inc. (NASDAQ:DCBO) continues to improve its financial results, driven by increased demand for its AI-backed LMS system. During the third quarter of 2024, the company posted strong outcomes, despite a challenging macro environment. Docebo’s revenue was reported at $55.43 million, surpassing estimates by $1.28 million. The company expanded its presence in the quarter including new partnerships with Accenture and Deloitte. The company is testing a new pricing strategy to align with customer outcomes, which has been well-received and is anticipated to drive higher average contract values. The company’s latest AI Authoring, a tool designed to streamline content production, will further increase its sales.
11. Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX)
Analyst Upside (as of January 27): 49.36%
No. of Hedge Fund Holders: 16
Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) is a clinical-stage biotechnology company focused on decoding biology by integrating technological advancements across biology, chemistry, data science, automation, and engineering to industrialize drug discovery.
Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) became a popular AI stock following NVIDIA’s $50 million investment in the biotech firm in 2024. The company will use NVIDIA’s DGX™ Cloud and other AI tech stack for drug discovery. Recursion is now focusing on AI products and recently acquired AI biotech startup Exscientia. According to a 2023 PwC report, the AI market in healthcare was valued at $11 billion and is expected to reach $188 billion by 2030. Recursion is being considered a promising AI drug company that would benefit from that.
On January 8, KeyBanc Capital Markets analyst Scott Schoenhaus maintained its Overweight rating on RXRX shares with a price target downgrade from $12 to $10. Schoenhaus notes that healthcare technology stocks were under pressure for most of 2024 but experienced a rebound following the U.S. elections. Analysts are still bullish on RXRX following its purchase of Exscientia.
With the acquisition, Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) now holds a pipeline with over 10 clinical and preclinical programs, 10 advanced discovery programs, and over 10 partnered programs. Most programs target oncology and rare diseases, and could potentially achieve annual sales of more than $1 billion each. Recursion projects nearly 10 clinical program milestones within the next 18 months.
J.P. Morgan also weighed on RXRX and highlighted that the biotech company’s presentation updates at its recently held healthcare conference were “largely in line/as anticipated.” Analysts expect Recursion Pharmaceuticals to achieve definitive clinical wins.
10. Evolv Technologies Holdings, Inc. (NASDAQ:EVLV)
Analyst Upside (as of January 27): 37.16%
No. of Hedge Fund Holders: 18
Evolv Technologies Holdings, Inc. (NASDAQ:EVLV) provides AI-driven touchless security screening systems. The company’s products use advanced sensors and cloud services to uncover high-risk weapons while ignoring harmless objects. The company is based on a multi-year security-as-a-service subscription model, providing predictable revenue and growth opportunities. The company sells its products across diverse sectors including education, healthcare, and entertainment venues.
On January 24, Craig-Hallum increased its price target on EVLV from $5.75 to $6.75 and kept a Buy rating on the shares. The analyst raised the price target after the company issued an unequivocally positive business update in Q4 2024. During the fourth quarter of 2024, the company deployed over 6,000 Evolv Express units internationally, with 470 new multi-year subscriptions activated. The company also added nearly 60 new customers across various industries. The company continues to expand as the demand for its products remains stable. Evolv Technologies Holdings introduced a new AI-based weapons detection solution for bags, Evolv eXpedite, which booked its first orders in Q4.
Analysts pointed out that the higher-than-expected unit deployments should calm investors about the company’s financial restatements and regulatory scrutiny of its operations. To add to this, Evolv Technologies Holdings, Inc. (NASDAQ:EVLV) reported that not a single customer has unsubscribed their service following the FTC settlement. This development is considered an endorsement of customer satisfaction with the company’s offerings.
Evolv Technologies Holdings ended the fourth quarter of 2024 with zero debt and almost $52 million in cash and cash equivalents, further strengthening the firm’s balance sheet.
9. Verint Systems Inc. (NASDAQ:VRNT)
Analyst Upside (as of January 27): 40%
No. of Hedge Fund Holders: 19
Verint Systems Inc. (NASDAQ:VRNT) is a customer experience automation company that operates through its Verint Open platform and AI-driven bots to provide measurable business results via AI. The company’s services include tools for analytics, compliance, forecasting, fraud prevention, financial compliance, knowledge management, routing, real-time assistance, scheduling, self-service, and customer feedback analysis. Whereas, the Berint Open platform assists automation across the customer journey at the website, app level, contact center, and back office.
On January 15, RBC Capital analyst Dan Bergstrom kept an Outperform rating on VRNT shares and set a price target of $36, presenting an upside of almost 40% from current price level. Needham analyst Joshua Reilly also maintains a Buy rating on the stock with a price target of $40. The firm named VRNT its top pick and added it to the “Needham Conviction” list. The analyst believes the company’s growing ability in contact center spending and strong presence in the Hybrid Cloud contact center market makes it a promising AI stock.
The growing demand for Verint Systems Inc.’s (NASDAQ:VRNT) AI tools has demonstrated positive results in its recent Q3 2025. The company posted revenue of $224 million, almost $14 million ahead of guidance, reflecting a 5% year-over-year growth. Verint reported strong demand in SaaS, with bundled SaaS revenue soaring by 19% from a year ago, driven by AI innovation. The company secured large orders, including an $11 million contract from a financial services firm and a $7 million contract from an insurance company.
8. NICE Ltd. (NASDAQ:NICE)
Analyst Upside (as of January 27): 46.56%
No. of Hedge Fund Holders: 24
NICE Ltd. (NASDAQ:NICE) is a software company that offers cloud platforms for AI-driven digital business solutions internationally. The company engages in assisting businesses to improve customer interactions and manage compliance against financial crimes. The company operates through the CXone and Enlighten platforms that use AI to optimize their operations.
In Q3 2024, NICE Ltd. (NASDAQ:NICE) posted a notable 15% year-over-year growth in revenue, reported at around $690 million, driven by high demand for its AI tools. The cloud revenue soared over 24% to $500 million, surpassing the $2 billion ARR mark, which is the highest cloud growth on the largest cloud revenue base in the industry. Due to a massive growth driven by increased outputs, NICE increased its earnings by 27% year-over-year to $2.88 in Q3. NICE continued to improve its cash flow during Q3, posting $159 million in operating cash, up by 32% compared to Q3 2023.
Broyhill Asset Management stated the following regarding NICE Ltd. (NASDAQ:NICE) in its Q3 2024 investor letter:
“NICE Ltd. (NASDAQ:NICE) develops software to run customer contact centers. The company’s cloud-based software enables the implementation of greater functionality versus its on-premise competitors. Many of these on-premise competitors, which do not offer cloud-based products, have stopped rolling out new features. This has prompted their customers to switch to companies like Nice where they have wider access to new developments. Artificial intelligence is a large part of this shift and of our differentiated view. The market views AI as a threat to Nice’s core operations; we view it as an enabler of additional revenue streams with improved economics.”
7. Dell Technologies Inc. (NYSE:DELL)
Analyst Upside (as of January 27): 49.27%
No. of Hedge Fund Holders: 60
Dell Technologies Inc. (NYSE:DELL) is a pioneer in producing desktops, servers, storage solutions, monitors, and gaming products. Dell is also one of the top AI companies that provides essential infrastructure, tools, and solutions that allow AI adoption through industries.
Dell Technologies Inc.’s (NYSE:DELL) strategic positioning focuses on end-to-end AI solutions, with a wide range of offerings from large-scale data centers to AI PCs. The company’s competitive advantage in AI revolves around its strong engineering capabilities. The demand for Dell’s AI-optimized servers continues to rise, driven by increasing data centers. In Q3 FY2025, the company’s AI-optimized server orders reached $3.6 billion, contributing to the total revenue of $24.4 billion, up by 10% year-over-year. The company’s AI server shipment totaled around $2.9 billion in Q3. In addition to that, the company ended the quarter with an AI backlog of $4.5 billion.
On January 10., Morgan Stanley’s analyst Erik Woodring maintained a Buy rating on Dell Technologies Inc. shares with a price target of $154. Woodring highlighted that Dell is well-positioned in the AI server market and projects its conventional hardware market to expand in 2025. Moreover, Dell has committed to returning more than 80% of its cash flow to shareholders, which will grow incrementally through 2027.
6. Palo Alto Networks, Inc. (NASDAQ:PANW)
Analyst Upside (as of January 27): 124.51%
No. of Hedge Fund Holders: 64
Palo Alto Networks, Inc. (NASDAQ:PANW) is a leading cybersecurity firm that offers a comprehensive platform and services backed by AI. On January 22, the company launched Quantum Random Number Generator (QRNG) Open API framework, an AI solution that will empower organizations to protect their systems against quantum security risks. QRNG will utilize AI, ML, and deep learning in quantum computing to enhance its solution offering.
Palo Alto Networks, Inc. is aggressively investing in AI, and over the last ten years, it has developed into a more complete security platform, adding ML and AI capabilities into a wide range of cloud-based products. The company’s latest deal of $100 million plus with the U.K. Home Office reflects Palo’s growing influence.
On January 21, Morgan Stanley analyst Hamza Fodderwala rated PANW an Overweight stock, lifting its price target from $223 to $230 per share. In addition to Morgan Stanley maintaining an overweight rating on PANW, Scotiabank also raised its price target on the stock from $200 to $225 with a Sector Outperform rating. Analysts see Palo Alto Networks, Inc. (NASDAQ:PANW) to outperform considering its growing business as it continues to land big deals and demonstrate a strong position in the cybersecurity market.
5. Micron Technology, Inc. (NASDAQ:MU)
Analyst Upside (as of January 27): 59.15%
No. of Hedge Fund Holders: 107
Micron Technology, Inc. (NASDAQ:MU) designs, develops, manufactures, and sells memory and storage products internationally. Some of the top customers of Micron include Apple, Dell, HP, IBM, Lenovo, Microsoft, and Samsung. In early 2024, the company started mass production of HBM chips for NVIDIA’s AI graphics processing units, expanding its position in the AI market.
Micron Technology, Inc. (NASDAQ:MU) experienced a robust AI demand in 2024 and anticipates higher revenue, improved profitability, and positive FCF in FY2025. In Q1 FY2025, the company posted revenue of $8.71 billion, posting record revenue with a year-over-year increase of a remarkable 84%. The company’s data center revenue soared over 400% from a year ago and 40% quarter-over-quarter, reaching a record level of data center revenue. In addition to that, Micron received a $6.1 billion agreement with the U.S. Department of Commerce under the CHIPS and Science Act to support advanced DRAM manufacturing.
Delaware Ivy Core Equity Fund stated the following regarding Micron Technology, Inc. (NASDAQ:MU) in its Q3 2024 investor letter:
“Micron Technology, Inc. (NASDAQ:MU) – Fundamentals here also appear solid though concern about global demand for handsets and PCs drove the shares down during the quarter. We expect Micron to be a significant beneficiary of growth in AI demand as an investment in new data centers is extremely memory (semiconductor) intensive.”
4. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Analyst Upside (as of January 27): 59%
No. of Hedge Fund Holders: 107
Advanced Micro Devices, Inc. (NASDAQ:AMD), NVIDIA’s counterpart, specializes in manufacturing semiconductors, providing processors, and graphics solutions for gaming, data centers, and embedded systems, with a core focus on high-performance computing using AI use cases.
Where NVDA led the AI boom in 2024, Advanced Micro Devices, Inc. (NASDAQ:AMD) shares plunged over 35% in the last year. Earlier in December 2024, someone asked Jim Cramer if he was worried about AMD and the stock’s underperformance. Here is what Cramer said:
“This is very difficult, and you’re absolutely right to bring it up, and I’m glad you did. Here’s the problem. It is absolutely true—it is absolutely true that they’re not doing as well as Nvidia. It is true that they do not have the big Amazon orders that I’ve been looking at. But can we just remember that Lisa Su has built an amazing company, taking a lot of shares from Intel? She got the number two when it comes to the data center, when it comes to AI, and come on, she just did the great deal where she got all these engineers to come in.
Advanced Micro Devices, Inc. (NASDAQ:AMD) has transformed its business from a struggling company to a semiconductor leader, with its stock jumping from $3 to $115 over a decade, as of January 27. In 2024, AMD introduced the Instinct MI325X AI accelerators and next-generation networking solutions, focusing on strengthening its position in the AI data center market. The company’s majority of revenue comes from data center sales. In 2024, the company acquired ZT Systems for around $5 billion. The ZT Systems purchase will further help Advanced Micro Devices in improving its market share in AI data centers.
During the third quarter of 2024, Advanced Micro Devices, Inc. (NASDAQ:AMD) posted a revenue of $6.82 billion, up by 18% year-over-year and beating estimates by $104.33 million. The data center revenue accounted for $3.5 billion, up 122% year-over-year, driven by significant growth in EPYC CPU and Instinct GPU sales.
On January 21, Citi maintained a Buy rating on AMD shares and lowered the price target from $200 to $175. The firm expects a drop in semiconductor sales due to weaker demand in PC, automotive, and industrial markets. However, analysts project AMD’s data center business to expand, driven by AI sales.
3. Alibaba Group Holding Limited (NYSE:BABA)
Analyst Upside (as of January 27): 33.40%
No. of Hedge Fund Holders: 115
Alibaba Group Holding Limited (NYSE:BABA) is the largest Chinese online retailer that uses AI in its e-commerce business. Alibaba is also expanding its presence in the cloud business. On January 21, the South China Morning Post reported that BABA’s cloud business and AI arm, Alibaba Cloud, has introduced an expanded suite of its proprietary LLMs under its Qwen family.
During the second quarter of FY2025, Alibaba Group Holding Limited’s (NYSE:BABA) cloud business posted a year-over-year increase of 7%, driven by double-digit growth in public cloud services. The company’s AI products within the cloud segment showed notable performance, maintaining a triple-digit growth for five consecutive quarters.
On January 21, BofA analyst Joyce Ju kept a Buy rating on BABA shares and increased the price target to $117 per share from a previous target of $112. The analyst expects the company to post a 9% year-over-year increase in revenue during Q3 FY2025 and surpass Wall Street estimates by 2%. Considering the sudden rise of Chinese AI startup DeepSeek, Chinese AI stocks hold a lot of promise in 2025.
2. Adobe Inc. (NASDAQ:ADBE)
Analyst Upside (as of January 27): 42.50%
No. of Hedge Fund Holders: 123
Adobe Inc. (NASDAQ:ADBE) operates as a diversified software company internationally. In 2023, the company launched Firefly, a collection of generative AI models designed to improve creative workflows, making its mark among AI companies. In October 2024, the company released the beta version of its Firefly Video Model, expanding its family of creative Gen AI models.
Similarly, on January 22, the company announced innovations to its AI tools and a $5 million investment in Adobe Film and TV Fund to expand its filmmaking network by supporting creators and filmmakers. In addition to that, Adobe Inc. (NASDAQ:ADBE) has revealed new features in Adobe Premiere Pro, After Effects, and Fame.io to enhance post-production and minimize the time spent on videos.
During the fourth quarter of 2024, Adobe Inc. (NASDAQ:ADBE) reported a record growth revenue of $21.51 billion, up by 11% year-over-year. The AI innovation has fueled the company’s growth, with Firefly-powered generations surpassing 16 billion. The company’s digital media business posted a record ARR of $578 million in Q4. Adobe continues to improve its presence among big players, with 48 of the Fortune 100 companies leveraging Adobe services.
1. NVIDIA Corporation (NASDAQ:NVDA)
Analyst Upside (as of January 27): 47.78%
No. of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) specializes in AI-driven solutions offering platforms and chips for data centers, self-driving cars, robotics, and cloud services. Chinese AI startup, DeepSeek, sent shockwaves to the U.S. stock market after revealing its AI tool that is potentially more efficient than the GPT-4-level model, designed at a fraction of the cost of Open AI’s model. NVDA shares plunged over 16% following the announcement of DeepSeek’s AI model on January 27. Is it game over for NVDA?
Analysts see this as an opportunity to buy NVDA shares as they believe the market has overreacted to the Chinese AI model. Bofa analysts believe this worry is overstated. Whereas, Wedbush analyst, Dan Ives called it a buying opportunity for American tech stocks. He wrote in a post on X:
“DeepSeek is a competitive LLM model for consumer use cases…launching broader AI infrastructure is a whole other ballgame and nothing with DeepSeek makes us believe anything different. It’s about AGI for Big Tech and DeepSeek’s noise. Also, no US tech using this tech. Buying oppy.”
While we acknowledge the potential of NVDA to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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