Power needs for artificial intelligence and cloud computing are expanding so rapidly that some data center campuses may use more electricity than entire cities, or even states, CNBC reports. Here is what Ali Fenn, president of Lancium, a company that secures land and power for data centers had to say about technology companies:
“Technology companies are in a “race of a lifetime to global dominance” in artificial intelligence. It’s frankly about national security and economic security. They’re going to keep spending because there’s no more profitable place to deploy capital”.
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As such, it is important to note that renewable energy isn’t going to be enough to meet their power needs. According to developers, natural gas will also have to play a role. In turn, this need will slow down the progress towards meeting carbon dioxide emission targets. Nat Sahlstrom, chief energy officer at Tract, a Denver-based company that secures land, infrastructure, and power resources for such facilities, further reveals how data center companies have already begun operating at a scale where they have started “tapping out against the existing utility infrastructure”.
In other news, Uber is reportedly building a fleet of gig workers for labeling data for AI models. The new data labeling division, known as Scaled Solutions, will have workers complete projects for the company’s internal business units as well as serve outside customers, including self-driving vehicle company Aurora Innovation and video game developer Niantic, according to a report from Bloomberg. The ride-hailing company has started recruiting contractors in countries including the U.S., Canada, and India, among others.
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. Perfect Corp. (NYSE:PERF)
Number of Hedge Fund Holders: 9
Perfect Corp. (NYSE:PERF) is a leader in AI and AR-powered beauty technology solutions. On November 25, Perfect Corp. (NYSE:PERF) announced that it has partnered with Holidermie, a leading French skincare brand. The partnership will be integrating Perfect Corp.’s dermatologist-verified Skincare Pro AI Skin Analysis into Holidermie’s flagship retail locations. Available through iPads at Holidermie’s flagship store and Le Bon Marché Rive Gauche, customers will be able to enjoy AI-powered personalized skin care consultations like never before. The AI platform evaluates a customer on six key skin health indicators—including hydration, wrinkles, dark circles, acne, radiance & firmness, on order to deliver precise, high-resolution skin assessments.
“With the Skincare Pro AI Skin Analysis, we’re introducing a transformative level of precision and personalization to the skincare shopping experience, especially in Paris’ iconic retail hubs. Our partnership with Holidermie embodies our commitment to combining cutting-edge technology with science-backed solutions to enhance the customer journey”.
-Alice Chang, Founder and CEO of Perfect Corp.
14. Informatica Inc. (NYSE:INFA)
Number of Hedge Fund Holders: 22
Informatica Inc. (NYSE:INFA) is a leader in enterprise AI-powered cloud data management.
On November 26, Informatica Inc. (NYSE:INFA) announced that Informatica’s senior leadership team will be hosting a “Technology Talk” webcast emphasizing modern cloud data architectures. The webcast will delve into the transformation from traditional data warehouses to modern cloud data infrastructures, and learn how Informatica’s Intelligent Data Management Cloud™ platform (IDMC) drives the success of cloud data warehouses, lakes, and lake houses. The team will also be discussing the role IDMC plays in current and emerging cloud data technologies. The live video webcast will be hosted on Tuesday, December 17, 2024, at 8:30 a.m. Pacific Time.
13. Box, Inc. (NYSE:BOX)
Number of Hedge Fund Holders: 31
Box, Inc. (NYSE:BOX) empowers organizations of various sizes to manage and share their content from anywhere on any device. The cloud-based content services platform leverages artificial intelligence through its Box AI platform, positioning itself as a key player in the “intelligent content management” space. On November 26, JP Morgan revealed that it expects Box, Inc. to deliver a “consistent quarter” on a constant currency basis, with potential signs of growth picking up. Fiscal 2026 estimates will still be challenging to meet considering that a stronger US dollar complicates guidance expectations. Moreover, the firm remains positive on the company’s long-term potential as a key content platform connecting collaboration tools and enterprise applications. This positioning is significantly enhanced by the company’s integration of artificial intelligence (AI) into its platform. The firm has an “Overweight” rating on the shares.
12. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 43
Palantir Technologies Inc. (NYSE:PLTR) is a leading provider of AI systems. On Monday, November 25, BofA analyst Mariana Perez Mora raised the firm’s price target on Palantir Technologies Inc. (NYSE:PLTR) to $75 from $55. According to the firm, Palantir has successfully been able to digitize everything from enterprises and battlespaces to finances and missile production. This has enabled the company to be “the enabler and winner in this new era” where efficiency, innovation, safety, and speed are the most valued assets, the analyst told investors. Palantir is also “poised to dominate”, considering software now makes 17% of US business investments, and since companies are increasingly relying on software and AI to boost profits instead of expanding their physical assets.
“PLTR has demonstrated their ability to digitize enterprises and battlespaces from finances to missile production.”
11. Elastic N.V. (NYSE:ESTC)
Number of Hedge Fund Holders: 47
On November 25, Elastic N.V. (NYSE:ESTC), known as the search-focused AI company, announced that it is expanding its partnership with Amazon Web Services. The expanded partnership will leverage AWS’s latest generative artificial intelligence (AI) services. Through the collaboration, Elastic N.V. (NYSE:ESTC) will be offering large language model (LLM) observability support for Amazon Bedrock in Elastic Observability. Amazon Bedrock is a fully managed service that builds generative AI applications with security, privacy, and responsible AI. Site Reliability Engineers (SREs) will be able to track insights into their Amazon Bedrock LLMs performance and usage; helping prevent issues and improve performance for their Amazon Bedrock-powered generative AI applications. Moreover, Elastic’s AI Assistant, which is also powered by Amazon Bedrock, will offer insights, visualizations, and recommendations to help SREs solve problems.
“As LLM-based applications are growing, it’s essential for developers and SREs to be able to monitor, optimize, and troubleshoot how they perform. Today’s integration simplifies the collection of metrics and logs from Amazon Bedrock, in turn streamlining the process of gaining valuable and actionable insights.”
– Santosh Krishnan, general manager of Security and Observability Solutions at Elastic N.V. (NYSE:ESTC).
10. AppLovin Corporation (NASDAQ:APP)
Number of Hedge Fund Holders: 51
AppLovin Corporation (NASDAQ:APP) is a leading marketing platform powered by AI technology. On November 25, Oppenheimer analyst Martin Yang raised the firm’s price target on AppLovin Corporation (NASDAQ:APP) to $480 from $260 and kept an “Outperform” rating on the shares. The company uses its AI-powered Axon engine to optimize ad delivery and targeting, enhancing the effectiveness of its e-commerce initiatives. The buy rating comes after the firm spoke with two experts who participated in the company’s e-commerce pilot. The experts shared positive feedback, highlighting that Applovin’s return on ad spend (ROAS) is on par with Meta‘s. The recent stock performance and e-commerce momentum are expected to drive further growth for the company in 2025. For all of these reasons, AppLovin Corporation (NASDAQ:APP) is one of the firm’s top picks.
9. Baidu, Inc. (NASDAQ:BIDU)
Number of Hedge Fund Holders: 54
On November 22, Saiyi HE from CMB International Securities maintained a Buy rating on Baidu, Inc. (NASDAQ:BIDU) with a price target of $153.60. The company’s positive financial outlook and strong third-quarter results for 2024 have contributed to the buy rating. Although it will take time for its Gen-AI initiatives to monetize, its focus on improving products and user engagement lays a strong foundation for long-term growth. Baidu’s anticipated recovery in its Cloud revenue growth, driven by increased GPU cloud revenue and cross-selling opportunities, has also led to the buy rating. Although Baidu Core’s online ad revenue dipped a bit, it is expected to recover with support from macroeconomic environment improvements and future monetization of Gen-AI search results.
8. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Holders: 64
Palo Alto Networks, Inc. (NASDAQ:PANW) is a leader in AI-powered cybersecurity. On November 22nd, CMB International Securities analyst Saiyi HE maintained a “Buy” rating and set a price target of $464.40. The rating comes after the company’s strong financial performance and future potential. The financial results for the first fiscal quarter of 2025 were very impressive. The company reported 13.9% year-over-year revenue growth to $2.1 billion and a 17% increase in non-GAAP net income, surpassing market expectations. The company’s platformization strategy, aiming to bring customers to its unified AI-driven platform, has also had a positive impact and is already demonstrating success in subscription and support revenue. Upgraded FY25 guidance reflects confidence in continued growth.
7. Pinterest, Inc. (NYSE:PINS)
Number of Hedge Fund Holders: 66
Pinterest, Inc. (NYSE:PINS) is a visual search and discovery platform powered by AI recommendation models. On November 26, TD Cowen analyst John Blackledge initiated coverage of Pinterest, Inc. (NYSE:PINS) with a “Buy” rating and a $38 price target. TD Cowen’s survey data shows Pinterest “over-indexes on product discovery use case relative to other Social Platforms, a tailwind for monetization”. The analysts told in a research note that 44% of U.S. Pinterest users visit the platform to “find or shop for products”. This is double the same metric for other social networks like Reddit, Facebook, and Instagram. The firm also said that the company is now injecting billions of user actions into its artificial intelligence models for delivering more personalized and relevant content and ads.
6. Marvell Technology, Inc. (NASDAQ:MRVL)
Number of Hedge Fund Holders: 70
Marvell Technology, Inc. (NASDAQ:MRVL is a fabless chipmaker that supports AI-optimized data centers through AI compute programs, interconnect switching, and storage solutions. On November 26, Oppenheimer analyst Rick Shafer raised the price target on Marvell Technology, Inc. (NASDAQ:MRVL) to $110.00 from $90.00 and maintained an “Outperform” rating. Oppenheimer expects strong results for the current quarter and guidance for the next, driven by growth in custom computes and networking/optics. It also stated that CSP/hyperscale AI builds remain early innings.
“MRVL reports Tuesday (12/3). We see upside to F3Q (Oct) print and F4Q (Jan) guide led by custom compute and networking/optics. CSP/hyperscale AI builds remain early innings. AI-related on track to surpass mgmt sales targets of $1.5B/$2.5B in CY24/CY25. Conversations reveal investors modeling $2B AI ASIC next year. We see MRVL’s four projects (Trainium, Inferentia, Axion, and Maia) potentially supporting revenues 2x that. Trainium alone could approach $2B, in our view. Trainium/Axion now ramping, Inferentia next year, Maia as early as 4Q25. 1.6T PAM4 DSP ramping, contribution $10Ms in F4Q; 1.6T/800G cross-over likely 1H CY26. We see 51.2T TL10 (ToR switch) sales also $10Ms in F4Q. Non-DC segments (carrier, enterprise, storage) expected to broadly improve, driving additional upside. We see GM 60%+/- long-term. MRVL’s structural growth, led by cloud DC AI, accelerating into CY25. We reiterate our Outperform rating. New target $110 (prior $90)”.
5. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders: 71
Snowflake Inc. (NYSE:SNOW) is an artificial intelligence data cloud company. On November 25, Wedbush upgraded Snowflake Inc. (NYSE:SNOW) to “Outperform” from Neutral with a $190 price target. The analyst told investors in a research note that it’s time for the broader software space to “get in on the AI party”, upgrading stocks such as Elastic, Palantir, and Salesforce alongside. Wedbush, bullish about the next phase of the artificial intelligence revolution, said that the enterprise consumption phase will begin in 2025 with the launch of large language models as use cases are “exploding”. The true adoption of generative AI will be a major catalyst for the software sector. In particular, Snowflake is well-placed to benefit from the increasing demand for AI-driven solutions.
4. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 74
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a leader in cloud-delivered endpoint and cloud workload protection. On November 25, Rosenblatt raised the firm’s price target on CrowdStrike Holdings, Inc. (NASDAQ:CRWD) to $385 from $325 and kept a “Buy” rating on the shares. According to the firm’s analysis, customer confidence in CrowdStrike Holdings, Inc. (NASDAQ:CRWD) remains unshaken despite challenges such as the July 19th system outage. Customer Commitment Packages (CCP) and Flex Pricing options are proving effective in customer retention for the AI-powered cybersecurity firm as well, despite the anticipated $60 million headwind in Annual Recurring Revenue (ARR) and overall revenue for the second half of 2025. The analyst also anticipates a moderate upside for the quarter and a slightly raised guidance.
3. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 99
Tesla is an American multinational automotive and clean energy company that integrates artificial intelligence to drive advancements in autonomous driving, robotics, and smart manufacturing. On Tuesday, November 26th, Tom Narayan from RBC Capital maintained a “Buy” rating on Tesla, Inc. (NASDAQ:TSLA) with a price target of $313.00. Elon Musk has previously expressed his hopes of launching a robotaxi service sometime in 2025. A recent job listing on Tesla’s career page reveals how the company is hiring a software engineer. The job would require helping develop a teleoperations system that will allow human operators to remotely access and control the company’s upcoming robotaxis and humanoid robots. Reports of the job listing surfaced on Monday, November 25th. According to Tesla’s job listing, “our cars and robots operate autonomously in challenging environments. As we iterate on the AI that powers them, we need the ability to access and control them remotely”.
2. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 116
Salesforce Inc (NYSE:CRM) is a cloud-based CRM company that gained momentum with its AI-powered Agentforce platform. On November 25, Truist analyst Terry Tillman raised the firm’s price target on Salesforce Inc (NYSE:CRM) to $380 from $315 and kept a “Buy” rating on the shares. Truist is confident in the company’s steady earnings and cash flow growth after it attended the Salesforce Agentforce World Tour. The analyst told investors in a research note that the company’s new product catalysts and increased innovation cycle can potentially boost future revenue. He also emphasized the impact of Agentforce on the automation, healthcare, and contact center industries.
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) is a technology company that designs, manufactures, and markets smartphones, tablets, PCs, wearables, and accessories worldwide. Apple Intelligence is the company’s personal intelligence system. Erik Woodring from Morgan Stanley maintained a Buy rating on Apple, with a price target of $273.00, on Monday, November 25th. The firm states that its survey checks “reinforce [the] multi-year iPhone upgrade thesis.” A survey by the firm has found that 78% of potential buyers of AI-enabled iPhones would pay a monthly subscription, potentially boosting Apple’s services revenue by $7-14 billion by 2027. The company is also improving its position in China, despite Wall Street’s concerns about increasing smartphone competition from domestic players like Huawei.
“Our 2024 AlphaWise Global Smartphone Survey confirms that iPhone upgrade rates are improving and Apple Intelligence is an emerging catalyst to iPhone upgrades, with broader availability key to unlocking pent-up demand globally”.
-Morgan Stanley analyst.
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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