In this article, we discuss the 18 trending AI stocks on latest analyst ratings and news.
Growth investors have been piling into artificial intelligence (AI) stocks over the past few months as a variety of factors, including rapid technological advancements, soaring investment, and widespread adoption across sectors drive interest towards the AI business. Some important metrics illustrate this phenomenon. The global AI market was valued at approximately $142.3 billion in 2023 and is projected to grow at a compound annual growth rate of over 36%, reaching nearly $2 trillion by 2030. In 2024 alone, the AI market is expected to expand by around 40%, a pace that far outstrips the broader technology sector and the overall global economy, which is predicted to grow at a more modest 2.7%.
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.
This explosive growth is driven by the increasing integration of AI technologies across various industries, including healthcare, finance, retail, and manufacturing. Investment in AI is surging, with companies recognizing its potential to revolutionize business operations and deliver significant returns. According to PwC, AI could contribute up to $15.7 trillion to the global economy by 2030, with North America and China accounting for nearly 70% of this value. In 2024, corporate investment in AI is expected to surpass $500 billion, driven by companies seeking to enhance efficiency, reduce costs, and innovate their product offerings.
Industry experts are increasingly bullish on the long-term prospects for AI stocks. According to a survey by Gartner, 80% of executives believe that AI will be a critical business driver by 2025, with 75% already piloting or implementing AI solutions. McKinsey estimates that AI could deliver up to $6.1 trillion in annual value across industries, primarily through automation and optimization. This growing confidence in AI capabilities is reflected in the stock market, where AI-focused companies have consistently outperformed their peers. For instance, AI-driven companies have seen their stock prices surge by over 50% in 2023 alone, a trend expected to continue as demand for AI solutions grows.
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.
These AI-focused firms are also investing in AI startups as they seek to diversify their businesses. NVIDIA, Apple, and Microsoft are all reportedly considering a huge investment in OpenAI, a California-based AI firms whose claim to fame is the launch of ChatGPT back in late 2022. If the rumors are true, the latest round of funding would take the valuation of the startup to $100 billion. For some additional context, this value is higher than the combined GDPs of 110 nations, the highest for any venture capital backed firm in the US since Facebook’s IPO, and the most valuable private firm in the US after Musk-owned SpaceX.
This high valuation also follows an emerging trend in the startup universe. Research into the domain by Coatue Management reveals that up until June 2024 year-to-date, there were a total of 200 AI-related deals in the venture capital world, compared to just 7,000 for non-AI firms. The average valuation in these deals for AI startups was around $1 billion. On the non-AI side, this value was only $200 million. The average funding round for AI firms fetched over $120 million, while this figure for non-AI companies was around $20 million. The numbers highlight that AI firms, on average, are valued at five times more than their non-AI peers and raise six times more in funding.
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
18. Dell Technologies Inc. (NYSE:DELL)
Number of Hedge Fund Holders: 88
Dell Technologies Inc. (NYSE:DELL) designs, develops, manufactures, markets, sells, and supports various comprehensive and integrated solutions, products, and services. The firm recently posted earnings for the second quarter of 2024, topping expectations on earnings per share and revenue by $0.18 and $910 million. The highlights from the report were record results for the Infrastructure Solutions division, with revenue of $11.6 billion, up 38% year over year. Within this division, servers and networking revenue was $7.7 billion, a new record for the company and up 80% year-on-year due to AI demand.
Following the results, Dell Technologies Inc. (NYSE:DELL) earned bullish reviews from Wall Street. Citi raised the price target on the stock to $160 from $155 and kept a Buy rating, underlining that the second quarter results of the firm had exceeded expectations with artificial intelligence servers delivering upside while ISG margins also came in better than expected as Dell was able to attach higher services to improving enterprise customer mix. The advisory further added that looking ahead, Dell remains very confident in competitive positioning to deliver higher value-added storage and services with growing enterprise adoption.
17. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 75
Intel Corporation (NASDAQ:INTC) markets key technologies for smart devices. Latest reports indicate that the firm is exploring the possibility of splitting the foundry business and scrapping factory projects in a bid to limit mounting losses. Investment banks like Morgan Stanley and Goldman Sachs are advising the firm in this regard, with merger activity also on the table. The management will likely present options at a board meeting in September. Amid a pivot to AI, the firm has missed estimations on latest earnings and guidance, while announcing job cuts and suspending the dividend to lower costs.
Intel Corporation (NASDAQ:INTC) stock has nosedived as a result. The accumulation of bearish news over the past few weeks has resulted in a more than 30% crash in the share price and analyst downgrades across the board. Mizuho, Argus, Baird, and Wedbush have all recently issued bearish commentary on the chipmaker. Year-to-date, the shares have fallen close to 55% even as management seeks to ease investor concerns.
16. 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 is a leading supplier of chips to smartphone giants like Apple and Samsung. However, as the latter two have started backwards integrating their business into QCOM, the chipmaker has started diversifying into automotive and PCs in a bid to offset the potential impact of losing Apple and Samsung as customers. However, this diversification seems nowhere near enough to replace the loss of big customers since QCOM does not presently have standing deals in this regard with large automakers.
Perhaps this is the reason that Wall Street analysts have turned bearish on QUALCOMM Incorporated (NASDAQ:QCOM). Wolfe Research recently downgraded the stock to Peer Perform from Outperform without a price target. In an investor note, the advisory highlighted that a move by Apple to shift to an internal modem was a headwind for QCT revenue of QCOM but not unexpected given prior guidance numbers.
