2024 has been a big year for AI breakthroughs, and the momentum shows no signs of slowing down anytime soon. Generative AI has arguably been the biggest trend, with McKinsey estimating that it could add the equivalent of $2.6 trillion to $4.4 trillion in value across industries annually, based on 63 use cases they analyzed. Back in 2022, when OpenAI launched its free web app, ChatGPT, few could have predicted the scale of the AI revolution that would follow. Major tech giants have since followed suit, revealing their own chatbot-based assistants, AI-enabled phones, and much more.
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As AI continues to revolutionize industries and push technological boundaries to new heights, today’s headlines reveal just how impactful these advancements can be. The question of the hour is, with all of these big AI breakthroughs, are regulators finally catching up with developers working on their next big AI projects? Yahoo Finance’s Catalysts features an interview with Credo AI Founder and CEO Navrina Singh, discussing the sustainability of the valuations and growth of AI companies, and the potential risks they may pose. Credo AI is an AI governance platform streaming responsible AI adoption and automating oversight.
According to Singh, even though AI developers may see governance as a “speed bump in innovation”, companies who start with emerging technologies such as artificial intelligence with the right guardrails in place will eventually end up being “long-term winners”. Regardless of how long it takes for governance to fully catch up, the AI frenzy continues to intensify. In recent news, the world’s largest asset management firm led under the leadership of Larry Fink launched a new AI-focused exchange traded fund on Tuesday, October 22.
Tony Kim, head of the fundamental equities technology group, believes that AI is a growing stack of opportunity. The ETF is going to hold a concentrated portfolio of around 30 to 40 stocks, with new winners to be added as they emerge. According to Kim, the whole concept of the portfolio is to embody the concept of time and stack. That said, even though the AI trade has lost some spark, the plans and spending for advanced AI, in hopes of achieving artificial general intelligence, or AGI, make the portfolio very relevant.
“Most of these companies in tech are all racing to get to AGI. We all have different views of AGI and when AGI will happen and what it will cost, but it will cost a lot more. Orders of magnitude more. And not only will it take that much more [money], it will take that much time”.
– Tony Kim
That said, many of the companies that may prove to be the winners in the AI revolution may not be on investors’ radars yet, or may not even have begun being publicly traded. Consider Daze, a creative AI-powered messaging application that hasn’t even launched yet but already shows the potential to challenge leading platforms once it hits the market. Prelaunch, the app’s waitlist is already overflowing with approximately 156,000 sign-ups (and counting).
The momentum of the Daze app is happening alongside broader technical advancements, such as the launch of “Swifts,” or stratospheric, which are AI-enabled robotic cameras that fly on weather balloons, by a New York-based startup called Near Space Labs. The technology aims to assess property risks and climate-related disasters, helping insurance companies pay out claims within days instead of weeks or months.
In other news, Jeff Bezos-backed Perplexity AI has begun fundraising talks looking to double its valuation to $8 billion or more, according to the Wall Street Journal. Perplexity AI is an AI-powered research and conversational search engine that answers queries using natural language predictive text. Recently, the search engine has been facing numerous lawsuits from the likes of Dow Jones and the New York Post, alleging that the company uses copyrighted content unlawfully. Publishers claim that such bypasses are depriving them of advertising and subscription revenue, and also undermining the work of journalists. Even though Perplexity AI has launched a revenue-sharing program with some publishers, many still continue to push back and seek legal protection for their content.
A business executive in a modern office looking over reports detailing artificial intelligence.
Methodology
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).
20. Bullfrog AI Holdings, Inc. (NASDAQ:BFRG)
Number of Hedge Fund Holders: 2
Bullfrog AI Holdings, Inc. (NASDAQ:BFRG) is a technology-enabled drug discovery company that uses artificial intelligence to usher in the next generation of lifesaving therapies. Their robust graph analytic AI platform, bfLEAP™, helps in quickly detecting anomalies and uncovering hidden associations within patient data.
On October 22, Bullfrog AI Holdings, Inc. (NASDAQ:BFRG) announced that VP Artificial Intelligence, Enrique García-Rivera, Ph.D., will be presenting at Google’s inaugural Cancer AI Symposium. The exclusive one-day event will take place on October 30, 2024, at the Boston Center for the Arts. Dr. García-Rivera’s presentation will be revealing BullFrog AI’s groundbreaking use of artificial intelligence in drug discovery and development.
The company’s proprietary bfLEAP™ platform will be the highlight of the presentation, and how it is applied to cancer research by leveraging AI to identify complex biological patterns that contribute to disease progression and treatment resistance. Moreover, Dr. García-Rivera will also be introducing BullFrog AI’s novel “AlgoLLM” system for gene prioritization. This system transforms the identification of high-priority targets in drug development by harnessing large language models. The new AI tool is essential for simplifying the process of finding useful information about neuropsychiatric disorders and other diseases.
19. Perfect Corp. (NYSE:PERF)
Number of Hedge Fund Holders: 9
Perfect Corp. (NYSE:PERF) is a global leader in artificial intelligence (AI) and augmented reality (AR) beauty technology solutions. Working with over 600 partners, the company offers AI-powered tools such as virtual try-ons and AI analysis to help empower brands within the beauty industry.
On Monday, October 21, Noble Capital initiated coverage of Perfect Corp. (PERF) with an “Outperform rating” and a $5 price target. According to the analyst, the company’s AR and AI technology is powering its “market leading” virtual try-on service which is used by retailers and beauty brands alike for skincare products and makeup. It also leverages its technology to offer a suite of AI products via its app. With additional interest rate cuts on the horizon, the company is expected to grow its enterprise client base, thereby enhancing revenue growth and improving margins.