In recent news reported by Reuters, a U.S. congressional commission proposed a Manhattan Project-style initiative to fund the development of AI systems that will be as smart, or even smarter, than humans. The proposition is amid the intensifying competition from China over advanced technologies.
“We’ve seen throughout history that countries that are first to exploit periods of rapid technological change can often cause shifts in the global balance of power. China is racing towards AGI … It’s critical that we take them extremely seriously”
– Jacob Helberg, a USCC commissioner told Reuters
Helberg, while recognizing that energy infrastructure is a significant bottleneck for training large AI models, suggests that streamlining the permitting process for data centers is one way of enabling a public-private partnership that could accelerate AI development.
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This news follows a rumor that artificial intelligence models are hitting a “wall”. Separate sources, including Reuters, The Information, and Bloomberg, have reported that companies such as OpenAI are failing in their next endeavors. Unnamed sources have claimed that OpenAI’s Orion is “so far not considered to be as big a step up from OpenAI’s existing models as GPT-4 was from GPT-3.5.”
However, OpenAI is pushing back on these rumors, stating that there is “no wall”. Despite having not reached a wall, analysts do admit that it’s possible to have reached a turning point.
“We haven’t seen a breakthrough model in a while. Part of it is that we’ve exhausted all the human data, and so just throwing more compute at the same data may not yield better results.”
– Gil Luria, managing director at investment group D.A. Davidson
Gary Marcus, NYU professor emeritus and outspoken critic of AI hype, has this to say:
“The economics are likely to be grim. LLMs will not disappear, even if improvements diminish, but the economics will likely never make sense…”
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds.
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15. Penguin Solutions, Inc. (NASDAQ:PENG)
Penguin Solutions, Inc. (NASDAQ:PENG) is a leading AI infrastructure provider for organizations looking to build and operate state-of-the-art generative AI facilities.
On November 19, Penguin Solutions, Inc. (NASDAQ:PENG) announced the latest additions to its OriginAI® infrastructure solution, the company’s AI factory infrastructure offering. The additions include the latest NVIDIA and AMD GPUs, and Dell Technologies AI-optimized hardware, combining top-tier GPU servers, networking, and storage options with Penguin’s easy-to-use cluster management software and services. Through the OriginAI solution, companies can scale their AI infrastructure deployments, achieve faster access to ROI, and reap the competitive benefits of AI technology.
“Our Penguin OriginAI solution has been established as the go-to answer for making AI both attainable and efficient. Adding the latest GPU technology from industry leaders AMD and NVIDIA, alongside an option for Dell servers, storage and networking, gives organizations the ability to tailor their AI infrastructure to specific workloads and business requirements and maximize their ROI”.
– Pete Manca, president of Advanced Computing at Penguin Solutions.
14. SAP SE (NYSE:SAP)
Number of Hedge Fund Holders: 36
SAP SE (NYSE:SAP), a market leader in ERP software, leverages AI to enhance its enterprise resource planning (ERP) solutions.
On November 19, SAP and Microsoft highlighted their collaborative vision for redefining workplace productivity at Microsoft Ignite, an annual conference for developers. The vision involves the seamless integration of SAP’s AI copilot, Joule, and Microsoft 365 Copilot. The integration will allow users to perform tasks and surface insights from both systems through either copilot so that they don’t have to switch between applications. This integration marks a new benchmark for cross-functional productivity, and a limited preview of this integration is expected before the end of 2024.
13. Okta, Inc. (NASDAQ:OKTA)
Number of Hedge Fund Holders: 47
Okta, Inc. (NASDAQ:OKTA) is a workplace cybersecurity company operating as an identity partner. Its AI-driven features across its Customer Identity Cloud and Workplace Identity Cloud helps clients take control of their digital presence.
On November 19, Barclays initiated coverage of Okta, Inc. (NASDAQ:OKTA) with an “Equal-Weight” rating and $81 price target. According to the analyst, Okta competes rapidly in the growing $20 billion identity and access management (IAM) market. The top two players own 40% of the market. While Microsoft leads in the Workforce IAM sector, Okta embraces the top position in the fast-growing customer IAM sector. Notably, Okta integrates AI-powered capabilities across both its Workforce Identity Cloud and Customer Identity Cloud. Moreover, Barclays is below fiscal 2026 consensus estimates for Okta on revenue.
12. MongoDB, Inc. (NASDAQ:MDB)
Number of Hedge Fund Holders: 49
MongoDB, Inc. (NASDAQ:MDB) provides a general-purpose database platform worldwide. It securely amalgamates operational, unstructured, and AI-related data to streamline building AI-enriched applications.
On Tuesday, November 19, MongoDB, Inc. (NASDAQ:MDB) announced an expanded partnership with Microsoft at the Microsoft Ignite conference. The partnership includes new integrations that enhance AI application development, real-time data analytics, and deployment flexibility. MongoDB Atlas, the company’s fully managed cloud database service, is now integrated into Microsoft Azure AI Foundry, enabling developers to easily develop AI applications. The second announcement is about MongoDB Atlas now supporting Open Mirroring in Microsoft Fabric for timely analytics and business intelligence. Meanwhile, the final announcement offers users the freedom to “deploy MongoDB their way” with MongoDB Enterprise Advanced on Azure Marketplace; granting deployment flexibility.
“By integrating MongoDB Atlas with Microsoft Azure’s powerful AI and data analytics tools, we empower our customers to build modern AI applications with unparalleled flexibility and efficiency”.
-Sandy Gupta, vice president of Partner Development ISV at Microsoft.
11. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 51
AppLovin Corporation (NASDAQ:APP) is a technology company leveraging its AI-powered platform to provide targeted, automated marketing solutions.
On Monday, November 18, Citi raised the firm’s price target on AppLovin Corporation (NASDAQ:APP) to $335 from $185 and kept a “Buy” rating on the shares. After the firm delivered strong Q3 results driven largely by artificial intelligence, the firm is rolling its valuation forward from 2025 to 2026. Moreover, it has also raised its free cash flow per share estimate in 2026 to $9.13 from $7.41 due to higher ad revenue expectations.
10. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Holders: 64
Palo Alto Networks, Inc. (NASDAQ:PANW) offers cybersecurity solutions for all apps, users, and devices. Precision AI, Palo Alto Networks’ proprietary AI system, plays a key role in detecting and mitigating cybersecurity threats.
On Tuesday, November 19, Wedbush analyst Daniel Ives maintained a Buy rating on Palo Alto Networks, Inc. (NASDAQ:PANW) with a price target of $400.00. The company will report its fiscal first-quarter results on November 20 after markets close, and while Wedbush Securities isn’t expecting any “major fireworks”, it does anticipate the company to plant “seeds of growth” for 2025. With Palo Alto accelerating its platformization strategy, Ives expects next-generation security annual recurring revenue to increase with the company landing higher ARR deals, hitting $15B in next-generation security ARR by 2030. Moreover, artificial intelligence is also expected to play a key role, given its recent AI suite of products, including Access, security posture management, and runtime. As per Ives, they “continue to generate greater scale foundation for platformization in place to accelerate throughout 2025”.
“We have seen stronger deal flow and believe PANW is getting their sea legs on the platform strategy now front and center for cybersecurity customer deployments. While not expecting major fireworks on Wednesday after the bell with FY1Q25 earnings, we view the seeds of growth are now in place for a very important FY25”.
-Analyst Dan Ives wrote in a note to clients.
9. Datadog, Inc. (NASDAQ:DDOG)
Number of Hedge Fund Holders: 71
Datadog, Inc. (NASDAQ:DDOG) offers a cloud-based SaaS platform for monitoring and analytics, specializing in cloud computing and AI-powered cybersecurity products.
On November 19, TD Cowen analyst Andrew Sherman kept a Buy rating on Datadog, Inc. (NASDAQ:DDOG) with a $165 price target. The analyst considers Datadog as the “Best Idea for 2025”. The company holds plenty of growth opportunities, with the firm highlighting its strong cloud leverage and ramping free cash flow production. Moreover, while tailwinds from the company’s artificial intelligence native customers may moderate, it is considered temporary. It is still expected that Datadog will continue to benefit from AI in the long run.
8. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders: 71
Snowflake Inc. (NYSE:SNOW) is an artificial intelligence data cloud company that leverages AI and machine-learning capabilities into its platform, allowing customers to create generative AI applications and build large language models.
On November 19, Snowflake Inc. (NYSE:SNOW) announced at the Microsoft Ignite conference that it is expanding its partnership with Microsoft to launch a new connector for Microsoft Power Platform. The connector will enable two-way access between Dataverse, the enterprise data platform for agents, and Snowflake’s AI Data Cloud. By simplifying data interoperability between Microsoft Power Platform, Microsoft’s low-code/no-code services suite, Dynamics 365, and the Snowflake AI Data Cloud, the connector will be able to offer developers and business users the ability to build and leverage custom enterprise AI applications using their enterprise data in Snowflake. Ultimately, customers will be able to simplify data collaboration, enhance enterprise insights, and leverage the power of AI for individual business needs.
“Snowflake and Microsoft have a shared vision, rooted in collaboration, to help customers gain deeper data-driven insights and break down data silos as effectively as possible. In the age of AI, this shared vision has taken on even greater meaning, and through our bidirectional data access integration, we’re giving developers and business users the tools they need to build powerful AI applications without the need to move or copy data – improving both collaboration and productivity. Today’s announcement deepens our partnership with Microsoft, and we look forward to continuing to innovate together in service of our customers.”
– Christian Kleinerman, EVP of Product, Snowflake.
7. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 74
Applied Materials, Inc. (NASDAQ:AMAT) develops, manufactures, markets, and services semiconductor wafer fabrication equipment and related spare parts for the worldwide semiconductor industry. Companies rely on Applied Material’s cutting-edge technology to build some of their most advanced semiconductors.
On November 18, Applied Materials, Inc. (NASDAQ:AMAT) announced that it will be expanding its global EPIC* (Equipment and Process Innovation and Commercialization) innovation platform, which was founded to network and grow international cybersecurity innovation ecosystems. The initiative was launched at a summit in Singapore, bringing together over two dozen R&D leaders from the semiconductor industry to foster alliances. The collaboration model is specifically designed to accelerate the commercialization of advanced chip packaging technologies. Known as the EPIC Advanced Packaging strategy, the expansion of Applied’s global EPIC platform aims to speed up the commercialization of energy-efficient computing solutions by offering leading chipmakers and system designers early access to next-generation technologies and equipment as well as deploying partnerships between equipment makers, material providers, device companies, and research institutes.
“Advanced packaging is paramount to the semiconductor roadmap for enabling sustainable progress in the AI era. Today’s summit unites the leaders from the most innovative organizations to explore collaborative advancements in performance-per-watt through advanced chip packaging. With our global innovation platform and the new EPIC Advanced Packaging strategy, Applied Materials is uniquely positioned to help chipmakers accelerate the journey from concept to commercialization of new technologies.”
-Dr. Prabu Raja, President of the Semiconductor Products Group at Applied Materials.
6. ServiceNow, Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 78
ServiceNow, Inc. (NYSE:NOW) is a cloud-based, AI-driven platform, that helps enterprises automate multiple management workflows.
On November 18, ServiceNow, Inc. (NYSE:NOW) announced that it has expanded its strategic alliance with Microsoft. Building on their existing partnership, Service Now’s Now Assist and Microsoft 365 Copilot integration will now enable streamlined workflows and enable self-service capabilities within Microsoft applications. In essence, the strategic alliance will help modernize front-office business processes. Copilot will simplify tasks through intelligent automation, while ServiceNow AI agents will manage workflows and offer solutions to complex problems.
“A strong partnership between ServiceNow and Microsoft means customers gain the best of both worlds: seamless, secure, and smart workflows. By combining our strengths, we’re enabling organizations to harness AI and automation in ways that fundamentally change how they work—reducing complexity, driving productivity, and helping teams move faster. This partnership isn’t just about technology; it’s about setting customers up for long-term success in a digital world.”
-Jon Sigler, senior vice president, Platform and AI at ServiceNow.
5. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 91
Oracle Corporation (NYSE:ORCL) is a database management and cloud service provider. It hosts immense data that AI applications need to process.
Microsoft’s Ignite 2024 event has unveiled several exciting partnerships and expansions. One such announcement made at the event is that of the expanded partnership between Microsoft and Oracle Corporation (NYSE:ORCL). Oracle used the conference to announce an increase in the number of Exadata database-optimized servers and Real Application Clusters; strategically co-located in Microsoft Azure data centers to nine regions. The partnership, offering businesses the low-latency option to integrate their databases seamlessly with Microsoft’s applications and infrastructure, aims to deploy 24 additional Azure regions with Oracle Cloud Infrastructure by 2025.
4. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Holders: 91
Vertiv Holdings Co (NYSE:VRT) is a global provider of digital infrastructure technology and services for data centers, communication networks, and commercial and industrial facilities.
On November 19, Vertiv Holdings Co (NYSE:VRT) announced the expansion of its liquid cooling product portfolio by introducing two new Vertiv™ CoolChip CDU (coolant distribution unit) systems. The Vertiv CoolChip CDU family offers affordable and flexible liquid cooling for data centers that enable the operation of high-density computing for AI alongside traditional air-cooled racks. The two cooling systems are on display at the Vertiv booth at SC24, the international conference for high-performance computing, networking, and storage, from November 19 – 22. Besides the cooling systems, Vertiv also boasts an extensive suite of global service offerings to support the deployment of liquid-cooled infrastructure.
“The AI-focused data center necessitates advanced cooling technologies. Vertiv’s expanded liquid-cooled solutions support the densification of the data center we are seeing as a result of AI. Our liquid cooling portfolio, complemented by our full solution of air cooling, heat rejection, and re-use solutions and global services capability, enables both new and existing data centers to seamlessly introduce liquid cooling as part of the overall hybrid cooling solution to make AI deployments easier, faster and more cost-effective for customers.”
-John Niemann, senior vice president of the thermal business unit at Vertiv.
3. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 99
Tesla, Inc. (NASDAQ:TSLA) is engaged in the design, development, manufacture, and sale of fully electric vehicles, energy generation and storage systems. The company is an AI stock, with its autonomous technology having the potential to be the “great unlock” that drives it to become an AI giant.
On November 18, Morgan Stanley maintained its bullish stance on Tesla, Inc. (NASDAQ:TSLA) stock, giving a “Buy” rating. Several factors have led to a buy rating on the stock, with the company’s strong leadership in artificial intelligence and autonomous technology being a key driver. Despite the unclear federal policies on self-driving cars, Jonas affirms that the company is well-positioned to benefit from policy accelerants. Moreover, Tesla’s rideshare business also seems promising despite the challenges with self-driving technology and regulations. There is also a significant potential for growth given the company’s strategic position in mobility services.
2. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 115
Alibaba Group Holding Limited (NYSE:BABA) is a Chinese multinational conglomerate that leverages artificial intelligence in its e-commerce business, having recently launched more than a hundred new AI models as part of its AI push.
On November 18, South China Morning Post, a leading news media company that reports on China and Asia, reported that Chinese augmented reality (AR) start-up Rokid has launched a new pair of lightweight smart glasses that employ Alibaba Group Holding Limited (NYSE:BABA)’s large language model (LLM), a technology that supports intelligent chatbots such as ChatGPT. The startup, founded by former Alibaba Group Holding Limited (NYSE:BABA) employee Misa Zhu Mingming, announced the LLM-equipped AR glasses on November 18. The company has chosen Alibaba Group Holding Limited (NYSE:BABA)’s LLM as it has recently been ranked highly in global performance benchmarks. The glasses aim to compete with Meta head-on, eyeing profitability in 2025.
1. Salesforce Inc (NYSE:CRM)
Number of Hedge Fund Holders: 116
Salesforce Inc (NYSE:CRM) is an American cloud-based CRM software company that has gained significant traction after the launch of Agentforce, its AI-powered platform.
Erste Group upgraded Salesforce (CRM) to “Buy” from Hold in a research report on Tuesday, November 19. According to the analysts, Salesforce holds a strong position in customer service, marketing automation, and most importantly, data analysis powered by artificial intelligence. Due to these factors, the company is in a strong position to consistently grow revenue and operating margins.
While we acknowledge the potential of CRM 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 CRM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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