In this article, we discuss the 16 trending AI stocks on latest analyst ratings and news.
In recent months, the AI industry has been presenting explosive opportunities in the development and deployment of AI infrastructure. Companies that provide AI chips, cloud services, and data storage solutions are poised to benefit from the growing demand for AI capabilities. For example, NVIDIA, a leading provider of AI chips, has seen the shares rally by 160% in 2024, driven by the increasing need for powerful processing capabilities in AI applications. Similarly, cloud service providers like Amazon Web Services and Microsoft Azure are seeing a surge in demand for their AI and machine learning services, making them attractive options for investors.
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.
However, in this buzz around the new tech, investors should also stop and consider some of the risks and challenges associated with AI. Regulatory scrutiny on AI firms is intensifying, particularly around issues of data privacy, algorithmic bias, and the ethical use of AI. Governments worldwide are beginning to implement regulations that could impact how AI technologies are developed and deployed. For instance, the European Union has proposed an AI Act that seeks to create a regulatory framework that addresses the risks associated with AI while promoting innovation. This regulatory environment could lead to increased compliance costs and slower adoption rates in certain sectors, posing a potential risk for investors.
Another critical consideration for investors is the talent shortage in the AI industry. The demand for skilled AI professionals far outstrips supply, leading to fierce competition among companies for top talent. This talent gap could slow down the development and deployment of AI technologies, particularly in smaller companies that may not have the resources to compete with tech giants like Google and Microsoft for talent. Despite these challenges, the overall outlook for the AI industry remains highly positive. The continuous advancements in AI technologies, coupled with their increasing integration into various sectors, provide a strong foundation for future growth.
Read more about these developments by accessing Billionaire Stan Druckenmiller Is Betting On AI Infrastructure, Tobacco and Industrial Stocks and 10 Tech Stocks to Monitor Amid Market Volatility According to Bernstein Analyst.
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).
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Trending AI Stocks on Latest Analyst Ratings and News
16. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 75
Intel Corporation (NASDAQ:INTC) markets key technologies for smart devices. Media reports indicate that a member of the board of directors of the firm left their position earlier this month over concerns about a revival plan that was moving too slowly. Per the reports, the member was frustrated with the progress on AI strategy and the large workforce, when compared to competitors. Earlier this month, the company had announced that it was cutting 15% of the 125,000 strong-workforce and suspended dividend in an effort to cut spending and streamline the company. For comparisons, Intel rivals like NVIDIA and AMD, both of whom have more compelling AI growth stories, have around 30,000 to 40,000 employees.
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.
15. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 78
QUALCOMM Incorporated (NASDAQ:QCOM) develops and sells foundational technologies for the wireless industry. The company recently revealed that it would be purchasing 4G Internet of Things technologies from Sequans Communications, including certain employees, assets and licenses. The acquisition aims to bolster the Industrial IoT portfolio of the chipmaker, offering low-power solutions for reliable and optimized cellular connectivity for IoT applications. Paris-based Sequans — which develops cellular semiconductor solutions for IoT markets — will retain license of the 4G IoT technology for ongoing use and will continue to serve IoT markets.
QUALCOMM Incorporated (NASDAQ:QCOM) is attracting the attention of analysts on Wall Street. Rosenblatt recently raised the price target on the shares to $250 from $240 and kept a Buy rating, noting that the company was taking market share in premium Android handsets, Automotive cockpit, and the PC and the next phase of AI growth was at the network edge, where the company was well positioned.
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, one of the most prominent in the chip space, has historically performed better than peers in terms of financials. Over the past decade, the revenue of the company has increased by nearly 350%. Consensus revenue estimates suggest continued growth for this metric, with revenue projected to increase from around $27 billion in fiscal 2024 to over $37 billion in fiscal 2028. There is plenty of potential for further acceleration due to the AI revolution.
Applied Materials, Inc. (NASDAQ:AMAT) is one of the most followed stocks on Wall Street. JPMorgan analyst Harlan Sur recently raised the price target on the shares to $250 from $240 and kept an Overweight rating, noting that the company reported solid July quarter results driven by accelerating demand in advanced foundry/logic, DRAM, high bandwidth memory and ICAPs combined with sustained strength in services. The analyst further added that the company was well positioned to benefit from multiple upcoming technology inflections that should drive continued outperformance versus wafer fab equipment over the next several years.
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 stock has rallied this year due to increased demand for data center infrastructure components, even surpassing the performance of AI powerhouse NVIDIA. The success of the firm in this area is related to the full stack of supply chain and manufacturing services it offers to clients, some of which are Meta Platforms and Amazon. The valuation of the stock indicates strong upside potential. The stock has a 20x forward P/E, and the valuation points to at least 26% upside from current levels.
Celestica Inc. (NYSE:CLS) is attracting bull calls from Wall Street. Canaccord analyst Robert Young recently raised the price target on the stock to $70 from $53 and kept a Buy rating, noting that the company reported another strong quarter with Q2 results ahead of consensus on all metrics. The analyst added that in addition to a strong Q3 outlook, guidance for the next fiscal year was raised across the board.
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. The company is spending upwards of $30 billion on AI-related capex this year. For investors who follow the firm, this kind of spending is historically associated with higher growth opportunities for the chip maker in the following years. In the coming months, the firm expects strong AI-related demand underpinned by the industry megatrend of AI, HPC, and 5G. The AI chips being made by the firm are being used on devices made by leading firms like Apple and Samsung.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a Wall Street darling. JPMorgan recently raised the price target on the stock to NT$1,200 from NT$1,080 and kept an Overweight rating, highlighting that the company was now firmly on course to improve margins in the next few years, with continued strong demand for artificial intelligence acting as an accelerator.
