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).
Copyright: ralwel / 123RF Stock Photo
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.
15. 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 seems ahead of the curve with regards to AI needs as it has spent a considerable amount of money over the past few years to build a portfolio that boasts important data center tech like transistors, backside power delivery, advanced DRAM and High Bandwidth Memory (HBM). The HBM market has been a significant growth driver for the stock in recent months. HBMs are important components in AI GPUs that perform complex AI workloads. With DRAM demand also strong, the firm delivered more than 50% revenue growth on a sequential basis in the third fiscal quarter.
Applied Materials, Inc. (NASDAQ:AMAT) stock is closely monitored by analysts on Wall Street. Stifel has a Buy rating on the shares with a price target of $270. In an investor note, the advisory noted that the third quarter results of the firm and outlook modestly exceeded consensus estimates, reflecting gradual growth in system and service revenue, despite revenue to China being down 24% quarter over quarter. However, with China exposure now more de-risked, the advisory backed the company to grow at/above the industry in 2025.
14. 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 share price of the firm has rallied in the past few months, even surpassing the returns of chip giant NVIDIA, due to the increase in demand for data center infrastructure. The success of the firm in this space can be attributed to the full stack of supply chain and manufacturing services it offers to AI data center clients, a list that includes high profile customers like Meta Platforms and Amazon. The stock is also undervalued compared to AI peers, with a 20x forward P/E, indicating 26% upside potential. The firm markets network panels, switches, and cable for data center needs.
Celestica Inc. (NYSE:CLS) is in focus on Wall Street as AI spending skyrockets. Canaccord analyst Robert Young recently raised the price target on the stock to $70 from $53 and kept a Buy rating, underlining that the firm had reported another strong quarter with Q2 results ahead of consensus on all metrics, a strong Q3 outlook, and fiscal 2024 guidance that was raised across the board.
13. 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 firm derives a competitive advantage in the chip space through technological dominance and economies of scale. For example, the company plans nearly $32 billion in capex for 2024. The figure is around $5 billion more than Intel, a key rival of TSM, spent on capex in 2023. The capex will go towards increasing the technological and manufacturing superiority of the firm in the chip world as AI demand takes off. The firm derives a large portion of revenue from the sale of advanced technology chips. This process, virtually monopolized by TSM, makes chips with a size of 7 nanometers and below.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the favorite AI stocks among Wall Street analysts. Bank of America recently raised the price target on TSM to NT$1,200 from NT$1,160 and kept a Buy rating on the shares, highlighting that it had lifted 2024-26 earnings forecasts for the firm by 3%-5% to reflect stronger results, a better Q3 margin outlook, and tighter-than-expected CoWoS/N3/N5 supply into 2026.
12. Micron Technology (NASDAQ:MU)
Number of Hedge Fund Holders: 120
Micron Technology (NASDAQ:MU) makes and sells memory and storage products. The company has benefited from the rise in capex on AI in recent months, having sold out chip and high-bandwidth memory production till 2025. These products are needed for building complex AI data centers that power AI software features around the globe. The company is a supplier of components to prominent AI firms like NVIDIA and Apple, two of the top ideas in the AI space, according to consensus opinions on Wall Street. After surging to record highs, the share price has pulled back in recent weeks, providing shrewd investors with a buying opportunity based on strong fundamentals and AI demand.
Investment advisory Citi has a Buy rating on Micron Technology (NASDAQ:MU) stock with a price target of $175. In a recent investor note, the advisory claimed that a little bit of inventory has built up in the PC and wireless supply chains. Per the advisory, Micron would end up increasing inventory, which added risk to near-term estimates, even as DRAM upturn continues with upside from Samsung and Hynix.
11. Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders: 38
Arm Holdings plc (NASDAQ:ARM) architects, develops, and licenses central processing unit products and related technologies for semiconductor companies and original equipment manufacturers. Chip stocks in the US have had a rough ride this year. After touching record highs due to the AI spending in the first half of the year, a major selloff in the past few months has resulted in valuations dropping by as much as 40%. However, even though some analysts on Wall Street believe that this downturn could last until after the US election, Bank of America contends that chip stocks, including ARM, may start recovering by as early as October.
In a recent investor note, Bank of America analyst Vivek Arya said that Arm Holdings plc (NASDAQ:ARM) could be one of the outperformers in the event of a resurgence. Arya claims that the semiconductor industry is only in the fourth quarter of an upcycle, with the Philadelphia Semiconductor Index having generated a return of 28% – previous upcycles have lasted 10 quarters and generated an average return of 67% for the index.
10. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 44
Palantir Technologies Inc. (NYSE:PLTR) builds and deploys software platforms for the intelligence community to assist in counterterrorism investigations and operations. The company has significantly improved financials in the past few months. The revenue growth rates for the firm have accelerated for four consecutive quarters, breaking all records in the latest quarter. The firm generated close to $680 million in revenue during the second quarter, up 27% year-on-year. The number comfortably beat both the high-end of guidance and analyst estimates by $25 million. The stellar performance was driven by strong momentum in the commercial and government businesses.
Palantir Technologies Inc. (NYSE:PLTR) recently announced that it had entered into a partnership with Sompo, an insurance firm based in Japan. The deal, with a subsidiary of the parent company in Japan, includes a commitment to invest over the next three years in a data integration and AI solution to drive digital transformation at the insurer, which is among the top five in the corporate and agribusiness insurance segment in Brazil.
9. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 130
Broadcom Inc. (NASDAQ:AVGO) supplies semiconductor infrastructure software solutions. The earnings results of the firm are expected in the first week of September. For the third quarter, the chipmaker expects more than 14% year-on-year growth in normalized EPS, and over 15% year-on-year growth in revenue. These numbers are in most part driven by the integration of VMware, a cloud computing firm Broadcom bought last year, and the increasing demand for AI products. The AI segment remains a significant driver of the overall growth for the company, with expectations that AI-related revenues could top $10 billion this year, up from $4.2 billion in 2023. The firm has also initiated partnerships with major tech companies for custom AI chips.
Broadcom Inc. (NASDAQ:AVGO) is a Wall Street darling. Rosenblatt recently raised the price target on the stock to $240 from $165 and kept a Buy rating, underlining that the firm had rolled out fiscal 2026 estimates that support high-teens sales growth and $75 non-GAAP earnings per share, driven by continued artificial intelligence infrastructure networking momentum and improved synergies in enterprise software.
8. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Holders: 92
Vistra Corp. (NYSE:VST) operates as an integrated retail electricity and power generation company. The utility sector has outperformed the broader market over the past few months as the rise in demand for power creates a favorable business environment for utility firms. AI data center build, linked to energy portfolios with sustainable power assets, is one of the biggest drivers of this boom. Vistra, with a diverse portfolio, investments in nuclear energy, stable financials, and a stellar dividend track record, is poised to benefit from the latest trends. The stock offers a healthy mix of value and growth.
Vistra Corp. (NYSE:VST) has earned bull calls from Wall Street in recent months. Morgan Stanley recently raised the price target on the stock to $110 from $109 and kept an Overweight rating, noting that in July, utilities outperformed the S&P’s 1.22% return by 560 bps. In an investor note, the advisory further stated that the strong and stable free cash flow of the firm was underappreciated at the current price.
7. Super Micro Computer, Inc. (NASDAQ:SMCI)
Number of Hedge Fund Holders: 47
Super Micro Computer, Inc. (NASDAQ:SMCI) develops and manufactures high performance server and storage solutions based on modular and open architecture. In the past few months, investments in generative AI have led to a massive rally in the share price of the company. Super Micro provides server solutions for generative AI firms. Even though the sales of the servers have skyrocketed as AI investments ramp up, the working capital required to meet the rise in demand has resulted in consistently negative cash flows. Even as the firm tries to raise new capital, access to investors could be difficult in light of recent developments, including a delayed 10k filing that sent the shares crashing earlier this week.
After the release of a report alleging accounting irregularities at Super Micro Computer, Inc. (NASDAQ:SMCI), JPMorgan reiterated an Overweight rating on the stock. In an investor note, the advisory claimed the report was void of details. The note further added that the magnitude of revenues referenced in the report does not change the medium-term revenue opportunity for the company in relation to the addressable $275 billion artificial intelligence server total addressable market in 2026 and 2027.
6. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based technology company. Investors have expressed concerns about the high capex of the tech giant on AI infrastructure over the past few months. Multiple factors have contributed to this. For example, the company recently failed to meet expectations on cloud growth and gross margins. With revenues from AI failing to fill the gap, there was lots of chatter about the near-term consequences of the high capex. In addition, as chipmakers enter into annual cycles of updates – these chips form the bulk of capex spending on AI – there is a fear that the chip architecture developed by tech giants might become obsolete as newer chip versions are launched, thereby rendering their investments useless within a few years.
However, Wall Street remains as bullish on Microsoft Corporation (NASDAQ:MSFT) as ever. Evercore has an Outperform rating on the shares with a price target of $500. In a recent investor note, analyst Kirk Materne said that Microsoft remains well positioned to deliver durable top-and-bottom-line growth and investors should use any pronounced weakness as a buying opportunity for the long-term.
5. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 165
Alphabet Inc. (NASDAQ:GOOG) is a California-based technology company that owns and runs the internet search engine Google. It is no secret that tech giants have committed to billions of dollars in capex to develop AI infrastructure. AI data centers are at the heart of this endeavor. Recent reports indicate that hyperscalers like Google, Meta, Amazon, and Meta have found it hard to find suitable locations for these centers, largely because of the power needs of the facilities. As rivals like Microsoft and Amazon turn to industrial sites to solve this problem, in close proximity to power plants, Google is considering Vietnam as an alternative.
Wall analysts have viewed Alphabet Inc. (NASDAQ:GOOG) with caution following the revival of an antitrust case against the firm. Barclays has an Overweight rating on the shares with a price target of $200. In a recent investor note, the advisory claims the case can have a range of outcomes that could include structural changes like divesting Chrome, the popular internet browser, Android, the mobile software, and AdWords, an ad system developed by Google.
4. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 219
Meta Platforms, Inc. (NASDAQ:META) engages in the development of products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide. The company has taken a somewhat different approach to AI than the other tech giants. While the large language models (LLMs) of other AI firms are closed, Meta has decided to open source Llama, the LLM it has developed over the past few years. Companies and businesses can develop their own AI supermodels, tailored to their specific needs, around Llama.
This Meta Platforms, Inc. (NASDAQ:META) strategy is already starting to bear fruit. Major companies have already started making their own AI models with Llama as a base. For example, professional services firm Accenture utilized Llama 3.1 to build a custom large language model to produce an annual ESG report. Telecom firm AT&T is using Llama and generative AI for customer service.
3. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores in North America and internationally. Latest reports reveal that the US government has signed a deal with Anthropic, a US-based AI startup backed by Amazon, for research, testing and evaluation of their artificial intelligence model. Under the terms of the deal, an institute associated with the government would receive access to the AI model before and after the public release. Anthropic is one of the leading developers of a large language model (LLM), the cutting edge tech that forms the basis for the popularity of ChatGPT by OpenAI.
Amazon.com, Inc. (NASDAQ:AMZN) is one of the most followed stocks on Wall Street. Wells Fargo has an Overweight rating on the shares with a price target of $225. In a recent investor note, the advisory underlined that heavy upfront costs related to satellite launches, commencing in the second half of 2024, would reduce operating income forecasts for Amazon from 2025 through 2027, even as the launches present an attractive longer term opportunity.
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 184
Apple Inc. (NASDAQ:AAPL) is a consumer electronics firm. Ahead of the launch event of the new iPhone, reports indicate that the company has placed orders for the assembly of around 90 million units of the new phone, ten million more than last year. The increase in orders might stem from the expected growth in sales for these phones that will be shipped with Apple Intelligence, a suite of AI features that Apple has been aggressively marketing over the past few months. Experts, like Dan Loeb of Third Point, believe the new AI features will lead to stronger up cycles for new launches. Apple Intelligence features are not compatible with older phones and might compel customers to faster upgrades.
Wall Street analysts have also weighed in on these developments regarding Apple Inc. (NASDAQ:AAPL). For example, Morgan Stanley analyst Erik Woodring has an Overweight rating on the stock with a price target of $273. In a recent investor note, the analyst highlighted that Apple Intelligence remained the key to unlocking pent up iPhone demand and accelerating the replacement cycle. The analyst expects the launch event to heavily feature AI integration on the new iPhone 16.
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. Latest reports from The Wall Street Journal and Bloomberg reveal that the company is planning to invest in a funding round for OpenAI, the firm that launched ChatGPT back in late 2022 to kickstart the AI revolution. Other tech big hitters like Apple and Microsoft will likely also participate in this funding round. OpenAI would reach a valuation of $100 billion if the funding goals for this round are achieved. The reports come within hours of NVIDIA topping analyst expectations on earnings and guidance for the second quarter of this fiscal year.
NVIDIA Corporation (NASDAQ:NVDA) CEO Jensen Huang, in an appearance on news platform CNBC after the earnings call, said that the company expected to earn billions of dollars in revenue from volume production of Blackwell chips in the fourth quarter and ramp up from there. Huang also underlined that hyperscalers only represented 45% of the total data center revenue of his company, emphasizing that NVIDIA was well diversified in this area, with customers ranging from internet service providers, sovereign AI firms, to industries and enterprises.
While we acknowledge the potential of NVIDIA Corporation (NASDAQ: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 NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Michael Burry Is Selling These Stocks and Jim Cramer is Recommending These Stocks.
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. You can also look at the 13 High Growth Semiconductor Stocks That Are Profitable in 2024 and the 11 Best AI Penny Stocks to Invest in Now.
