Artificial Intelligence is driving an unprecedented expansion in the potential market size for hardware and software products. According to Bain & Company, the market for AI-related hardware and software will witness annual growth rates of 40% to 55% over the next three years, potentially reaching a valuation between $780 billion and $990 billion by 2027. Companies investing in artificial intelligence know exactly how big of an opportunity this is and are determined not to miss it. Keshav Murugesh, Group CEO of WNS, a global business process management company, talked about its significance at the “CNBC Connect” event in Bangkok. According to Murugesh, many companies are underprepared for AI’s impact, particularly in areas such as government regulation. As such, there is clearly an upside to investing early in the technology.
“Three years from now, if you are investing significantly in generative AI, you might be disappointed, right? As we have seen in many technologies, sometimes the hype is much bigger than the reality. But, three years from now if you are not investing in generative AI, you are going to be terrified. Because those companies that made the investments now, will be far ahead of you”.
– Keshav Murugesh.
READ ALSO: 10 Trending AI Stocks on Latest Analyst Ratings and News and 8 Best Information Technology Services Stocks to Invest in Now
Latest Developments in AI
Let’s look at the latest developments in artificial intelligence to assess how they are helping businesses, customers, and society to reach the next level of success. In its first, Chinese scientists have developed the first AI-powered robot lifeguard to stand watch over the riverside site in Luohe city. Using artificial intelligence, big data, and navigation and tracking technologies, the robot will operate without any human intervention. While it is not the first robot lifeguard, it is the first to be fully automated and needs no intervention, South China Morning Post reported.
In other news, Japanese Prime Minister Shigeru Ishiba has pledged more than $65 billion of fresh support for the nation’s semiconductor and artificial intelligence sector. The move comes in hopes of narrowing the gap between Tokyo and global powers on chip support. Ishiba notes that he wishes to spread positive examples of regional revitalization like TSMC’s chip plant in Kumamoto across the nation.
Speaking of artificial intelligence, it seems that artificial intelligence companies are no longer scaling at the pace they were initially and that the outcomes from scaling up pre-training—the stage in AI model training where large volumes of unlabeled data are used to learn language patterns and structures—have seemingly reached a plateau. To overcome this plateau, researchers are now exploring “test-time compute,” a technique that enhances existing AI models during the so-called “inference” phase, or when the model is being used. This shift has the potential to reshape the AI landscape and impact the demand for hardware, challenging Nvidia’s dominance in training chips as the focus moves to the inference market.
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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A financial analyst looking at the news, analyzing the trends of the insurance market.
15. Spectral AI, Inc. (NASDAQ:MDAI)
Market Capitalization: $25.65 million
Spectral AI, Inc. (NASDAQ:MDAI) is an artificial intelligence company focused on medical diagnostics for faster and more accurate treatment decisions in wound care.
On November 7, H.C. Wainwright maintained a “Buy” rating on Spectral AI, Inc. (NASDAQ:MDAI) with a price target of $3.50. The buy rating comes amid Spectral AI’s strong financial performance and strategic positioning. It surpassed revenue forecasts for Q3 2024, reporting $8.2 million compared to the expected $7.1 million. Regulatory and commercial milestones have also led to the rating upgrade, and the company is scheduled to report its data on the US Burn Study by the year’s end, an important step for getting FDA approval for its DeepView system. The DeepView is an AI-driven non-invasive and predictive medical device that will provide clinicians with an immediate, binary assessment of a burn wound’s healing potential. The favorable feedback from the UK launch and funding from the Medical Technology Enterprise Consortium further affirm the buy rating.
14. Bloom Energy Corporation (NYSE:BE)
Market Capitalization: $3.1 billion
Bloom Energy Corporation (NYSE:BE) is a renewable energy company that designs, manufactures, sells, and installs solid-oxide fuel cell systems for on-site power generation. Bloom Energy is an AI stock given its potential to power AI data centers.
On November 7, Bloom Energy Corporation (NYSE:BE) and Quanta Computer Inc., a Taiwanese electronics manufacturer, announced a significant expansion to their existing agreement to power the production of critical hardware serving the AI industry. Under the agreement, Quanta has expanded its Bloom Energy SOFC (solid oxide fuel cell) microgrid installation, increasing its power capacity by over 150%. This will help the company avoid expensive delays with local utility connections and keep up with the growing demand for its servers.
“Bloom’s SOFC microgrids provide AI customers with a flexible, pay-as-you-grow solution that is ready to scale and avoids additional transmission or distribution upgrades. This effectively shortens interconnection permitting associated with traditional infrastructures”.
– Aman Joshi, Bloom Energy’s global Chief Commercial Officer.
13. Elastic N.V. (NYSE:ESTC)
Market Capitalization: $9.24 billion
Elastic N.V. (NYSE:ESTC) is a search artificial intelligence (AI) company that delivers hosted and managed solutions designed to run in hybrid, public or private clouds, and multi-cloud environments. The company leverages AI across its product offerings, particularly within its “Elastic Stack” comprising Elasticsearch, Kibana, Beats, and Logstash (also known as the ELK Stack) and more.
On November 11, Elastic N.V. (NYSE:ESTC) introduced a new feature called Better Binary Quantization (BBQ) for Elasticsearch, the company’s open-source search and analytics engine. The BBQ tool will make it easier to store and work with complex data types known as vectors, which are often used in artificial intelligence and machine learning. The development of BBQ is a significant step toward data processing and storage, enhancing the capabilities of Elasticsearch. It is available as a tech preview for both self-managed and cloud users of Elasticsearch and will be contributed to Apache Lucene, an open-source Java library used as a search engine. Elasticsearch is built on top of Lucene.
“Elasticsearch is evolving to become one of the best vector databases in the world, and we see our users wanting to put more and more vectorized data in it. Better Binary Quantization is our latest innovation to reduce the resources needed to store vectorized data and provide freedom to our users to vectorize all the things.”
– Ajay Nair, general manager, Platform at Elastic.
12. NetApp, Inc. (NASDAQ:NTAP)
Market Capitalization: $24.97 billion
NetApp, Inc. (NASDAQ:NTAP) is a data infrastructure company offering a range of enterprise software, systems, and services that customers use to transform their data infrastructures. It is a top Goldman Sachs Phase 2 AI stock, catering to the needs of the cloud computing and data center industries.
On November 11, intelligent data infrastructure company NetApp, Inc. (NASDAQ:NTAP) introduced updates to its enterprise storage offerings including new NetApp AFF A-Series and AFF C-Series systems. The innovations will allow customers to expand their intelligent data infrastructure using NetApp’s leading data storage systems at more accessible entry points. The storage solutions offer improved performance, storage density, and efficiency; allowing customers to build or expand their intelligent data infrastructure for high-performance workloads with storage deployments at the scale and price point that suits them best.
“The unrelenting growth of data volumes and increasingly demanding workloads have put increasing pressure on IT teams of any size to provide simplicity at scale for all their workloads. Customers facing those challenges can rely on NetApp to deliver continuous innovation, illustrated by the release of the new more powerful, intelligent, and secure NetApp AFF A-Series systems and the new scalable, efficient, and secure NetApp AFF C-Series systems. Today, we are making our latest developments in intelligent data infrastructure more accessible for an even wider range of customers.”
– Sandeep Singh, Senior Vice President and General Manager of Enterprise Storage at NetApp.
11. Snowflake Inc. (NYSE:SNOW)
Market Capitalization: $41.40 billion
Snowflake Inc. (NYSE:SNOW) is a cloud-native platform that develops database architecture, data warehouses, query optimization, and parallelization solutions. The company is benefiting from the boom in artificial intelligence as data warehouses are a critical component in making AI useful for enterprises.
On November 11, KeyBanc analyst Eric Heath lowered the firm’s price target on Snowflake Inc. (NYSE:SNOW) to $150 from $168 and kept an “Overweight” rating on the shares. The price reduction comes from short-term challenges in storage and ETL revenue linked to Iceberg adoption. The adoption of Iceberg, a tool that helps manage large amounts of data more efficiently, could potentially reduce the need for Snowflake’s storage and ETL (extract, transform, load) services. KeyBanc further revealed that it conducted its quarterly Snowflake survey of 15 partners and customers to keep track of spending intentions, product traction, Iceberg adoption, GenAI interest, and competitive dynamics. The survey results reveal that Snowflake is increasingly strategic, with a strong interest in new products, especially GenAI. However, customers are only expecting to increase their spending with Snowflake by 10% over the next year.
10. Fortinet, Inc. (NASDAQ:FTNT)
Market Capitalization: $74.33 billion
Fortinet, Inc. (NASDAQ:FTNT) provides cybersecurity solutions and services worldwide. This leading cybersecurity company leverages artificial intelligence across its cybersecurity products.
On November 11, HSBC analyst Stephen Bersey upgraded Fortinet, Inc. (NASDAQ:FTNT) to “Buy” from Hold and raised his price target to $111 from $83. The rating upgrade comes after the company’s better-than-expected Q3 earnings result and long-term outlook. The company reported a revenue of $1.51 billion for the third quarter, beating the analyst forecast of $1.48 billion and up 13% from the previous year. The company’s growth in the quarter was fueled by factors such as growth in Unified SASE (Secure Access Service Edge) billings and Security Operations billings (driven by demand from large enterprises), and a return to positive growth in Secure Networking. The company’s innovative use of FortiOS and FortiASIC technology also proved to be beneficial, while AI-driven security operations were its fastest-growing pillar, outpacing the market with a 32% billings growth.
9. Marvell Technology, Inc. (NASDAQ:MRVL)
Market Capitalization: $79.91 billion
Marvell Technology, Inc. (NASDAQ:MRVL) engages in the design, development, and sale of integrated circuits; preparing custom AI chips for big tech names such as Google and Amazon.
On November 11, Loop Capital initiated coverage of Marvell Technology, Inc. (NASDAQ:MRVL) with a “Hold” rating and a $95 price target. According to the firm, Marvell is benefiting from cloud service providers’ investments that they are making into high-performance general-purpose computing as well as accelerated computing for AI training and inference. Additionally, as MRVL trades at about 45 times the next 12 month’s earnings, the analyst believes that the stock is appropriately valued.
8. AppLovin Corporation (NASDAQ:APP)
Market Capitalization: $96.12 billion
AppLovin Corporation (NASDAQ:APP) is a technology company that provides end-to-end software and AI solutions for businesses to reach, monetize, and grow their global audiences. The company leverages its AI-powered platform to provide targeted, automated marketing solutions
On November 11, Loop Capital analyst Rob Sanderson raised his price target on AppLovin Corporation (NASDAQ:APP) to $385 from $181 and kept a “Buy” rating on the shares. The rise in price target comes after the company’s Q3 earnings beat and an above-consensus guide. Ever since the company launched Axon 2 AI-based advertising technology in Q2 2023, it has seen phenomenal growth and attributes its growth to AI. According to the firm, it is changing its model to use an EBITDA multiple of times 30, compared to the previous 17.5 times. A rapid reevaluation may be followed by a consolidation in the stock, and the firm would be eager to buy shares in the case the price dips.
7. Cisco Systems, Inc. (NASDAQ:CSCO)
Market Capitalization: $233.7 billion
Cisco Systems, Inc. (NASDAQ:CSCO) is a technology company that offers a wide array of technology innovations such as Internet Protocol-based networking and other products related to communications and information technology. It offers AI-native infrastructure and solutions. Currently, artificial intelligence makes up 2% of the company’s revenue.
One of the biggest analyst calls on Monday, November 11, highlighted Cisco Systems, Inc. (NASDAQ:CSCO). JPMorgan upgraded the stock to “Overweight” from Neutral with a price target of $66, up from $55. The firm cites “enterprise networking demand” for the company as a factor for the upgrade. Even though the shares rallied following the company’s earnings report for fiscal Q4 2024, JPMorgan believes there is still potential for the stock to rise further.
“We are upgrading Cisco from Neutral to Overweight despite the strong run in the shares since reporting F4Q24 (Jul-end) earnings in the middle of August, driven by our expectation of further headroom for upside in the medium term…”
-JP Morgan
6. Salesforce Inc (NYSE:CRM)
Market Capitalization: $326.7 billion
Salesforce Inc (NYSE:CRM) is a cloud-based software company. Salesforce’s AI strategy this year has shifted to developing autonomous agents, exemplified by the launch of Agentforce, a platform that allows organizations to build, customize, and deploy autonomous AI agents for various business functions.
On November 8, Bloomberg reported that Salesforce Inc (NYSE:CRM) plans on hiring more than 1,000 workers in order to sell its new generative AI agent product called Agentforce. According to the company, this new artificial intelligence product has already gained “amazing momentum”, resulting in a hiring surge. Agentforce was launched last month, with an initial pricing of about $2 per agent conversation.
“Agentforce became available just two weeks ago and we’re already hearing incredible feedback from our customers”.
– Chief Executive Marc Benioff, Salesforce
5. Oracle Corporation (NYSE:ORCL)
Market Capitalization: $524.09 billion
Oracle Corporation (NYSE:ORCL) is a database management and cloud service-providing company. This AI play is building cloud data centers to house AI systems and also has ambitious plans for its cloud business.
On November 11, Reaktr, a unit of Exela Technologies and part of the Oracle Partner Network announced their collaboration with Oracle Corporation (NYSE:ORCL) to deliver their SecAi service on Oracle Cloud Infrastructure (OCI) and in the Oracle Cloud Marketplace. SecAI, part of Reaktr’s innovative AI cybersecurity suite, supports more than 120 large-language models and integrates more than 80 external data sources to help enterprises secure their GenAI implementations and protect them from bad actors. The collaboration leverages OCI’s security and global reach to provide enterprises with a reliable framework for generative AI validation and threat detection.
“Reaktr understands the complexities of security challenges facing companies today. Leveraging OCI, SecAi can benefit customers and enterprises worldwide, helping ensure heightened protection and peace of mind in today’s ever-evolving cyber threat landscape.”
– David Hicks, group vice president, ISV business and marketing development, Oracle.
4. Palo Alto Networks, Inc. (NASDAQ:PANW)
Market Capitalization: $130.28 billion
Palo Alto Networks, Inc. (NASDAQ:PANW) is a leading cybersecurity company offering security solutions for all apps, users, and devices. The company leverages artificial intelligence, such as Precision AI; Palo Alto Networks’ proprietary AI system, to detect and mediate threats in an AI-first world.
On November 11, Barclays raised the firm’s price target on Palo Alto Networks, Inc. (NASDAQ:PANW) to $425 from $410 and kept an “Overweight” rating on the shares. The rating comes amid anticipation of the company’s upcoming earnings report on November 20. The firm expects strong fiscal Q1 results, supported by bookings and annual recurring revenue (ARR). This positive outlook is attributed to favorable channel checks indicating strong sales activity, increasing adoption of its platform offerings, and the beneficial effects of seasonality, which typically boosts performance during this period.
3. Broadcom Inc. (NASDAQ:AVGO)
Market Capitalization: $835.61 billion
Broadcom Inc. (NASDAQ:AVGO) is a global technology company that designs, develops, and supplies semiconductor and infrastructure software solutions. It designs chips for companies that are building AI data centers.
On November 7, Jefferies analyst Blayne Curtis reaffirmed his “Buy” rating on Broadcom Inc. (NASDAQ:AVGO), citing surging demand for AI chips that will last “several years” to benefit the technology company. According to Curtis, the AI accelerator market will grow by 58% a year from $47 billion in 2023 to $287 billion in 2027. Moreover, there isn’t a sign of a CapEx spending slowdown from the major technology companies as well. While Broadcom Inc. (NASDAQ:AVGO)’s chip business is largely driven by Google, other companies are also likely to use it in a significant manner in the years to come.
“We see the most near-term upside at Marvell and Nvidia, but do expect outperformance from Broadcom later in 2025”.
-Jefferies analyst
2. Tesla, Inc. (NASDAQ:TSLA)
Market Capitalization: $1.1 trillion
Tesla, Inc. (NASDAQ:TSLA) designs, develops, manufactures, and sells fully electric vehicles, energy generation and storage systems. It leverages artificial intelligence for its self-driving technologies and robots that have the potential to revolutionize manufacturing.
On Monday, November 11, Wedbush reiterated Tesla, Inc. (NASDAQ:TSLA) as “Outperform” and raised the firm’s price target on the stock to $400 from $300. The firm believes Tesla is well-positioned to gain from artificial intelligence and autonomous driving. Together, the opportunity that these two factors present is worth $1 trillion alone for Tesla. This is especially true after Donald Trump won the elections, the firm notes, calling the Trump win a “game changer” for the stock.
“We are raising our price target on Tesla to $400 from $300 as we believe the Trump White House win will be a game changer for the autonomous and AI story for Tesla and Musk over the coming years”.
-Wedbush
1. Apple Inc. (NASDAQ:AAPL)
Market Capitalization: $3.39 trillion
Apple Inc. (NASDAQ:AAPL) is a technology company that designs, manufactures, and markets smartphones, tablets, PCs, wearables, and accessories worldwide. The company’s investment in AI technology and integration of AI in its offerings makes it a key AI player. It has recently launched Apple Intelligence, the company’s personal intelligence system.
On November 11, Citi reiterated Apple Inc. (NASDAQ:AAPL) as its top pick, sticking with its buy rating despite the stock’s heavy reliance on China. Apple continues to be a strong performer in the market, which is why the firm has a positive outlook on the stock.
“China is the main manufacturing location for Apple with more than 90% manufacturing in China, in our estimates.”
– Citi
While we acknowledge the potential of AAPL 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 AAPL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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