In this article, we discuss the 17 trending AI stocks according to latest news and analyst ratings.
One of the biggest breakthroughs of artificial intelligence in the past few years has been the advances in natural language processing. These AI models in language are now making their way into the business world and the society at large. Over a course of the next decade, informed estimates by investment advisors at Goldman Sachs indicate that these AI tools could drive a 7% increase in global GDP, worth nearly $7 trillion, and lift productivity growth by 1.5 percentage points overall. Expert economists Joseph Briggs and Devesh Kodnani recently wrote in a report that the ability of AI tools to generate content that is indistinguishable from human-created output and to break down communication barriers between humans and machines reflects a major advancement with potentially large macroeconomic effects.
Some of these macro factors are more discernible in the form of numbers. A recent study on artificial intelligence by Stanford University in the United States reveals that businesses are already outpacing academics when it comes to training AI models. For example, in 2023, the AI industry was able to train nearly 51 notable machine learning models (read more about these firms by accessing 33 Most Important AI Companies You Should Pay Attention To) compared to just 15 for academia. This happened despite the costs associated with training models rising. For instance, ChatGPT 4, the latest iteration of the popular ChatGPT that launched the AI wave back in late 2022, cost nearly $80 million to train. Similarly, Gemini Ultra, an AI tool developed by Google, cost $191 million to compute. The number of AI patents is also increasing, evidenced by the fact that since 2010, the number of granted AI patents has increased more than 31 times.
This exciting phase in the world of technology has ushered in a new boom for the world economy, previously plagued by inflation concerns, geopolitical conflicts, and stagnating demand figures. The bullish sentiment on AI needs to be balanced with caution. In the long run, investors should prepare themselves for significant changes to how the world works as AI could automate nearly 300 million jobs. In previous cycles of automation, new jobs and opportunities have risen to replace this. Recognizing these opportunities (read more about them by accessing 20 Industrial Stocks Already Riding the AI Wave) ahead of the time could go a long way towards balancing the risk profiles of growth-heavy portfolios. Recent research suggests that 60% of the workforce presently was occupied in positions that did not exist just half a century ago, lending credence to claims that over 80% of employment growth since the time can be explained by tech-driven innovation.
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).
A technician installing a complex of microcontrollers and internet of things devices inside a server rack.
Trending AI Stocks According to Latest News And Analyst Ratings
17. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 96
Oracle Corporation (NYSE:ORCL) offers products and services that address enterprise information technology environments worldwide. The company has not been in the AI spotlight on Wall Street over the past few months, but is emerging as a strong AI play in light of recent developments. The management expects revenue growth to climb from 3% to double digits within a year, driven by a string of AI-related deals in the past few weeks. One of these deals is with OpenAI, a California-based AI firm that launched the AI wave back in late 2022 with the launch of ChatGPT. The firm is also undervalued compared to tech peers, with a PE Ratio of just around 22. The stock has jumped nearly 30% year-to-date.
Even though a recent $10 billion AI server deal between xAI, owned by Tesla chief Elon Musk, and Oracle Corporation (NYSE:ORCL) has apparently collapsed, Jefferies analyst Brent Thrill has reiterated a Buy rating on the stock with a price target of $150, noting that the company continued to witness exceedingly strong demand with the pipeline growing faster than bookings and revenue. The analyst also backed the firm to track towards $65 billion in revenue by 2026.
16. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 78
QUALCOMM Incorporated (NASDAQ:QCOM) develops and sells foundational technologies for the wireless industry. Even though the smartphone market, one of the top earners for the firm, has remained soft so far this year, the third fiscal quarter results of the firm and guidance for the fourth quarter managed to top analyst estimates. In the first quarter of the next fiscal year, the company expects revenue growth to be around 5%, although this number could trend higher as AI-powered smartphones and PCs rebound. The firm is famous for providing consumer electronics firm Apple with the chips needed to power their handheld devices. This agreement between the two firms was extended until 2026 at the back end of last year.
This partnership with Apple is one of the reasons why analysts remain bullish on QUALCOMM Incorporated (NASDAQ:QCOM). Investment advisory Baird recently maintained an Outperform rating on the shares and increased the price target to $250 from $200, noting that the firm could provide more than 90 million units for the upcoming iPhone 16, deliver above-average shipments for AI PCs, and sell important components with a double-digit increase in prices during the second half of this year.
15. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Holders: 85
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. The company has emerged as a power leader in the AI space over the past few months. The investments in AI data centers have led to a surge in demand for power. Graphic processing units (GPUs) sit at the core of this demand. These units use two or three times more power than traditional central processing units (CPUs) and are needed for AI data center computations. Some estimates place the estimated power usage of data centers in the US to climb 50% as a result of investments in AI over the coming months. The power firm aims to provide electricity and boost business during this time.
This bullish view on AI data center power consumption by Vertiv Holdings Co (NYSE:VRT) is shared by analysts at Mizuho. The investment advisory recently upgraded the stock to Outperform from Neutral and lowered the price target to $92 from $95, underlining that the maker of power and cooling systems for data centers was poised to become more valuable with improved operations and the shares were attractively valued based on a price-to-earnings growth basis.
14. Dell Technologies Inc. (NYSE:DELL)
Number of Hedge Fund Holders: 82
Dell Technologies Inc. (NYSE:DELL) designs, develops, manufactures, markets, sells, and supports various comprehensive and integrated solutions, products, and services. The firm has been a market leader in memory and storage solutions. As tech giants invest in AI data centers, memory remains a key link connecting AI hardware to AI software. The firm has inked several partnerships with AI firms to cash in on the AI chip demand. One of the notable ones is the agreement with GPU powerhouse NVIDIA under which the two firms will work together to develop the Grok chatbot of xAI, an AI firm owned by Tesla chief Elon Musk. Musk has also revealed that his AI company will use Dell hardware to build a new supercomputer.
Even though enterprise server and storage businesses fail to impress, analysts on Wall Street have been forced to reckon with the AI power of Dell Technologies Inc. (NYSE:DELL). Barclays analyst Tim Long recently upgraded the stock to Equal Weight from Underweight with a price target of $97, commenting that while AI servers carry lower gross margins than traditional servers, AI should still benefit the overall top-line growth of the hardware firm.
13. ASML Holding N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders: 75
ASML Holding N.V. (NASDAQ:ASML) makes and sells advanced semiconductor equipment systems. One of the most famous customers of the firm is Taiwan Semiconductor Manufacturing Company, the leading chipmaker in the world. This partnership had helped the shares climb this year as the AI craze led to a rise in demand for high-end chips. However, reports that the US government was considering curbs on chip exports to China had led to a downward turn for the stock. Latest rumors from Washington indicate that this export ban would extend to US allies, but exempt firms working in Japan, South Korea, and the Netherlands. ASML Holding is based in Veldhoven, Netherlands.
Following the new developments, ASML Holding N.V. (NASDAQ: ASML) has earned a confidence boost on Wall Street, with Bank of America analyst Didier Scemama reiterating a Buy rating with a price target of €1,302, noting that the company remained irreplaceable in the buildout of AI infrastructure, with all AI processors and DRAM companies using EUV technology marketed by the firm to manufacture their chips.
12. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 79
Applied Materials, Inc. (NASDAQ:AMAT) provides equipment, services, and software for the semiconductor industry. The firm is important to companies that manufacture AI chips and those that are increasing their capex to improve chip making to keep up with rising demand. Some of the major names associated with Applied Materials in this regard include Taiwan Semiconductor Manufacturing, Intel, and NVIDIA. Latest reports suggest that companies in the US will spend nearly $1 trillion to build AI infrastructure in the coming years. A large portion of this spend will go towards chipmakers mentioned above. Applied Materials, which provides tools to these chipmakers, will witness a boom in business.
Stifel analysts Brian Chin and Denis Pyatchanin agree with this assessment and recently reiterated a Buy rating on Applied Materials, Inc. (NASDAQ:AMAT) stock and increased the price target to $275, highlighting that the firm was well on track to establish higher peak revenue and profitability through the ensuing upcycle, and warranted a higher multiple as it demonstrated improving financial performance, in particular during the downturn.
11. MicroStrategy Incorporated (NASDAQ:MSTR)
Number of Hedge Fund Holders: 22
MicroStrategy Incorporated (NASDAQ:MSTR) provides analytics software and services. The company has remained relevant on the news and among Wall Street analysts due to the big bets it had made on cryptocurrency Bitcoin. It is also a favorite among retail traders who bet on high growth targets like the firm and keep it among the trending stocks online. However, the AI offerings of the firm should also be discussed. In addition to unveiling a host of AI software offerings last year, at the height of the AI craze, the company recently released a new customizable AI bot called Auto. The new bot lets customers of the firm interact with the data analytic offerings of MicroStrategy through the use of natural language.
Wall Street analysts are optimistic about the new developments, with Mark Palmer at Benchmark rating MicroStrategy Incorporated (NASDAQ:MSTR) stock as a Buy with a price target of $215, up from $187.5 previously. Per Palmer, the strategic moves of the analytics firm in Bitcoin as well as AI over the past few months influenced the Buy recommendation.
10. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 135
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) makes and sells integrated circuits and semiconductors. These chips are used by some of the biggest technology companies in the world, including Apple, NVIDIA, and Advanced Micro Devices, among others. The Taiwan-based firm has benefited from the AI boom, with the demand for the products it markets rising rapidly. One such indicator of this is the latest revenue figures released by the company. In the month of July, the firm earned around NT$257 billion, up more than 44% compared to July 2023. The revenue for the first seven months of the year was NT$1.5 trillion, climbing by over 30% compared to the same period in 2023.
Finance experts like Susquehanna analyst Mehdi Hosseini are bullish on the long-term growth prospects of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), with the analyst recently maintaining a Positive rating on the stock with a price target of $250. Recent reports indicate that the firm will raise prices on key 3nm and 5nm nodes in 2025. This rise should help the firm beat analyst expectations on 2025 EPS, which presently sit around $6.3, up nearly 21% on a year-on-year basis.
