In this article, we discuss the 15 trending AI stocks on latest analyst ratings and news.
The AI industry has been experiencing explosive growth, making it a highly attractive sector for potential investors. According to a report by Bloomberg Intelligence, the global generative AI market was valued at approximately $40 billion in 2022, just before the launch of ChatGPT, and is now expected to expand at a compound annual growth rate of more than 40% to reach over $1.3 trillion in size within the next decade. This growth is fueled by the rapid adoption of AI technologies across various industries, including healthcare, finance, retail, and manufacturing, where AI is being leveraged to enhance efficiency, reduce costs, and create new revenue streams. For instance, in healthcare, AI-driven diagnostics and personalized medicine are revolutionizing patient care, leading to more accurate and timely treatments. The finance sector is also reaping the benefits of AI through advanced algorithms for fraud detection, risk management, and personalized banking services.
Read more about these developments by accessing 33 Most Important AI Companies You Should Pay Attention To and 20 Industrial Stocks Already Riding the AI Wave.
The AI market is not just expanding in terms of applications but also geographically. North America has been a dominant force in AI development, with companies like Google, Microsoft, and Amazon leading the charge. However, Asia-Pacific, particularly China, is rapidly catching up, driven by significant investments and a robust government push toward AI adoption. The Chinese government has an ambitious AI plan aimed to make the country a global leader in AI by 2030, with projections that the AI industry of China could reach $150 billion in size by then. This geographical diversification is crucial for investors looking to tap into different markets and reduce their risk exposure.
Investors should also consider the substantial investments being made in AI startups, which are critical drivers of innovation. According to CB Insights, AI startups raised over $66 billion in funding in 2022, marking a record year despite broader economic uncertainties. This trend is expected to continue as more venture capital firms and corporate investors recognize the potential of AI to disrupt traditional industries. Furthermore, the integration of AI with other emerging technologies, such as the Internet of Things (IoT), 5G, and quantum computing, is likely to create new opportunities and markets, further driving growth.
Our Methodology
For this article, we selected AI stocks based on the latest news and analyst ratings. These stocks are also popular among hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Trending AI Stocks on Latest Analyst Ratings and News
15. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 75
Intel Corporation (NASDAQ:INTC) markets key technologies for smart devices. The company has been in the spotlight recently as it aims to make an entry into the AI market with heavy investments in chips manufacturing. However, this plan has hit a few roadblocks. Recent reports suggest that Japanese tech giant SoftBank has scrapped a deal to produce an artificial intelligence chip with Intel. The collapse of the deal, according to the report, was a result of the inability of the latter to meet the advanced chip requests of the former, specially in terms of volume and speed.
Investment advisory Bernstein has a Market Perform rating on Intel Corporation (NASDAQ:INTC) stock and recently lowered the price target to $25 from $35. In an investor note, the advisory noted that the Q2 results of the firm were challenged and Q3 outlook was awful as the company saw the second half of 2024 recovery more muted than prior expectations amid weaker macro and some client inventory channel adjustments.
14. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 77
Applied Materials, Inc. (NASDAQ:AMAT) provides equipment, services, and software for the semiconductor industry. The company is most famous for being a wafer fab equipment (WFE) supplier, a key piece of tech that enables the seamless manufacture of chips used in most modern devices. The AI boom has created explosive demand for these chips. In the WFE category, the firm has a diverse portfolio compared to peers like ASML and KLA Corp. The former specializes in lithography systems while the latter focuses on inspection and metrology equipment. Applied Materials, however, offers a range of WFE services, including Epitaxy, etching, deposition, ion implant, inspection and metrology, and hybrid bonding.
Investment advisors on Wall Street thus have bullish views on Applied Materials, Inc. (NASDAQ:AMAT) stock. For example, Stifel has a Buy rating on the shares with a price target of $270. In a recent note, the advisory noted that the Q3 results and outlook of the firm modestly exceeded consensus estimates, reflecting gradual growth in system and service revenue. The note further stated that the firm was well-positioned to grow at/above the industry in 2025 as the China exposure had been derisked.
13. Celestica Inc. (NYSE:CLS)
Number of Hedge Fund Holders: 38
Celestica Inc. (NYSE:CLS) offers a range of product manufacturing and related supply chain services. The connectivity and cloud solutions business of the firm, which comprises nearly 70% of the overall revenue, has helped the firm beat consensus expectations on revenue guidance for ten of the last eleven quarters. Even as this business is healthy and growing, AI data center spending has forced investors to look at the hardware platform solutions department. In this domain, the firm has many famous customers, like Google and Amazon. The firm markets 800G switches, a networking product that supports high throughput and low latency features necessary for handling large data transfers, to these customers.
In the second quarter earnings call, Celestica Inc. (NYSE:CLS) management highlighted the importance of this growth driver, revealing that there had been accelerated demand for networking products from hyperscale customers for this year and the next year. In the coming months, the company expects the market to now move towards distributed regional data centers due to power constraints, a move that would lead to a further increase in demand for networking products.
12. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 156
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) makes and sells integrated circuits and semiconductors. AI investors can take a lot of positives from the company. For example, it has a 28% market share in the foundry business, underscoring the importance of the firm as the AI boom drives the demand for high-end chips that need fabrication as part of their manufacturing process. The recent purchase of a manufacturing plant worth $530 million will double fab capacity by 2025. The firm also plans to spend close to $30 billion in capital expenditures this year, the majority of which is marked for investments in advanced technologies, highlighting the commitment it has to chip leadership in an AI world.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has received bullish calls from analysts on Wall Street in recent weeks. For example, investment advisory JPMorgan has an Overweight rating on the shares with a price target of NT$1,200. In a recent note, the advisory stated that TSM is now firmly on course to improving margins in the next few years in light of the market leading position with continued strong demand for artificial intelligence.
11. Micron Technology (NASDAQ:MU)
Number of Hedge Fund Holders: 120
Micron Technology (NASDAQ:MU) makes and sells memory and storage products. AI data center spending has created a large market for High Bandwidth Memory (HBM), one of the premier products of the firm. Micron has leapt ahead of competitors in this regard as the HBM3e chips it sells are 30% more efficient than others on the market. This number is important because AI data centers consume a lot of power and efficiency solutions are highly sought after in the industry. Micron, which launched these new chips earlier this year, has already sold production of these through 2025. This is driving investor interest in the company, pushing up prices as demand increases, and boosting margins for the chipmaker.
Micron Technology (NASDAQ:MU) has many famous customers, including AI leaders like Apple and NVIDIA. The latter uses the HBM3e chips in their H200 GPUs. These GPUs are likely to sell like hot cakes as production for Blackwell, the latest AI chips marketed by NVIDIA, is hit with delays. Demand for the DRAM, an AI data center essential and another Micron product, is also increasing. As firms like NVIDIA cross $3 trillion in valuation, with analysts forecasting it to cross the $10 trillion mark by 2030 keeping in mind the AI potential, smaller players like Micron have lots of room to grow in the coming years.
10. Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders: 38
Arm Holdings plc (NASDAQ:ARM) architects, develops, and licenses central processing unit products and related technologies for semiconductor companies and original equipment manufacturers. The company has not been in the spotlight as much as it should have been in the past few months considering that it is perhaps the third-best performing semi stock in the AI world with a return of close to 90% year-to-date, behind only industry behemoths like NVIDIA and Taiwan Semiconductor Manufacturing Company. Arm Holdings virtually monopolizes the mobile market across the globe. It is trading at more than 33x forward revenue, a 40% premium to the 24x forward revenue multiple of NVIDIA.
Although not a darling of financial media, Arm Holdings plc (NASDAQ:ARM) nevertheless enjoys considerable attention on Wall Street. Investment advisory Daiwa recently upgraded the stock to Outperform from Neutral with a $130 price target, noting that the bad news of a possible recession was out and tech was settling post the big recent selloff, with AI expectations still strong but valuations still high.
9. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 44
Palantir Technologies Inc. (NYSE:PLTR) builds and deploys software platforms for the intelligence community to assist in counterterrorism investigations and operations. There are a string of reasons to be bullish on the shares in the long term. The company recently announced that it would be making previously exclusive AI tools available on the Microsoft Azure system for government sectors, enabling it to leverage AI for high-value contracts. Furthermore, in earnings for the second quarter, the firm revealed that US commercial revenue grew 55% year-on-year, with an 83% increase in customers, reflecting strong AI sector growth. During the time, the company secured 96 deals in the US worth over $1 million, contributing to a 152% year-on-year increase in contract value.
Market experts have viewed Palantir Technologies Inc. (NYSE:PLTR) positively so far this year. Investment advisory Northland recently initiated coverage of the stock with a Market Perform rating and $35 price target. In an investor note, the advisory noted that the artificial intelligence operating system of the firm, powered by the Ontology software, had overcomes myriad roadblocks to adoption and was igniting AI use across the enterprise landscape.
8. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 130
Broadcom Inc. (NASDAQ:AVGO) supplies semiconductor infrastructure software solutions. The stock has suffered in recent weeks due to the concerns over AI overvaluation and overinvestment. However, a closer look at the product portfolio of the chip firm reveals that it is much more diversified in the semi business compared to peers, with growth supported by tailwinds such as cybersecurity, connectivity, and data management solutions, in addition to artificial intelligence. The infrastructure solutions business of the company has been growing faster than semiconductor solutions in recent months, highlighting this diversification. This is illustrated by the fact that revenue from infrastructure solutions as a percentage of total revenue has increased from below 10% in 2018 to above 30% this year.
This optimism around Broadcom Inc. (NASDAQ:AVGO) is shared by analysts on Wall Street. Investment advisory Rosenblatt recently raised the price target on the stock to $2,400 from $1,650 and kept a Buy rating, noting that the firm rolled out fiscal 2026 estimates that support high-teens sales growth and $75 non-GAAP earnings per share, driven by continued artificial intelligence infrastructure networking momentum and improved synergies in enterprise software.
7. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Holders: 92
Vistra Corp. (NYSE:VST) operates as an integrated retail electricity and power generation company. The shares of the firm have climbed more than 120% year-to-date, largely due to the rise in demand for power, growth in AI data center energy needs, and the purchase of Energy Harbor. The company seems in pole position to deliver clean and reliable energy for AI data centers given that it has a diversified energy portfolio, including nuclear assets. This growth ramp, rivaling that of technology stocks, comes despite concerns about grid strain and valuation but is offset by the strong financial performance, growth projections, and strategic positioning of the utility company.
This bullish view on Vistra Corp. (NYSE:VST) is backed by market experts on Wall Street. For instance, Seaport Research analyst Angie Storozynski has a Buy rating on the shares with a price target of $116. In an investor note, the analyst pointed out that even after the price rally this year, companies such as Vistra continued to trade at attractive double-digit free-cash-flow yields.
6. Super Micro Computer, Inc. (NASDAQ:SMCI)
Number of Hedge Fund Holders: 47
Super Micro Computer, Inc. (NASDAQ:SMCI) develops and manufactures high performance server and storage solutions based on modular and open architecture. The stock has been hit hard in recent weeks as NVIDIA, one the premier customers of the firm, announced delays to the famous Blackwell chips. These chips, designed and produced for AI tasks, were to be used by tech giants in their data build, together with liquid-cooled AI rack servers marketed by Super Micro Computer. Although interest in rival Dell has increased due to the Blackwell situation, the deployment advantages and quick adoption of DLC server solutions by Super Micro have allowed it to scale capacity for the arrival of the latest chip. This is important given the CapEx committed by big tech and hyperscalers in their bid to maintain generative AI leadership.
Keeping in view the bigger picture, Barclays analyst George Wang recently lowered the price target on Super Micro Computer, Inc. (NASDAQ:SMCI) to $693 from $1,000 and kept an Overweight rating on the shares. In an investor note, the analyst pointed out that the company had delivered a strong revenue guide for fiscal 2025, indicating strong demand, though gross margin came in below estimates due to initial production costs on DLC racks and customer mix.
5. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 165
Alphabet Inc. (NASDAQ:GOOG) is a California-based technology company that owns and runs the internet search engine Google. Latest reports suggest that the company has signed an agreement with authorities in Australia to develop novel AI-powered tools for automated vulnerability scanners and data protocols which can quickly identify and assess the impact of open source vulnerabilities on the software supply chains of Australian critical infrastructure operators. Under the deal, Google Cloud will provide infrastructure and solutions, including machine learning and Big Data capabilities, plus domain specific large language models, to accelerate research and translate it into tools or as-a-service offerings. Alphabet plans to spend more than $670 million in Australia till 2026.
As media reports indicate that the Department of Justice in the US might pursue a breakup of Alphabet Inc. (NASDAQ:GOOG), prominent Wall Street analyst Daniel Ives, who works at Wedbush, has said that such a development would be a stretch with Google likely to appeal the rulings which might be in the court system for years. He said investors should not expect any disruption to the near-term operations of the firm. However, he cautioned that the business model tweaks and heavier scrutiny of mergers and acquisitions will be front and center for big tech in the coming months.
4. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 219
Meta Platforms, Inc. (NASDAQ:META) engages in the development of products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide. The firm has taken a different approach than other tech giants when it comes to AI, choosing to open source the large language model it has developed, unlike Google and Microsoft. This is largely because the firm plans to use the generative AI potential to enhance the advertisement market. Meta just recently overtook Google in digital ad market share and now plans to beat Amazon in the ad domain as well. Under this plan, the firm is also investing heavily in AI infrastructure build.
This aggressive AI strategy has caught the attention of market experts on Wall Street. Investment advisory Tigress Financial has a Strong Buy rating on Meta Platforms, Inc. (NASDAQ:META). In a recent investor note, the advisory highlighted that the cash flow of the tech giant was enabling ongoing investments in artificial intelligence initiatives that would drive user engagement, better content, and a more effective advertising experience.
3. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) operates as a technology conglomerate with core interests in the ecommerce business. Latest reports indicate that the company has signed a deal to purchase Perceive Corporation from California-based technology firm Xperi. Perceive is the developer of Ergo, an AI processor that focuses on delivering edge inference solutions. The move is part of a wider plan by Amazon to invest in AI chips, like competitors Google and Apple. The deal is worth around $80 million and includes specific clauses that prevent Xperi and Perceive from engaging in certain business activities for three years after the purchase. Under the terms of the deal, employees from the newly purchased firm would join the ecommerce giant after the sale goes through.
Amazon.com, Inc. (NASDAQ:AMZN) might be a bit behind other tech giants when it comes to incorporating AI into products, but Wall Street still considers it a top idea in the growth space. For example, investment advisory Seaport Research has a Buy rating on the shares with a price target of $200. In a recent investor note, the advisory underlined that while second quarter results and guidance were somewhat mixed for the company, the steady ecommerce growth, cloud leadership and advertising momentum were driving optimism around the shares.
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 184
Apple Inc. (NASDAQ:AAPL) is a consumer electronics firm. The buzz surrounding Apple on Wall Street these days is not related to artificial intelligence, but rather the sale of Apple stock by Wall Street legend Warren Buffett. Even as the firm prepares to debut new M4 processors and Apple Intelligence, hardware and software specifically designed for AI tasks, the Buffett sale has overshadowed the upcoming annual Apple event. Buffett reduced his stake in the firm by half during the second quarter of 2024, latest 13F filings reveal. The timing of this move seems questionable, since Apple continues to show strong iPhone shipments and has the most AI-enabled PC portfolio in the global market.
When it comes to Apple Inc. (NASDAQ:AAPL), even Wall Street analysts seem to be at odds with Buffett. Investment advisory Loop Capital has a Buy rating on the shares with a price target of $300, implying upside potential of a handsome 32%. In a recent investor note, data cited by Loop Capital supply chain analyst John Donovan suggested that iPhone shipments for the September quarter were above market expectations.
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. The company is famous for the graphic processing units (GPUs) it markets. These GPUs are capable of handling complex computational tasks that AI softwares demand, thus the claim to fame. The firm has been investing in AI-specific chips, a more AI-focused version of GPUs, since 2012. The GPU business has been making the waves since 2017, when the company launched Volta, a chip that could speed up performance by five times versus competitors. Various successors to Volta have since been released, most notably Ampere in 2020, Hopper in 2022, and the latest Blackwell, reportedly releasing early next year.
NVIDIA Corporation (NASDAQ:NVDA) also has a sizable networking portfolio that will serve the company in good stead as AI infrastructure investment takes off. Ahead of the third quarter earnings report of the firm, expected next week, Wall Street analysts are bullish on the shares. Goldman Sachs has a Buy rating on the stock with a price target of $135. In a recent investor note, the advisory noted that the setup for NVIDIA was constructive with a compelling risk/reward on potential for positive earnings revisions.
While we acknowledge the potential of NVIDIA Corporation (NASDAQ:NVDA) 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 NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Michael Burry Is Selling These Stocks and Jim Cramer is Recommending These Stocks.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. You can also look at the 13 High Growth Semiconductor Stocks That Are Profitable in 2024 and the 11 Best AI Penny Stocks to Invest in Now.
