Artificial Intelligence developments are making headlines across various sectors. From high-profile legal battles to groundbreaking advancements in model performance and safety protocols, AI is reshaping the landscape across industries at an unprecedented pace.
READ ALSO: 15 AI News Investors Should Not Miss and 20 Trending AI Stocks on Latest News and Ratings
Before we move on to the breaking news on AI, let’s talk about Morningstar’s recent report. The investment research firm reveals that for the third consecutive year, investors are leaving exchange-traded funds related to specific themes for funds linked to broad stock-market benchmarks “that are hitting record highs”. Despite overall growth in equity ETFs, thematic ETFs have lost $5.8 billion in investor capital in the year 2024. This is greater than $4.8 billion outflows in all of 2023. The reason? Broad market index returns are setting a higher bar for thematic funds this year.
“It’s not that people don’t like the idea of themes any longer, but that a bull market dominated by a handful of megacaps makes it hard for any theme to stand out”.
-Aniket Ullal, ETF analyst at CFRA, a market research firm.
As per Morningstar, thematic ETFs often struggle due to mistimed investments, with investors usually missing out on two-thirds of their returns. Despite some AI-themed funds having strong holdings, higher fees and timing challenges reduce their overall appeal.
“I think that when S&P 500 megacaps stop delivering the way they do today, the focus will shift back to thematic ETFs”.
-Taylor Krystkowiak, investment strategist at Themes ETFs, an investment management firm.
Moreover, while AI remains a key focus in many thematic ETFs, its impact goes far beyond investing. Consider Penguin Random House, the first of the Big Five anglophone trade publishers to amend its copyright information. The publisher has recently added a language to its copyright pages to prohibit the use of those books to train AI. Publishers and AI firms will be increasingly clashing in the future if clear guidelines and processes aren’t kept in place. In a similar endeavor, The New York Times has sent Perplexity AI, an AI-powered research firm, a “cease and desist” notice demanding that it stop using the newspaper’s content for generative AI purposes. The news publisher claims that the way the AI Company uses its material violates copyright law.
In other news, Anthropic, a U.S.-based artificial intelligence public-benefit startup, is now adding a comprehensive update to its safety policy, reinforcing the guardrails of its AI as it becomes more capable. This push to improve AI safety is in stark contrast to competitors such as OpenAI, whose increasing focus on improving capabilities and performance is very likely to threaten safety guidelines in the future. As per McKinsey, 63% of companies consider inaccuracy risk to be relevant. However, only 38% of companies are working to mitigate the risk.
While artificial intelligence may be intimidating, it is equally, if not more, beneficial for mankind. In its latest achievement, AI has helped UCLA researchers develop a deep-learning framework that teaches itself to automatically analyze and diagnose MRIs and other 3D medical images. That too, with the accuracy matching that of medical specialists in a fraction of the time. Another breakthrough from Archetype AI, a physical AI company, is set to significantly change how we understand and interact with the physical world. The model, named Newton, shows the unparalleled capacity to generalize across diverse physical phenomena using only raw sensor measurements as input.
Finally, in our roundup of the latest AI news, the US rules that will ban certain US investments in artificial intelligence in China are under final review, as per a government posting. The rules, requiring US investors to notify the Treasury Department regarding some investments in AI and other stem technologies, come from an executive order signed by President Joe Biden in August 2023. The order aims to keep American investors’ know-how from aiding China’s military. Chipmakers and related companies that may be impacted by the decisions denied responding to Reuters’ requests for comment.
Methodology
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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15. Nebius Group N.V. (NASDAQ:NBIS)
Nebius Group N.V. (NASDAQ:NBIS) is a technology company offering infrastructure and services for AI builders worldwide. One of its businesses is Nebius, an AI-centric cloud platform built for intensive AI workloads.
On Monday, October 21, AI infrastructure firm Nebius Group N.V. (NASDAQ:NBIS) resumed trading on the NASDAQ after its suspension in February 2022. The firm was previously held by Yandex, often dubbed “Russia’s Google”, whose trading was suspended after Russia invaded Ukraine. Nebius emerged in July following a $5.4 billion deal to split Yandex’s Russian and international assets.
“We are at the very beginning of the AI revolution. Nobody can be sure which business models or underlying technologies will prevail, but we can be sure of one thing: the demand for AI infrastructure will be massive and sustained”.
– Nebius Chairman John Boynton.
CEO Arkady Volozh is optimistic on the company’s prospects, citing strong growth over the coming years, and deeming computational power as key. The company expects to deploy more than 20,000 graphics processing units at its Finnish data center by year-end. It also expects its addressable market – GPU-as-a-service and AI cloud – to grow to more than $260 billion in 2030 from $33 billion in 2023.
14. Oklo Inc. (NYSE:OKLO)
Oklo Inc. (NYSE:OKLO) is a nuclear technology company engaged in the design and development of fission power plants to provide reliable and commercial-scale energy to customers in the United States. AI has been driving significant energy demand, and nuclear energy has emerged as a strong avenue to address the increase in power demand.
Last week, Amazon Web Services announced plans that it will invest $500 million in nuclear power. Big tech companies are increasingly facing energy demands driven by the AI revolution, and many of them have already entered into agreements to meet their energy needs. Following the announcement, nuclear names such as Oklo Inc. (NYSE:OKLO) continued to rise on Monday on the back of optimism in the sector. There is also increased speculation that Sam Altman’s backed Oklo Inc. (NYSE:OKLO) will be the next one to secure a deal with a major tech player.
In a CNBC interview last week, Oklo CEO Jacob DeWitte stated the massive demand for power is being driven by AI growth. When asked about the potential for the company to announce a deal similar to Google’s deal with Kairos Power, he stated that there is “a lot more to come”. Oklo shares closed on Monday with a 22.4% increase, reaching $22.32.
13. Richtech Robotics Inc. (NASDAQ:RR)
Number of Hedge Fund Holders: 2
Richtech Robotics Inc. (NASDAQ:RR) offers collaborative robotic solutions for automation in the service industry. The company helps businesses generate revenue and save time by offering AI-driven robotic solutions.
On October 17, Richtech Robotics Inc. (NASDAQ:RR) revealed that it plans to use its robotics and artificial intelligence cloud technology to run 20 more Walmart-located restaurants in Arizona, Colorado, and Texas. In a binding letter of intent signed with Ghost Kitchens America, the companies will enter into a franchise agreement whereby Richtech Robotics Inc. (NASDAQ:RR) will acquire exclusive rights to operate the restaurants.
The restaurants will be directly managed by Richtech Robotics’ subsidiary, AlphaMax Management LLC. The agreement aims to optimize restaurant operations through robotics and AI cloud technology, with each location expected to generate between $700,000 and $2 million in annual revenue.
“All Walmart locations where we’ve signed agreements with Richtech Robotics have strong sales numbers and steady customer traffic. Based on our previous collaborations, Ghost Kitchens is confident that Richtech Robotics’ robotic technology and operational management services will maximize the performance of these restaurants. We look forward to further expanding our partnership with Richtech Robotics as we rapidly grow our restaurant footprint”.
– George Kottas, CEO of Ghost Kitchens America.
12. Lumen Technologies, Inc. (NYSE:LUMN)
Number of Hedge Fund Holders: 18
Lumen Technologies, Inc. (NYSE:LUMN) is a global communications services provider that offers various integrated products and services to business and residential customers. The telecom company has been benefitting from soaring AI demand and the need for greater connectivity between data centers, with it being in a strategic position to help drive the AI growth wave.
On October 21, Lumen Technologies, Inc. (NYSE:LUMN) announced that it will be partnering with Meta Platforms Inc. to increase the latter’s network capacity and help drive its “bold AI missions”. The partnership will offer it enhanced flexibility with secure, on-demand bandwidth, supporting its complex computing requirements and allowing it to serve billions daily. Meta will be able to improve the size and dependability of its AI system through Lumen’s Private Connectivity Fabric providing dedicated connections.
“We’re enabling one of the biggest expansions of network capacity in our lifetime. We’ve transformed our company to meet this demand. As Meta’s customers use more AI services across its platforms, we’re helping provide Meta with a seamless, effortless, and flexible network that will meet its growing needs.”
– Ashley Haynes-Gaspar, Lumen’s EVP and chief revenue officer.
Following the partnership news, Raymond James analyst Frank Louthan stated that the partnership is unlikely to move Lumen’s stock. He maintains a “Market Perform” rating on Lumen. He also emphasized that this action appears to be part of the previously announced $5 billion conduit network transaction from August.
“We do not believe this announcement warrants any near-term moves in the shares as it is likely already reflected in the outlook”.
-Analyst Frank Louthan.
11. SentinelOne, Inc. (NYSE:S)
Number of Hedge Fund Holders: 37
SentinelOne, Inc. (NYSE:S) is a leading American cybersecurity AI platform that provides top-tier AI-powered security solutions to its clients. The company’s most sophisticated AI-driven platform, Purple AI, has exceeded expectations and played a significant role in the company’s strong Q2 performance, just months after its official launch.
On October 17, SentinelOne, Inc. (NYSE:S) announced the extension of its strategic collaboration agreement (SCA) with Amazon Web Services (AWS). The partnership, aimed at delivering generative AI benefits, will use SentinelOne’s Purple AI powered by Amazon Bedrock, to provide AI-powered security and protection for customers. The expanded strategic collaboration agreement (SCA) will also increase investments in SentinelOne’s AI-powered Singularity™ Platform within AWS Marketplace. This will empower enterprises to access end-to-end protection from a unified, AI-powered platform quickly and with ease.
“By taking advantage of AWS AI infrastructure and Amazon Bedrock to train, tune, and serve our own models, we can give AWS customers access to today’s best generative AI security analyst – and future Purple AI innovation – delivered entirely inside AWS”.
– Gregor Stewart, Vice President, AI and Machine Learning Engineering, SentinelOne
On October 17, Needham, an independent investment bank and asset management firm, resumed a “Buy” rating on the company’s stock, with a price target of $32. The coverage resumption followed after it attended the company’s first-ever analyst event in Las Vegas. The company’s expanding platform, enhanced go-to-market, and improving execution had made them confident in SentinelOne, Needham’s analyst told investors in a research note. Moreover, its partnership with Lenovo last month is also considered “transformational”, driving a “compelling upside” to new annual recurring revenue estimates over the coming years.
10. Zoom Video Communications, Inc. (NASDAQ:ZM)
Number of Hedge Fund Holders: 39
Zoom Video Communications, Inc. (NASDAQ:ZM) is a communications technology company popularly known for its video conferencing application called Zoom. The company leverages AI in several ways, such as through Zoom AI Companion, an AI assistant that can compose messages, summarize meetings, and offer meeting assistance.
On Tuesday, October 22, Zoom Video Communications, Inc. (NASDAQ:ZM) announced that it is partnering with Suki, an AI medical scribe provider. The partnership aims to offer doctors on its platform an AI scribe to help them take notes about consultation with their patients. Punit Soni, founder and CEO of Suki, claims that the popular video conferencing platform considered every other AI medical scribe startup before they chose Suki.
Earlier this month, Zoom’s founder and CEO, Eric Yuan revealed that the company is aiming to transform itself from merely a conferencing company to one focused on AI tools for workplaces. On October 17, Wedbush, a privately held financial services firm, upgraded the rating on the company’s stock from “Neutral” to “Outperform”, raising the price target from $80 to $85. As per analysts, the company is expected to see a re-acceleration in growth at enterprise customers. The company’s broad portfolio is also expanding into a contact center with a “strong installed base” of small-to-mid-sized business, mid-market, and enterprise customers. This will position it for strong up-sell and cross-sell opportunities, the analysts note.
9. GE HealthCare Technologies Inc. (NASDAQ:GEHC)
Number of Hedge Fund Holders: 49
GE HealthCare Technologies Inc. (NASDAQ:GEHC) is a leading global medical technology company that provides digital infrastructure, data analytics & decision support tools that help healthcare workers in the diagnosis, treatment, and monitoring of patients. The company incorporates artificial intelligence in many of its products and services.
On Monday, October 21, GE HealthCare Technologies Inc. (NASDAQ:GEHC) announced a new artificial intelligence application to help doctors who diagnose and treat cancer to save time. Known as CareIntellect for Oncology, the AI application will help doctors get up to speed by showing them the data they need on a patient’s history and disease progression. This will help spare them from the headache of digging through records.
The application will also be able to help identify relevant clinical trials that the patients may be eligible for. Previously, doctors had to go through a lengthy procedure involving going through a database of trials, memorizing inclusion and exclusion criteria, and digging through patient records to determine a good fit. CareIntellect for Oncology is expected to be widely available for use to US customers in the year 2025, initially targeting prostate and breast cancers.
The company has also introduced an AI innovation lab, a move designed to accelerate early-concept AI innovations within the company. The AI projects are part of its broader AI and digital strategy, focusing on integrating AI into medical devices, integrating AI into applications, and also using AI to support better outcomes. The company’s investment in cloud technology supports its strategy by providing the computing power needed for large-scale AI development.
“The AI Innovation Lab lifts the curtain on the work we are undertaking at the vanguard of healthcare innovation. At GE HealthCare, we’re not just developing technology—we’re striving to break new ground by exploring novel ways that AI could enable healthcare. For example, through projects like Health Companion, we are evaluating ways to apply agentic AI in order to bring the clinical knowledge and problem-solving insights of a multi-disciplinary medical team to clinicians’ fingertips and help them take action. The pioneering projects we’re showcasing today are just some of the innovations we have underway, enabled by our AI and cloud computing capabilities. We will continue to gather feedback from our customers as we find ways to help them apply AI to their health data and convert information into actionable, care-enhancing strategies”.
– Dr. Taha Kass-Hout, GE HealthCare’s Global Chief Science and Technology Officer.
8. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 50
Honeywell International Inc. (NASDAQ:HON) is a multinational conglomerate corporation engaging in aerospace technologies, building automation, energy and sustainable solutions, and industrial automation businesses in the United States, and internationally. The company is making strides in the AI space by equipping companies with AI agents that assist workers in real time.
On Monday, October 21, Honeywell International Inc. (NASDAQ:HON) signed a deal with Google to connect artificial intelligence technology with its industrial data. The collaboration seeks to connect artificial intelligence (AI) agents with assets, people, and processes to speed up safer, autonomous operations for the industrial sector. It will bring together the multimodality and natural language capability of Gemini on Vertex AI, Google Cloud’s AI platform, with the extensive data set from Honeywell Forge, a top Internet of Things (IoT) platform for industrial applications.
The AI-powered tools are designed to automate tasks for engineers, technicians, warehouse workers, and more. Customers of Honeywell International Inc. (NASDAQ:HON) across the industrial sector will be able to achieve reduced maintenance costs, improved operational productivity, and upskill employees. The first solutions will be available to Honeywell customers from 2025.
“The path to autonomy requires assets working harder, people working smarter and processes working more efficiently”.
-Vimal Kapur, chairman and CEO of Honeywell.
7. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 54
International Business Machines Corporation (NYSE:IBM) is an American multinational technology company offering integrated solutions and services worldwide. The company’s artificial intelligence solutions include their IBM® watsonx™, an AI and data platform and portfolio of AI-powered assistants; IBM® Granite™, a family of open-source, high-performing, and cost-efficient models trained on trusted enterprise data; IBM Consulting, their AI services to redesign workflows; and hybrid cloud offerings that enable AI-ready infrastructure to better scale AI.
On Monday, October 21, International Business Machines Corporation (NYSE:IBM) introduced their latest versions of artificial intelligence models for businesses at IBM’s (NYSE:IBM) annual TechXchange event. Aiming to capitalize on the surge in businesses adopting “generative AI technology”, the new Granite 3.0 8B & 2B models, are the most advanced family of AI models to date. As per IBM, the third-generation Granite flagship language models show “strong performance across many academic and enterprise benchmarks”, and are “able to outperform or match similar-sized models”.
The new language models are designed as “workhorse” models for enterprise AI, excelling in tasks such as Retrieval Augmented Generation (RAG), classification, summarization, entity extraction, and tool use. Moreover, they are designed to be customized with enterprise data and effortlessly integrated into various business environments and workflows. In contrast to rivals that charge customers for access to their models, “Granite 3.0” models will be made open-source, and some versions will be available starting Monday for commercial use on the Watsonx platform. As per Dario Gil, IBM’s director of research, these new Granite models were trained using AI chip leader Nvidia’s H100 graphics processor units (GPUs).
In a post on X, Dan Ives, a Wall Street Analyst at Wedbush focusing on the Tech sector, states how IBM is amongst the companies making significant moves in artificial intelligence and capitalizing on the technology revolution. Stating optimism about the tech sector, he claims that the next phase of the AI revolution has begun. Moreover, the expanding AI landscape is a breeding ground for investment opportunities beyond the few companies that initially dominated the AI narrative.
6. Veritone, Inc. (NASDAQ:VERI)
Number of Hedge Fund Holders: 67
Veritone, Inc. (NASDAQ:VERI) is an American artificial intelligence technology company that designs human-centered AI solutions. Its proprietary operating system, aiWARE™, manages a growing ecosystem of machine-learning models to transform audio, video, and other data sources into actionable intelligence.
On October 18, Veritone, Inc. (NASDAQ:VERI) announced major advancements to Veritone Track, its advanced AI-powered digital video forensics tool for public safety and law enforcement. The updated version of Veritone Track enables users to identify as well as track vehicles of interest by their make and model across multiple video sources. In turn, it will help offer them greater speed and accuracy in investigative efforts without the need to rely on personally identifiable information (PII).
The update also incorporates customer feedback, featuring a redesigned user interface as well as a new functionality that automatically combines all video evidence of a person or vehicle of interest into a cohesive timeline. This is done via video footage that is obtained through various camera sources, such as closed-circuit television, body camera footage, and drone camera footage, thereby reducing the manual review of countless hours of footage.
5. GE Vernova Inc. (NYSE:GEV)
Number of Hedge Fund Holders: 92
GE Vernova Inc. (NYSE:GEV) is an energy equipment manufacturing and services company. With its approximately 55,000 wind and 7,000 gas turbines, GE Vernova’s technology base helps generate approximately 25% of the world’s electricity. The company is leveraging AI to modernize power grids and optimize power generation, and analysts consider it the “supermarket” for electric power.
On October 21, Deutsche Bank initiated the coverage of GE Vernova Inc. (NYSE:GEV) stock with a “Buy” rating, and a price target of $354. This implies a nearly 30% upside. A majority of analysts covering the stock are generally bullish on it, with many rating it as either a “Buy”, or a “Strong Buy”. Nicole DeBlase is optimistic about the stock considering a strong outlook on investments toward power-generating assets.
“This can be attributed to increasing electricity consumption due to: the electrification of all things, proliferation of AI data centers globally, decarbonization, and aging existing grid infrastructure. We believe the forthcoming power investment cycle will enable GEV to deliver best-in-class revenue and earnings growth vs. the rest of our coverage universe”.
-Analyst Nicole DeBlase
Similarly, on October 20, Bank of America Securities said that more nuclear investment is a positive for GE Vernova Inc. Based on over 60 years of experience in nuclear power, GE Vernova has developed an SMR, the BWRX-300. This GE product has won its first contract and has a pipeline of 28 units in various stages of regulatory approval, as per information from The Fly. BoFa sees a “big opportunity in small reactors” for the company.
4. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 100
QUALCOMM Incorporated (NASDAQ:QCOM) is an American multinational corporation engaged in the development and commercialization of foundational technologies for the wireless industry worldwide. The company has been developing and integrating generative AI capabilities across its extensive semiconductor line for the past few years.
On Monday, October 21, QUALCOMM Incorporated (NASDAQ:QCOM) stated that its bringing the technology initially developed for its laptop chips to its mobile phone chips to make them more powerful for generative AI tasks. The successor to the outstanding Snapdragon 8 Gen 3, the newest mobile chip for the company, is called the Snapdragon 8 Elite. As per Qualcomm’s SVP and GM of Mobile, Chris Patrick, “this is a special year” for Snapdragon and the company sees a clear difference “before this chip and after this chip”. According to QUALCOMM Incorporated (NASDAQ:QCOM), the latest AI capabilities will allow customers to do things like virtually adjust the lighting in video calls and recognize real-world objects without the Internet.
Including improved performance and power efficiency, the Snapdragon 8 Elite uses Prime Cores, designed for high-end applications, and Performance Cores, for more casual tasks. In the coming weeks, Qualcomm anticipates the chips to make their way into smartphones from companies such as Samsung, Xiaomi, ASUS, OnePlus, Honor, Oppo, and more. According to the chipmaker, the central processing unit (CPU) and graphics processing unit (GPU) of the Snapdragon 8 Elite should save 44% and 40% more energy than the Snapdragon 8 Gen. 3. However, its biggest feature is its ability to power onboard AI functions.
Yahoo Finance tech editor Dan Howley talks about the QCOM’s AI chip’s heightened performance and power-saving features but also highlights how AI capabilities aren’t exactly what takes people out of the door. Rather, it is the hardware, such as the design or camera that usually motivates buying behavior. Moreover, while the PC and smartphone industries view AI as a key feature to encourage upgrades, simply enabling devices to run AI apps is unlikely to persuade most consumers to invest in new models. The only thing that will do is fascinating new apps that take advantage of AI.
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) is a global technology company engineering the most advanced chips, systems, and software for the AI factories of the future. The company is said to represent “the dominant” infrastructure player behind the current rise of the AI sector.
Wall Street is abuzz with excitement about NVIDIA Corporation (NASDAQ:NVDA)’s new AI chip, Blackwell. Sector analysts are enthusiastic about the company’s potential major upside in the fourth quarter with all the initial rush of Blackwell. On October 18, Ram Ahluwalia, Lumida Wealth Management CEO, discussed on Yahoo Finance’s Catalysts how things are looking up for NVIDIA Corporation (NASDAQ:NVDA) .
According to Lumida CEO, the company is still in the “early innings” and expects that Nvidia’s stock will reach $150 between now and the end of the year. With the hyperscalers intending to each spend between $50 and $100 billion on GPU compute, the primary beneficiary is going to be NVIDIA Corporation (NASDAQ:NVDA), he says. Lumidia’s CEO further commented how the company has a class of its own and doesn’t have a “close competitor”. There is a growing confidence that the chip giant will be the first Tech firm to reach a $4 trillion valuation.
“We made a call earlier this year that Nvidia would be the most valuable company in the world. It achieved that milestone yesterday, and the demand for GPU chips is strong. And you’re seeing enterprises start to get some ROI (return on investment) on it from the early adopters”.
On Friday, October 18, Bank of America analyst Vivek Arya reiterated his “Buy” rating on the stock, raising his price target by $25 to $190. From Taiwan Semiconductor’s (one of Nvidia’s major suppliers) third-quarter results to the “insane” demand for Blackwell chips as quoted by Nvidia CEO Jensen Huang, the analyst believes that recent industry trends have the potential to increase the company’s lead and generational opportunity. Furthermore, “underappreciated” enterprise partnerships with companies are also catalysts for more growth.
“We also highlight a growing presence of AI in enterprise, where NVDA is the partner of choice (more on pg. 10)”.
– Vivek Arya
According to the bank’s forecast, the AI technology market will grow from $45 billion in 2023 to $117 billion this year while Nvidia maintains a 75% market share, which translated to a staggering $272 billion in AI computing revenues for Nvidia by 2030. Arya also believes the company could see at least $200 billion in free cash flow generation over the next two years.
2. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 219
Meta Platforms, Inc. (NASDAQ:META) is a social technology company that builds applications and technologies that can help people connect, find communities, as well as growing businesses. It uses artificial intelligence to help users accomplish tasks, learn, and connect. Over 400 million people use Meta AI, an intelligent assistant that is capable of following instructions, visualizing ideas, and solving nuanced problems.
AI-generated responses can be smart, but they are not always right. This is why one of the challenges in AI development remains the need for extensive human oversight, also known as Reinforcement Learning from Human Feedback (RLHF). This process often requires human annotators to verify the accuracy of AI responses. On October 18, Meta Platforms, Inc. (NASDAQ:META) announced that it will be releasing a batch of new AI models, including a “Self-Taught Evaluator”, which is a significant step towards autonomous AI that may require less human involvement in the AI development process.
Meta Platforms, Inc. (NASDAQ:META) will use the same “chain of thought” technique that is used by OpenAI’s recently released o1 models for generating reliable judgments about model responses. Researchers at Meta have used AI-generated data entirely for training the evaluator model. As per Meta researchers, the ability to use AI to evaluate AI reliably will in turn open a path towards building autonomous agents that will learn from their own mistakes.
Meta Platforms, Inc. (NASDAQ:META) has been spending massively on AI, but investors don’t hate it. The company’s second-quarter revenue hit $39 billion, surpassing Wall Street expectations. It asserts how the company’s infrastructure costs, such as the money it’s working into building its artificial intelligence capabilities, will be a “significant driver of expense growth”.
“While we continue to refine our plans for next year, we currently expect significant capital expenditures growth in 2025 as we invest to support our artificial intelligence research and product development efforts”, the company said in its earnings report.
On CNBC’s “Halftime Report Final Trades,” Jason Snipe of Odyssey Capital Advisors said that he is buying the company’s stock ahead of earnings. They are paying dividends and buying back shares, he noted. Jeffrey Wlodarczak of Pivotal Research Group is also bullish on the stock. On October 1, he stated that aside from increasing sales and income, Meta will also report cost efficiencies enabled by AI over the next few months. The company has been amongst those leading the AI charge this year, releasing the sophisticated chatbot model Llama 3 in April.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is an American multinational corporation and technology company that develops and markets software, services, and hardware. The company’s AI strategy is evident through its partnership with OpenAI and the integration of AI across Azure, Office 365, and security solutions which together create a strong ecosystem.
On Monday, October 21, Microsoft had its “AI Tour” in London, announcing the rollout of its Copilot AI features designed to enhance productivity by automating routine administrative tasks. The company plans to allow businesses to create their own autonomous agents within the Copilot Studio, Microsoft’s platform for building and customizing its “Copilot” assistants, fending off challenges from Salesforce. These agents can be built in the studio with low code or no code instructions, which in turn allow users to create AI-driven workflows without needing major technical expertise. The software will be available for public preview next month.
The technology company has also revealed that it will launch 10 new autonomous agents in Dynamics 365, which is the company’s suite of enterprise resource planning and customer relationship management apps. The company’s autonomous agents aim to achieve a return on investment in AI. As per CFO Amy Hood, the company has spent $19 billion on capital expenditures, including finance leases, a large portion of which was derived from AI and cloud-related needs. With 2.1 million users engaged with Copilot, Microsoft is banking heavily on the platform to generate revenues. As of Q4, the company achieved $36.8 billion in quarterly revenue from its cloud services, which includes its AI platform, a 21% year-over-year increase.
While all these announcements may seem like a big leap for Microsoft, the company received a rare downgrade last month over concerns about the tech giant’s over-reliance on Nvidia for its AI infrastructure. On September 23, analysts at D.A. Davidson, an investment banking company, downgraded the company’s stock from “Buy” to “Neutral”, keeping their price target unchanged at $475. While the analysts are still positive about Microsoft, they note how the company lags behind its rivals in AI chip development, something its rivals started working on as early as a decade ago.
“They started their chip development later than Amazon and Google. But apart from that, they’re doing what they need to do.”
-Gil Luria, an analyst at D.A. Davidson
Overall, MSFT ranks first among the 15 AI News Investors Should Not Miss. While we acknowledge the potential of MSFT 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 MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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