OpenAI, the AI startup of ChatGPT fame, recently urged the United States government and allies to come together to develop the AI infrastructure needed to compete with China. According to a report published by Bloomberg, the startup has said that the US and neighboring countries should form a North American Compact for AI that can streamline access to talent, financing and supply chains for building out the technology. The company further added this collaboration could later expand to include a global network of US allies and partners, including countries in the Middle East.
Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.
At an event hosted by the Center for Strategic and International Studies in Washington, the startup issued a new policy blueprint, saying that the US should backstop energy infrastructure projects by committing to purchase power from them. The company further urged the US to establish AI Economic Zones that speed up the permitting process and help bring nuclear reactors back online. It also proposed expanding nuclear energy capacity by tapping the US Navy, which has built compact reactors to power submarines. The company is already working with Microsoft to set up an AI fund needed to develop AI chips, energy and data centers.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.
For this article, we selected AI stocks by combing 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).
Stocks
15. Okta, Inc. (NASDAQ:OKTA)
Market Capitalization: $13 Billion
Okta, Inc. (NASDAQ:OKTA) owns and runs an identity management platform. One of the premier products of the firm is Identity Threat Protection, powered by Okta AI. Per the company, Okta AI is a mixture of machine learning and GenAI algorithms. The company is also working on a governance analyzer that suggests identity solutions for a company based on their policy setups. On November 12, Deutsche Bank analyst Brad Zelnick downgraded the stock to Hold from Buy with a price target of $85, down from $115. While not an explicit call on the company’s fiscal Q3 results, feedback on Okta has been more mixed of late and the path to realizing value may still be several quarters away, perhaps making it more interesting deeper into next year, the advisory told investors in a research note. Deutsche says that aside from the ongoing macro-driven seat and monthly active user headwinds, it found the compounding effects of its numerous breaches and competition are weighing on customer expansion and new logo acquisition. Accordingly, Deutsche believes Street estimates are likely too high for next year.
14. Super Micro Computer, Inc. (NASDAQ:SMCI)
Market Capitalization: $14 Billion
Super Micro Computer, Inc. (NASDAQ:SMCI) develops and manufactures high performance server and storage solutions based on modular and open architecture. On November 12, the company detailed in a filing with regulatory authorities that it would be unable to file the quarterly report on Form 10-Q for the period ended Sept 30 in a timely manner without unreasonable effort or expense. The firm further said that it also said it needed additional time to select and engage a new accounting firm and to prepare the Q1 2025 Form 10-Q.
13. GlobalFoundries Inc. (NASDAQ:GFS)
Market Capitalization: $23 Billion
GlobalFoundries Inc. (NASDAQ:GFS) provides a range of mainstream wafer fabrication services and technologies worldwide. On November 6, Susquehanna analyst Mehdi Hosseini lowered the price target on the stock to $48 from $50 and kept a Neutral rating on the shares. The advisory updated its estimates following its Q3 report and said consistent with the preview, there remain challenges into 1H25 as customer inventories remain elevated while also facing tough compares versus 2H24.
12. ON Semiconductor Corporation (NASDAQ:ON)
Market Capitalization: $29 Billion
ON Semiconductor Corporation (NASDAQ:ON) provides intelligent sensing and power solutions in the United States and internationally. The firm markets innovative power supply solutions used to power high-density servers that can handle the larger data loads and intense power consumption required to power many Gen-AI applications and tools. For example, the multiphase controllers of ON are able to accurately and quickly supply power to all server racks in AI data centers, making them more energy efficient compared to competitors. On November 11, Loop Capital analyst Gary Mobley initiated coverage of the stock with a Buy rating and $95 price target. The company has been a consensus short since late 2023 or once automotive tier-one names began bringing down days of inventory held amid a backdrop of flattening light vehicle production, the advisory told investors in a research note. While cyclical headwinds may limit ON’s bounce off the bottom, however, the advisory believes that investors should overweight stocks with high exposure to the automotive end market and overweight the companies exposed to the fastest growing automotive trends like powertrain electrification and AD/ADAS.
11. Vertiv Holdings Co (NYSE:VRT)
Market Capitalization: $47 Billion
Vertiv Holdings Co (NYSE:VRT) designs, manufactures, and services critical digital infrastructure technologies and life cycle services for data centers, communication networks, and commercial and industrial environments. On November 13, UBS initiated coverage of the stock with a Buy rating and $155 price target. The advisory forecasts 20% compounded annual earnings growth from 2024 to 2028, which is about double the peer average. Vertiv’s concentration in data centers makes it the clearest beneficiary of secular trends, the advisory tells investors in a research note. UBS estimates double digit market growth per annum and continuation of solid earnings conversion.
10. Cadence Design Systems, Inc. (NASDAQ:CDNS)
Market Capitalization: $84 Billion
Cadence Design Systems, Inc. (NASDAQ:CDNS) provides software, hardware, services, and reusable integrated circuit (IC) design blocks worldwide. On November 11, Loop Capital initiated coverage of the stock with a Buy rating and $360 price target. Semiconductor design companies represent miners for chip-design gold as some succeed while others fail to strike chip-design gold, the advisory told investors in a research note. Investment into EDA, or electronic design automation, and IP companies like CDNS is an ideal way to hedge against this trend in chip design redundancy, Loop added.
9. QUALCOMM Incorporated (NASDAQ:QCOM)
Market Capitalization: $185 Billion
QUALCOMM Incorporated (NASDAQ:QCOM) develops and sells foundational technologies for the wireless industry. On November 12, Cristiano Amon, the CEO of the firm, spoke at the Web Summit in Lisbon, playing down concerns about the impact of US-China tensions on the chip business. Amon said that the connections of his company and other companies with their Chinese counterparts could serve as a stabilizing factor in the US-China relationship. He also affirmed that the primary focus of his company remained whether it could make the best technology.
8. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Market Capitalization: $240 Billion
Advanced Micro Devices, Inc. (NASDAQ:AMD) operates as a semiconductor manufacturer. Latest reports, based on social media sources, and published by finance news platforms like Seeking Alpha and Wccftech, indicate that the company is planning to lay off nearly 4% of its global workforce. The move is widely seen as part of a larger plan to focus on growth opportunities as the chipmaker makes efforts to challenge the AI chip dominance of NVIDIA. A spokesperson for the company has confirmed the development to CRN as well.
7. ASML Holding N.V. (NASDAQ:ASML)
Market Capitalization: $268 Billion
ASML Holding N.V. (NASDAQ:ASML) makes and sells advanced semiconductor equipment systems. On November 12, investment advisory Bernstein penned an investor note on the US-China tensions over advanced chips, highlighting ASML as one of the stocks that could be caught in the crossfire. Bernstein analysts, led by David Dai, noted that there had been two major rounds of US restriction, in Oct. 2022 and Oct. 2023, but China’s WFE spending in 2024 was 60% higher than in 2022. Per Dai, depending on the specific measures of restriction, another round might not materially impact China’s overall purchase of WFE. The analysts added that if, and when, new WFE export restrictions to China were announced, it could present a buying opportunity for some chip stocks.
6. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Market Capitalization: $851 Billion
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) makes and sells integrated circuits and semiconductors. On November 13, Zhu Fenglian, a spokeswoman for the Taiwan Affairs Office in China, stated that a United States directive to TSM to block shipments of advanced chips to some Chinese clients demonstrated that the US was playing the Taiwan card in order to increase tensions in the Taiwan Straits. This is the first Chinese reaction to new US directives that have halted advanced AI chip exports to Chinese companies.
5. Meta Platforms, Inc. (NASDAQ:META)
Market Capitalization: $1.5 Trillion
Meta Platforms, Inc. (NASDAQ:META) engages in the development of products that enable people to connect and share with friends and family. Latest reports indicate that Instagram, one of the social media platforms owned by the company, has started rolling out a new feature that will allow users to create and personalize their profile pictures with the help of AI tools offered by the company. The reports come as Meta prepares to face trial in the US over allegations that it bought social media firms Instagram and WhatsApp to crush emerging competition. Meta, previously known as Facebook, bought Instagram in 2012 and WhatsApp in 2014.
4. Amazon.com, Inc. (NASDAQ:AMZN)
Market Capitalization: $2.1 Trillion
Amazon.com, Inc. (NASDAQ:AMZN) operates as a technology conglomerate with core interests in the ecommerce business. On November 12, the company announced that it would be investing nearly $110 million in a university research program named Build on Trainium. Trainium is the AI chip that Amazon has developed in-house. Under the program, Amazon Web Service has deployed 40,000 Trainium chips for university researchers. The initiative will provide compute hours that allow researchers the opportunity to build new AI architectures, machine learning libraries, and performance optimizations.
3. Alphabet Inc. (NASDAQ:GOOG)
Market Capitalization: $2.2 Trillion
Alphabet Inc. (NASDAQ:GOOG) is a California-based technology company that owns and runs the internet search engine Google. Latest reports, published by news platform Bloomberg, indicate that Gemini, a generative AI chatbot developed by Google, development has slowed down. Per the report, an upcoming iteration of the Gemini software is not living up to internal expectations, despite the tech giant spending a significant amount of money towards developing the tech behind the chatbot. One of the problems being faced by the company is the provision of new and high quality training data collected by humans.
2. Microsoft Corporation (NASDAQ:MSFT)
Market Capitalization: $3.1 Trillion
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based technology company. On November 13, Brad Smith, the president of the company, said at the sidelines of the Web Summit tech conference in Lisbon that in many ways, China was close to or catching up to the United States in terms of technology. The remarks come as the US tightens chip exports to China to slow down AI development in the Asian country. However, there have been rumors of a chip breakthrough in China despite US sanctions, evidenced by a recent Huawei chip in a smartphone that is capable of 5G download speeds. Smith urged the US and Europe to bring new advancements, like AI, to the rest of the world.
1. NVIDIA Corporation (NASDAQ:NVDA)
Market Capitalization: $3.6 Trillion
NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. On November 13, Citi raised the price target on the stock to $170 from $150 and kept a Buy rating on the shares ahead of the earnings report on November 20. The advisory models in-line October quarter sales. It lifted its January quarter data center sales to include $3 billion – $4 billion of Blackwell sales saying Nvidia has resolved the Blackwell mask issues but remains supply constrained.
While we acknowledge the potential of 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 NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
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.
