The AI Boom in Big Tech is showing no signs of slowing down any time soon. This past week, artificial intelligence was the key focus for the Big Five, which together are valued at more than $10 trillion. The reporting season not only highlighted the push these big tech companies are making in AI investments but also demonstrated that they aren’t afraid to take it up any further than they already have. Previously, concerns regarding the returns from substantial AI investments had led to negative investor sentiment and even triggered a sell-off in major AI plays. However, some results are demonstrating that AI investments may be worth the wait.
READ ALSO: Top 10 Trending AI Stocks to Watch in November and Top 10 Trending AI Stocks in Q4.
“The AI theme is intact if you’re the mega caps,” as companies show that they can monetize their investments while maintaining existing profitability. As long as that infrastructure continues to be built, then we continue to be in a good place for the broader AI trade”.
– Deepwater Asset Management’s Gene Munster.
That said, executives of the major AI plays have fair-warned that their AI splurges will continue next year. Tech giants are racing to secure high-end chips and build sprawling data centers, forging partnerships with energy providers and much more. Each company wants to prove to Wall Street that these investments will eventually lead to greater profitability as compared to their current businesses.
Ray Wang, principal analyst and founder at Constellation Research, believes that only a handful of technology names will be able to come out at the top, especially considering the high costs related to AI. This makes the situation quite favorable for well-capitalized companies.
The Latest Developments in AI
As companies ramp up their spending on AI, let’s take a closer look at how other AI players are advancing to make headlines. For starters, Perplexity, an AI conversational search engine that uses large language models to answer queries, has announced a dedicated hub for US general election information. Even though the AI-powered search engine has been seen to hallucinate from time to time, the company is keen on showing its trustworthiness when it comes to tracking election results.
“Starting Tuesday, we’ll be offering live updates on elections by leveraging data from The Associated Press so you can stay informed on presidential, senate, and house races at both a state and national level. Thank you to Democracy Works for granting us access to your Elections API to help power these experiences.”
-Perplexity.
The company’s election hub provides answers to election-related questions, as well as AI-generated analyses on ballot measures, policy stances, candidates, and endorsements.
In other news, Noma Security, a stealth mode startup specializing in Enterprise, Cyber Security, and Artificial Intelligence, is said to be developing tools to identify vulnerable data pipelines and code in data science environments, as well as threats like prompt injection attacks.
“Existing tools are designed for the traditional software lifecycle. However, the data and AI lifecycle is inherently different. It involves distinct R&D processes, relies on different technologies, and faces unique technical vulnerabilities within AI models.”
– CEO Niv Braun
Talking about the AI pioneer OpenAI, reports from Bloomberg state that the company is in talks with California’s attorney general’s office about the process of becoming a for-profit entity. While a shift to being a for-profit company would mark a drastic reversal in the governance structure for the company, the move would also make the firm more attractive to investors.
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.
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).
A team of reporters in a newsroom, gathering the latest news for broadcast.
15. Navitas Semiconductor Corporation (NASDAQ:NVTS)
Number of Hedge Fund Holders: 15
Navitas Semiconductor Corporation (NASDAQ:NVTS) is considered the industry leader in next-generation GaNFast™ gallium nitride (GaN) and GeneSiC™ silicon carbide (SiC) power semiconductors, known for their power efficiency, reduced size and weight, and lower overall cost. This emerging player in the AI landscape has been developing system designs to support the exponential growth in AI power demand.
Navitas Semiconductor Corporation (NASDAQ:NVTS) will be showcasing its latest innovations at the 2024 China Power Electronics and Energy Conversion Conference and the 27th Annual Academic Conference and Exhibition of the China Power Supply Society (CPEEC & CPSSC 2024), to be held in Xi’an from November 8th – 11th, 2024. Visitors will be able to explore Navitas Semiconductor Corporation’s (NASDAQ:NVTS) groundbreaking semiconductor innovations at the conference, from the world’s first 8.5kW power supply for AI data centers to their patented digital control called “‘IntelliWeave”. IntelliWeave is a new digital control technique for improving next-generation AI data center power supply (PSU) efficiency. Other developments, such as their 6.6kW EV charger, together will make for a compelling showcase at the event.
14. Cohu, Inc. (NASDAQ:COHU)
Number of Hedge Fund Holders: 16
Cohu, Inc. (NASDAQ:COHU) is a global technology leader that provides semiconductor test equipment and services in China, the United States, Taiwan, Malaysia, the Philippines, and internationally. The company is a key player in semiconductor manufacturing services.
On October 31, Cohu, Inc. (NASDAQ:COHU) announced that it had secured an initial order from one of the world’s top semiconductor memory manufacturers. A leading U.S. memory and data storage technologies customer has selected its Neon platform for inspection metrology of high bandwidth memory devices (HBM) used in high-performance computing (HPC) and generative artificial intelligence (AI) applications.
Neon offers an efficient vision system providing comprehensive 6-sided optical inspection and measurement of micro-pillars, facilitating integration with factory automation as well as an effective output sorting process for meeting current and future needs in the high-bandwidth memory (HBM) market. Cohu’s vision technology enhances accuracy and reliability in measuring these thousands of micro-pillars on HBM devices, while the AI inspection software employs deep learning and neural networks for improved inspection yield.
“We are pleased to have received an initial order from one of the world’s leading semiconductor memory manufacturers to improve quality of HBM memory used in AI data centers. This is a new market application for Cohu products, and it represents a strategic and substantial growth opportunity aligned with secular growth in artificial intelligence”.
– Luis Müller, Cohu President and CEO.
13. GlobalFoundries Inc. (NASDAQ:GFS)
Number of Hedge Fund Holders: 21
GlobalFoundries Inc. (NASDAQ:GFS) is a multinational semiconductor contract manufacturing and design company. It is one of the largest foundries in the world. Being a key semiconductor manufacturing and design player, it provides advanced chips for powering AI technologies and applications.
On Friday, November 1st, Reuters reported that the US has imposed a $500,000 penalty on GlobalFoundries Inc. (NASDAQ:GFS), the world’s third largest contract chipmaker, as it had been shipping chips without authorization to an affiliate of blacklisted Chinese chipmaker SMIC. The Commerce Department said GlobalFoundries Inc. (NASDAQ:GFS) sent 74 shipments without seeking a license worth $17.1 million to SJ Semiconductor, an affiliate of SMIC. In 2020, both SMIC and SJ Semiconductor were added to a trade restriction list known as the entity list owing to SMIC’s alleged ties to the Chinese military-industrial complex. SMIC has denied any wrongdoing. The department said that exports to firms on the list require a license that’s difficult to obtain, and which GlobalFoundries did not apply for.
“We want U.S. companies to be hypervigilant when sending semiconductor materials to Chinese parties”.
-Assistant Secretary for Export Enforcement Matthew Axelrod.
12. FormFactor, Inc. (NASDAQ:FORM)
Number of Hedge Fund Holders: 28
FormFactor, Inc. (NASDAQ:FORM) is a provider of test and measurement technologies for the semiconductor industry. It is a top supplier of semiconductor probe cards that are used for testing AI chips.
On October 31, Needham lowered the firm’s price target on FormFactor, Inc. (NASDAQ:FORM) to $52 from $60 and kept a “Buy” rating on the shares. According to the analyst, the company reported a solid Q3 result. However, Q4 guidance was below consensus, citing demand tied to consumer electronics such as PCs and smartphones growing weaker into Q4. Nevertheless, the firm adds that DRAM probe card revenue is expected to grow to a new record next quarter, with High Bandwidth Memory revenue expected to rebound after a temporary pull-back in Q3.
11. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 44
Palantir Technologies Inc. (NYSE:PLTR) is a software company that builds the world’s leading platforms for data-driven operations and decision-making. The company is recognized as a leader in artificial intelligence and machine learning (AI/ML) software platforms.
Palantir Technologies Inc. (NYSE:PLTR) shares have more than doubled so far this year, driven by the surge in demand for its artificial intelligence platform. It released its Q3 earnings report on Monday, November 4th, raising its annual revenue forecast for the third time. The annual revenue forecast rise is driven by strong government spending and increased demand from businesses adopting generative AI technology. It now expects 2024 revenue in a range of $2.805 billion to $2.809 billion, up from its prior expectation of $2.742 billion to $2.750 billion.
“Top line growth, which is driven by the demand for AI, (is) flowing through to the bottom line”.
-CFO David Glazer told Reuters.
10. Twilio Inc. (NYSE:TWLO)
Number of Hedge Fund Holders: 54
Twilio Inc. (NYSE:TWLO) is a leading cloud communications platform-as-a-service (CPaaS) company offering customer engagement platform solutions. Its all-in-one platform combines powerful channel APIs with AI and data, helping them serve each customer uniquely.
On October 31, Barclays raised the firm’s price target on Twilio Inc. (NYSE:TWLO) to $80 from $65 and kept an “Equal Weight” rating on the shares following the Q3 report. The recent upgrade highlights confidence in the company’s potential in Artificial Intelligence for improving communication solutions. AI-driven communication solutions will help increase usage as customers build Rich Communication Services (RCS) or voice AI applications using Twilio’s APIs, likely to drive greater volume for the company. Even the CEO of Twilio Inc. (NYSE:TWLO) is hopeful of the role of AI in driving better customer experiences:
“Twilio is uniquely positioned to bring the power of communications, plus contextual data, plus AI together to drive better customer experiences. Our continued product innovation and the outsized outcomes that we are delivering for customers illustrates our ability to be a winner in the age of AI.”
-Khozema Shipchandler, CEO of Twilio
9. Arista Networks, Inc. (NYSE:ANET)
Number of Hedge Fund Holders: 65
Arista Networks, Inc. (NYSE:ANET) is an American computer networking company engaged in the development, marketing, and sale of cloud networking solutions. The company’s products are especially relevant for hyperscalers who are ramping up their data center infrastructure to scale their cloud computing capabilities.
On November 1st, Meta Marshall from Morgan Stanley maintained a “Buy” rating on Arista Networks with a price target of $410.00. The analyst rating is derived from a number of factors that highlight the company’s potential for growth. Even though the company’s upcoming quarterly report demonstrates a lack of catalysts, the company maintains a strong position due to its conservative management and long-term opportunities in the networking sector, which is particularly appealing in a volatile market environment.
Moreover, while there is no change in the 2025 guidance or even in AI revenue targets, positive remarks in these areas could act as a catalyst for stock appreciation. There is an anticipation of a top-line beat in the upcoming earnings report signifying a potential recovery from recent stock declines, combined with the company’s advancements in AI trials, supporting the Buy rating.
8. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Holders: 66
Palo Alto Networks, Inc. (NASDAQ:PANW) is an American multinational cybersecurity company offering security solutions for all apps, users, and devices. Being one of the largest providers of cybersecurity software, it leverages artificial intelligence, such as Precision AI, Palo Alto Networks’ proprietary AI system, to detect and mediate threats in an AI-first world.
On October 31, TipRanks reported that Cantor Fitzgerald assumed coverage of Palo Alto Networks, Inc. (NASDAQ:PANW) with an “Overweight rating” and raised the price target to $415 from $400. According to the analyst, several online sources have reported that Palo Alto has been awarded a five-year $996M deal with the Department of Defense through U.S. federal distributor Carahsoft. The firm strongly believes in the company’s platform.
7. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 75
Intel Corporation (NASDAQ:INTC) is an American multinational corporation and technology company that designs and develops technology products and components. Once a very important chip company, Intel’s position has faced challenges in recent years. Currently, it leverages artificial intelligence across hardware, software, process, packaging, security, and manufacturing and foundry services.
On Friday, November 1, Moor Insights & Strategy CEO, founder, and chief analyst Patrick Moorhead joined Market Domination Overtime to analyze Intel Corporation’s (NASDAQ:INTC) Q3 results. The company reported an adjusted loss per share of $0.43, while revenue reached $13.28 billion, exceeding estimates of $13.02 billion. When asked how the report sets up the next phase of Intel, especially its positioning in the chip sector, Moorhead signified that 2025-26 is going to be the “ultimate proving ground” for Intel. He highlighted that the company will introduce the latest nodes and devices offering improved performance at lower costs.
He also stated that you are going to truly see the capabilities on the CPU side. Moreover, in 2025, Intel will bring out a new data center AI GPU. The company has a data center accelerator very similar to the ones that the hyperscalers are producing. He further said that in a chip company, turnaround takes around 5 years and we are almost into the fifth year under the leadership of Patrick Gelsinger. Even though the stock has been “disrespected”, it is setting the ground for the ultimate showdown with AMD in 2025 and the first half of 2026.
6. Dell Technologies Inc. (NYSE:DELL)
Number of Hedge Fund Holders: 88
Dell Technologies Inc. (NYSE:DELL) is an American multinational technology company that designs, develops, manufactures, markets, sells, and supports a wide range of comprehensive and integrated solutions, products, and services. The company offers the hardware and infrastructure that support the deployment and scalability of AI applications across various industries.
On November 1, CRN reported that the Dell PowerMax and Dell PowerScale have gotten big AI upgrades. The newest upgrades to the PowerMax storage arrays give partners faster and more efficient input and output rates, three times faster connectivity through ethernet, and the ability to back up a petabyte worth of data per day. Moreover, it also introduces 92 percent RAID efficiency to optimize overall storage and industry-leading power and environmental monitoring capabilities.
Varun Chhabra, senior vice president of product marketing at Dell Technologies, said the company has embedded AI into the product to make alerting easier, learn the customer’s workload, and then adjust its health checks and thresholds accordingly.
“There’s no other vendor in the world that has the capabilities across storage, servers or storage, compute, networking, client, PCs, data protection, etc., etc., that Dell has. And as AI is deployed, and how AI is deployed, and where it’s deployed continues to evolve. We think this is going to be a big differentiator for our customers.”
– Varun Chhabra, senior vice president of product marketing at Dell Technologies.
5. Salesforce Inc (NYSE:CRM)
Number of Hedge Fund Holders: 117
Salesforce Inc (NYSE:CRM) is an enterprise cloud computing solutions provider engaged in the design and development of cloud-based enterprise software. The company offers AI solutions that deliver autonomous, generative, and predictive capabilities built directly into one’s CRM (Customer Relationship Management) software. Its recent innovation in AI technology is Agentforce, an AI development platform that allows organizations to create, customize, and deploy intelligent agents.
On November 4, Evercore ISI raised the firm’s price target on Salesforce Inc (NYSE:CRM) to $400 from $300 and kept an “Outperform” rating on the shares. The firm expects Salesforce’s Agentforce to modestly drive revenue acceleration in the years 2025 and 2026, even with cautious assumptions regarding its adoption. Focusing on 2026 projections, the firm also states that in the case that Agentforce gains traction and cost control remains strong, it could surpass cash flow expectations and potentially drive up the stock price.
4. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 130
Broadcom Inc. (NASDAQ:AVGO) is an American technology company that designs, develops, and supplies semiconductor and infrastructure software solutions. This AI chip play is one of the leading players designing chips for companies that are building AI data centers.
On November 5th, Broadcom Inc. (NASDAQ:AVGO) announced major innovations, services, and partnerships aimed at accelerating and optimizing enterprise AI workloads. The company has introduced “VeloRAIN”, a new AI-powered networking architecture, along with two high-performance edge appliances and even a partner program called Titan that will support enterprise AI workloads beyond data centers.
“VeloRAIN is the foundation of our AI networking innovation, empowering our entire portfolio to better address the demands of enterprise AI workloads. By harnessing the advanced capabilities of VeloRAIN, AI workloads from distributed inferencing and agentic peer-to-peer applications to upstream heavy RAG transactions will see improved application-based QoE and security across all endpoints of the enterprise. We look forward to collaborating with our global partner ecosystem via Titan, our new partner program to provide more enterprises with the next generation of infrastructure necessary to support such current and future AI workloads.”
– Sanjay Uppal, vice president and general manager, VeloCloud Division, Broadcom.
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) designs the most advanced chips, systems, and software for the AI factories of the future.
On Monday, November 4th, SK Group Chairman Chey Tae-won said that NVIDIA Corporation (NASDAQ:NVDA) CEO Jensen Huang had asked memory chip maker SK Hynix to bring forward the supply of its next-generation high-bandwidth memory chips called HBM4 by six months. In October, SK Hynix aimed to supply chips to customers by the second half of 2025. As per an SK Hynix spokesperson, this timeline was faster than an initial target. Huang’s request reflects upon the increasing demand for higher capacity, energy-efficient chips used in Nvidia’s graphic processing units to develop AI technology. After all, the chip maker controls more than 80% of the global AI chip market. Meanwhile, SK Hynix has been leading the way in these advanced, high-performance HBM chips.
2. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 219
Meta Platforms, Inc. (NASDAQ:META) is an American social technology company that’s building the future of human connection and the technology that makes it possible. The company is a top AI player due to its strong AI ambitions and spending plans.
On November 4, D.A. Davidson reiterated Meta Platforms, Inc. (NASDAQ:META) as a “Buy”. The firm said that the stock, along with Amazon, is the biggest winner coming out of the earnings season.
Stephen Yiu, chief investment officer of Blue Whale Growth Fund, has similar views on the stock. He said that Meta stands out as the only stock in the Magnificent 7 group apart from Nvidia when it comes to artificial intelligence investments.
“We really think Meta could be a net winner on the back of this AI spending,”
-Yiu told CNBC’s Squawk Box Europe.
1. Amazon.com Inc (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon.com Inc (NASDAQ:AMZN) is one of the largest online retailers and technology providers offering e-commerce, cloud computing, and services such as digital streaming and artificial intelligence solutions.
On Friday, November 1, U.S. energy regulators rejected a request to increase the amount of power the Susquehanna nuclear plant in Pennsylvania can dispatch to an Amazon data center campus. As technology companies continue to push for directly powering artificial intelligence with nuclear plants, this news serves to be a major roadblock. Back in March, independent power producer Talen Energy sold the data center campus to Amazon for $650 million, which would be powered by the nuclear plant.
According to the Members of the Federal Energy Regulatory Commission, the agreement for increasing the capacity of the data center located on the site of Talen Energy’s Susquehanna nuclear-generating facility could raise power bills for the public and affect the grid’s reliability.
“Co-location arrangements of the type presented here present an array of complicated, nuanced and multifaceted issues, which collectively could have huge ramifications for both grid reliability and consumer costs”.
-FERC Commissioner Mark Christie
In a statement on Monday, November 4, Talen said FERC’s decision will have a “chilling effect on economic development in states such as Pennsylvania, Ohio, and New Jersey. The power company said it is evaluating its options with a “focus on commercial solutions.”
While we acknowledge the potential of AMZN 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 AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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