In this article, we discuss the 20 hidden gem AI stocks.
The rise of artificial intelligence (AI) businesses has loomed large over finance markets in the past few months, pushing investor attention away from other topics. This is because AI-enabled breakthroughs are creating new areas of focus for investors and disrupting major industries. Some of the major themes in this regard include AI-powered systems for environmental monitoring, ethical discussions surrounding the role of AI in healthcare, and the continued evolution of large language models. For example, tech giant Microsoft recently led the development of an AI system capable of predicting air pollution on a global scale. This system generates real-time, hyperlocal pollution forecasts, using data from satellites and ground sensors. The breakthrough could prove crucial for public health, especially in densely populated areas that suffer from poor air quality. The implications of this development extend beyond environmental health to improving policy decisions worldwide.
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.
Some important numbers illustrate this revolution in action. The global AI market was valued at around $208 billion in 2023 and is expected to reach $2 trillion by 2030, growing at a compound annual growth rate of 37% from 2024 to 2030 (as per estimates from Statista). According to recent surveys, about 35% of businesses are already using AI in some form, while another 42% are exploring its potential for future integration. Most of the AI usage is focused on process automation, customer insights, and data analysis. Hyperscalers are leading the innovation in this regard with multi-billion-dollar investments in AI data centers around the world. AI is also projected to both create and displace jobs. By 2025, AI is expected to displace 85 million jobs globally but create 97 million new roles, according to the World Economic Forum. These new jobs will primarily focus on AI development, machine learning, and AI governance. Investors should closely monitor these emerging trends to stay ahead of the curve and place their bets accordingly.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.
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Our Methodology
For this article, we selected AI stocks that do not receive much coverage from financial media or Wall Street analysts, but have AI-related operations and opportunities that are worthy of investor attention. 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 Hidden Gem AI Stocks
20. AEye, Inc. (NASDAQ:LIDR)
Number of Hedge Fund Holders: 1
AEye, Inc. (NASDAQ:LIDR) provides lidar systems for vehicle autonomy, advanced driver-assistance systems, and robotic vision applications in the United States, Europe, and Asia-Pacific. One of the key AI products of the company is the iDAR, Intelligent Detection and Ranging, which combines LiDAR with AI-based intelligence for precise environmental scanning. Unlike traditional systems, iDAR actively focuses on critical objects in real-time, improving decision-making speed, accuracy, and reliability. The 4Sight sensors of the firm are designed to work across multiple sectors like automotive, industrial, and mobility applications. The firm aims to scale the production of these systems for self-driving cars and industrial automation.
AEye, Inc. (NASDAQ:LIDR) also markets the Apollo LiDAR sensor that has demonstrated exceptional performance, such as detecting objects at distances of over one kilometer during field tests, a key milestone for autonomous driving and security applications. AEye also emphasizes adaptability, allowing its sensors to be fine-tuned for various use cases through software updates.
19. GD Culture Group Limited (NASDAQ:GDC)
Number of Hedge Fund Holders: 1
GD Culture Group Limited (NASDAQ:GDC) engages in virtual content production business. The firm is playing the AI boom through its subsidiary, AI Catalysis Corp. The latter develops AI-generated video content and digital human technology. One notable product of this subsidiary is the AI Creator Community, designed to empower creators to produce innovative AI-generated content like videos and advertisements. GDC has also launched an AI Video Contest to promote creativity and provide a platform for AI-powered storytelling.
GD Culture Group Limited (NASDAQ:GDC) has ventured into AI-generated filmmaking as well, exemplified by the release of their short film Forgotten Planet. This project integrates AI throughout the production process, using it for script development, animation, and visual effects to create a richly detailed narrative.
18. Guardforce AI Co., Limited (NYSE:GFAI)
Number of Hedge Fund Holders: 2
Guardforce AI Co., Limited (NYSE:GFAI) offers cash solutions and cash handling services in Singapore, Hong Kong, Macau, Malaysia, Thailand, and internationally. Earlier this year, the firm announced that it would be expanding the AI-based robot advertising business into the US market. This announcement would follow the deployment of over 200 robots in New York, per the company. Guardforce AI aims to strategically position the robots deployed in the US in high-traffic areas, including restaurant entrances, supermarkets, and hotels, to enhance customer engagement and visibility. Lei Wang, the CEO of the firm, said the market response to the expansion had been quite positive.
EF Hutton recently assumed coverage of Guardforce AI Co., Limited (NYSE:GFAI) stock with a Buy rating and $4.50 price target. The company is actively investing in artificial intelligence capabilities for both its AI Product Solutions and AI Travel Aid, the advisory told investors in a research note. The investment firm said interest from current partners for utilizing its AI Product Solutions product has been surprisingly positive, which could lead to quick sales following its fiscal 2025 launch.
17. Bullfrog AI Holdings, Inc. (NASDAQ:BFRG)
Number of Hedge Fund Holders: 2
Bullfrog AI Holdings, Inc. (NASDAQ:BFRG) operates as a digital biopharmaceutical company that focuses on artificial intelligence and machine learning (AI/ML) driven analysis of data sets in medicine and healthcare in the United States. A key AI product of the firm is the bfLEAP platform, which is designed to streamline the drug development process by analyzing complex biological and clinical data. The platform aims to reduce failure rates in drug development, saving costs and accelerating the discovery of new treatments. BullFrog AI’s focus is on using AI to uncover insights that would otherwise be difficult to detect, improving the precision of treatments across various stages of drug development.
Bullfrog AI Holdings, Inc. (NASDAQ:BFRG) is also partnering with the Lieber Institute for Brain Development (LIBD). Using bfLEAP, they have achieved groundbreaking results in psychiatric research, identifying biological subtypes within psychiatric disorders like schizophrenia and bipolar disorder. This could lead to more personalized and effective treatments for these conditions, a significant step forward in mental health research.
16. Serve Robotics Inc. (NASDAQ:SERV)
Number of Hedge Fund Holders: 3
Serve Robotics Inc. (NASDAQ:SERV) designs, develops, and operates low-emission robots that serve people in public spaces with food delivery in the United States. The company specializes in autonomous delivery robots, particularly focusing on sidewalk delivery solutions. Their AI-powered robots are designed to autonomously navigate urban environments, delivering goods efficiently and safely. These robots are equipped with advanced AI systems that enable them to detect obstacles, plan routes, and operate in real-time traffic conditions, providing contactless delivery services.
One of the notable Serve Robotics Inc. (NASDAQ:SERV) partnership is with Uber Eats, where Serve’s robots are being used to deliver food orders autonomously in various cities. Serve Robotics has also been piloting drone delivery projects in collaboration with Alphabet’s Wing, expanding focus to include aerial deliveries in some regions.
15. AudioEye, Inc. (NASDAQ:AEYE)
Number of Hedge Fund Holders: 4
AudioEye, Inc. (NASDAQ:AEYE) provides patented, internet content publication, distribution software, and related services to Internet and other media to people in the United States. The firm recently announced that it had acquired ADA Site Compliance, an ADA website accessibility compliance solution. David Moradi, the CEO of the firm, said the goal was to replicate the success of integrating the 2022 acquisition of the Bureau of Internet Accessibility, where the firm deepened customer relationships and increased ARR. The firm offers AI-driven solutions to help businesses create websites that are accessible and compliant with the Web Content Accessibility Guidelines. Prominent customers include Samsung and Calvin Klein.
HC Wainwright recently raised the price target on AudioEye, Inc. (NASDAQ:AEYE) stock to $28 from $23 and kept a Buy rating on the shares. The advisory said the company’s accretive ADA Site Compliance acquisition brings cross-selling opportunities.
14. CXApp Inc. (NASDAQ:CXAI)
Number of Hedge Fund Holders: 9
CXApp Inc. (NASDAQ:CXAI) provides a workplace experience platform for enterprise customers in the United States, Canada, and the Philippines. The firm uses artificial intelligence to transform workplace experiences, focusing on employee engagement and operational efficiency. Its AI-powered platform, CXAI, integrates customer experience with AI to create more intuitive, personalized work environments. This includes solutions like the Work SuperApp, which streamlines daily operations and tailors work tools and tasks to individual employee preferences, making the workday more efficient and engaging.
CXApp Inc. (NASDAQ:CXAI) has partnered with Google Cloud to further develop its AI infrastructure, enhancing workplace experiences through smarter, AI-driven interactions and environments. CXApp’s AI products are used by major Fortune 500 companies across industries such as finance, entertainment, healthcare, and technology. Their AI-based analytics platform, CXAI VU, is currently in pilot testing with strategic clients and aims to offer even deeper insights into workplace operations.
13. BigBear.ai Holdings, Inc. (NYSE:BBAI)
Number of Hedge Fund Holders: 9
BigBear.ai Holdings, Inc. (NYSE:BBAI) provides artificial intelligence-powered decision intelligence solutions. The company recently announced that it had been awarded, along with Concept Solutions, a $2.4 billion contract over ten years by the Federal Aviation Administration to enable the FAA to acquire a full range of IT capabilities, solutions, and emerging technologies. BigBeat stock has rallied since the announcement, and is up close to 12% in the past month. The contract is essential for procuring non-National Airspace System (non-NAS) IT services, supporting various functions such as IT resource management, financial management, and security.
HC Wainwright recently lowered the price target on BigBear.ai Holdings, Inc. (NYSE:BBAI) stock to $3 from $5 and kept a Buy rating on the shares. The company reported a Q2 revenue miss as contract delays push sales out and the reduced outlook is likely to pressure the shares, the investment firm told investors in a research note.
12. LivePerson, Inc. (NASDAQ:LPSN)
Number of Hedge Fund Holders: 10
LivePerson, Inc. (NASDAQ:LPSN) engages in conversational artificial intelligence. One of the key product offerings of the firm is Conversational Cloud, a tool which integrates voice, messaging, and generative AI to enable businesses to manage AI-powered conversations across platforms. This is particularly valuable for customer service, commerce, and IT service management. Other products include Conversation Copilot and Conversation Autopilot, voice AI solutions that integrate with digital messaging platforms, and conversational intelligence tools that analyze conversational data to generate insights for customer experience improvements.
Craig-Hallum recently raised the price target on LivePerson, Inc. (NASDAQ:LPSN) stock to $1.40 from $1.25 and kept a Buy rating on the shares. The advisory noted the reported quarter came in ahead and the annual guide was reiterated. CEO John Sabino has swapped out leadership and brought in a much deeper bench of talent, Craig-Hallum added.
11. Riot Platforms, Inc. (NASDAQ:RIOT)
Number of Hedge Fund Holders: 12
Riot Platforms, Inc. (NASDAQ:RIOT) operates as a bitcoin mining company in North America. Although not directly involved in the AI business, the company still has tremendous value in the AI universe through the energy and GPU markets. As a miner of digital coins, the firm uses an extensive amount of energy to keep machines running, and has developed a business selling the excess energy it does not need. As AI data centers come online, Riot could use them as potential customers in this regard. In addition, it also has an extensive GPU system, which are also used in AI data centers, and Riot could repurpose these machines for AI tasks and become a valuable partner to AI firms in desperate need of GPUs.
Roth MKM recently maintained a Buy rating and $20 price target on Riot Platforms, Inc. (NASDAQ:RIOT) stock after the company’s September bitcoin production data saw 28% sequential increase for the month. Riot’s hash rate increased to about 28.2 EH/s following new machine installations and the company also improved operational uptime by 69%, the advisory detailed in a research note. Riot Platforms remains one of the best options for investors seeking pure-play BTC mining exposure, the advisory added.
10. Cerence Inc. (NASDAQ:CRNC)
Number of Hedge Fund Holders: 14
Cerence Inc. (NASDAQ:CRNC) provides AI powered virtual assistants for the mobility/transportation market in the United States, Other Americas, Germany, Europe, Middle East, Africa, Japan, and Other Asia-Pacific. Stefan Ortmanns, the CEO of the firm, said during the second quarter earnings call that there were three key differentiators that distinguish the AI offering of his firm from others. Per the CEO, the first was a lengthy history and deep customer relationships in the automotive industry. The second was a strong IP position, approximately 700 patents and automotive specific data supporting an end to end solution that improved all aspects of the in-car user experience from the moment a driver began speaking all the way through to task completion. The third was a customer-centric approach to business.
TD Cowen analyst Jeff Osborne recently lowered the price target on Cerence Inc. (NASDAQ:CRNC) stock to $10 from $12 and kept a Buy rating on the shares. The investment firm said while topline growth for FY25 was talked down with the framework due to less emphasis on the Pro Services segment, Cowen saw investors more focused on profits and cash.
9. SoundHound AI, Inc. (NASDAQ:SOUN)
Number of Hedge Fund Holders: 15
SoundHound AI, Inc. (NASDAQ:SOUN) develops independent voice artificial intelligence solutions that enables businesses across automotive, TV, and IoT, and to customer service industries to deliver high-quality conversational experiences to their customers. The firm beat market estimates on earnings per share and revenue for the second quarter by $0.05 and $0.37 million respectively. Earlier this year, the in-vehicle voice assistant of the company with integrated ChatGPT capabilities was installed in vehicle brands owned by Stellantis in 11 European markets. These brands included Peugeot, Opel, and Vauxhall vehicles operating in Austria, France, Germany, Italy, Spain, and the UK.
Cantor Fitzgerald recently upgraded SoundHound AI, Inc. (NASDAQ:SOUN) stock to Overweight from Neutral with a price target of $7, up from $5. In a research note, the advisory noted that the Amelia acquisition would add financial services and healthcare customer exposure to SoundHound, and while the company would have entered these markets, it likely would have taken them several years to do so.
8. Sprout Social, Inc. (NASDAQ:SPT)
Number of Hedge Fund Holders: 16
Sprout Social, Inc. (NASDAQ:SPT) designs, develops, and operates a web-based social media management platform. The firm has integrated AI into its platform in a bid to help businesses streamline tasks, generate insights, and improve engagement. Some specific examples include Generate by AI Assist, which helps create alt-text for images, and Analyze by AI Assist, which identifies performance trends in social media activities. These tools, powered by both proprietary AI and OpenAI integrations, enhance content creation, reporting, and customer care. AI also assists in classifying inbound messages, suggesting responses, and surfacing social listening insights, allowing businesses to focus on more strategy while improving efficiency.
Sprout Social, Inc. (NASDAQ:SPT) also includes AI-driven automation for tasks such as optimal post timing with features like ViralPost and sentiment analysis for social listening. These features enable businesses to engage audiences more effectively and make data-driven decisions, enhancing creativity and business impact.
7. Lemonade, Inc. (NYSE:LMND)
Number of Hedge Fund Holders: 17
Lemonade, Inc. (NYSE:LMND) provides various insurance products through various channels in the United States, Europe, and the United Kingdom. The company leverages AI to optimize various operational processes, delivering more efficiency and enhancing customer experience. Key applications include AI bots for automating claims processing, virtual assistants that assist with customer service and underwriting, and advanced AI algorithms for fraud detection. These algorithms scan extensive data sets to identify patterns or anomalies that could indicate fraudulent activities. By integrating these AI-driven solutions, the firm reduces operational costs, allowing it to offer competitive premiums to its customers.
Lemonade, Inc. (NYSE:LMND) also uses AI to analyze customer data and behavior, enabling personalized recommendations and dynamic pricing adjustments based on individual risk profiles. This AI-based approach enhances accuracy and speed in decision-making, ultimately improving customer satisfaction while keeping costs in check.
6. BigCommerce Holdings, Inc. (NASDAQ:BIGC)
Number of Hedge Fund Holders: 19
BigCommerce Holdings, Inc. (NASDAQ:BIGC) operates a software-as-a-service platform for enterprises, small businesses, and mid-markets in the United States, North and South America, Europe, the Middle East, Africa, and the Asia–Pacific. The company has integrated several AI products across the platform to enhance operations. Some of these include BigAI Copywriter and BigAI Predictive Analytics. The former is a tool that helps create SEO-optimized product descriptions, tailored to a specific business’s voice and style. This tool enhances productivity by automating content creation. The latter uses BigQuery machine learning to forecast customer lifetime value, helping businesses optimize marketing and focus on high-value customers.
Stifel recently lowered the price target on BigCommerce Holdings, Inc. (NASDAQ:BIGC) to $8 from $10 and kept a Buy rating on the shares after the company announced a surprising change in its leadership, with CEO Brent Bellm departing and President Travis Hess taking over. The advisory noted the transition should go smoothly given Hess’ role in BigCommerce’s go-to-market restructuring, but added that questions remain surrounding the genesis of the CEO change.
5. Evolv Technologies Holdings, Inc. (NASDAQ:EVLV)
Number of Hedge Fund Holders: 19
Evolv Technologies Holdings, Inc. (NASDAQ:EVLV) provides artificial intelligence-based weapons detection for security screening in the United States and internationally. The firm beat market expectations on earnings per share and revenue for the second quarter of 2024 by $0.01 and $1.7 million respectively. Peter George, the CEO of the firm, said during the earnings call that the firm added 84 new customers in Q2 and now served over 800 customers across 10 key vertical markets. This was the highest number of new customers in the quarter since the fourth quarter of 2022, per the chief executive. He added that the firm activated 441 new multi year subscriptions of Evolv Express in Q2 compared to 377 in Q1.
Evolv Technologies Holdings, Inc. (NASDAQ:EVLV) markets Evolv Express as an AI-powered concealed weapons detection system that can differentiate between threats and everyday items like phones and keys. It is used in large venues like stadiums and schools. Per George, the system was used to screen on average, nearly 3 million visitors a day in Q2, with customers using Evolv Express to tag on average, more than 500 firearms every single day.
4. PROCEPT BioRobotics Corporation (NASDAQ:PRCT)
Number of Hedge Fund Holders: 21
PROCEPT BioRobotics Corporation (NASDAQ:PRCT) is a surgical robotics company that focuses on developing transformative solutions in urology in the United States and internationally. The flagship AI product of the firm is the HYDROS Robotic System, which powers Aquablation therapy. This AI-integrated system enhances surgical planning and execution through real-time ultrasound and cystoscopy imaging. Within the system is FirstAssist AI, a platform that uses image recognition software to help surgeons identify critical areas of the prostate and suggest optimal treatment plans tailored to the patient’s anatomy. This AI-driven approach improves patient outcomes and reduces the variability often seen in surgical results.
TD Cowen recently raised the price target on PROCEPT BioRobotics Corporation (NASDAQ:PRCT) stock to $99 from $75 and kept a Buy rating on the shares. The advisory said the recent 30% stock appreciation following its FDA approval was justified since Hydros could spark a multiyear new product cycle that enhanced the current revenue growth trajectory.
3. Aspen Technology, Inc. (NASDAQ:AZPN)
Number of Hedge Fund Holders: 24
Aspen Technology, Inc. (NASDAQ:AZPN) provides industrial software that focuses on helping customers in asset-intensive industries worldwide. The firm focuses heavily on integrating AI to help customers in industries such as energy, chemicals, and manufacturing improve efficiency, enhance sustainability, and reduce operational risks. Their AI-powered solutions include products like Aspen Mtell, which uses predictive analytics to detect and prevent equipment breakdowns, and Aspen Fidelis, a tool for evaluating and optimizing system reliability and performance. As the AI boom increases interest in their products, the firm is targeting high-single-digit to double-digit growth in Annual Contract Value over the next few years.
Loop Capital analyst Mark Schappel recently raised the price target on Aspen Technology, Inc. (NASDAQ:AZPN) stock to $260 from $204 and kept a Buy rating on the shares after attending the company’s Investor Day. Per the analyst, the major themes of the management’s presentation were that the company addresses a large market of $11 billion with durable tailwinds and that its customer efficiency and sustainability initiatives increasingly drive the company’s overall business, rather than just production like in the past. The note further detailed that oil/gas and chemical companies increasingly view Industrial AI as mission-critical to achieving their profitability and sustainability objectives.
2. Sprinklr, Inc. (NYSE:CXM)
Number of Hedge Fund Holders: 25
Sprinklr, Inc. (NYSE:CXM) provides enterprise cloud software products worldwide. Ragy Thomas, the CEO of the firm, said during the first fiscal quarter earnings call that his company operated in attractive and growing markets and supported a gold star list of customers through an AI-powered unified customer experience management platform. These included UBS, Ford, T-Mobile, Grupo Bimbo, and Planet Fitness, as well as one of the largest global asset managers in the world. At this industry-leading company, per the CEO, the Sprinklr platform replaced multiple social tools and point solutions, including an incumbent vendor who was in place for 12 years. He added that Sprinklr was unifying AI-powered listening, publishing, engagement, marketing and customer service across all social channels.
DA Davidson analyst Clark Wright recently lowered the price target on Sprinklr, Inc. (NYSE:CXM) stock to $8 from $9 and kept a Neutral rating on the shares. In an investor note, the analyst underlined that the company’s Q2 results were mixed with better than expected top line growth driven by strong professional services revenue and operating income coming in below the guide inclusive of credit losses. The analyst added, however, that go-to-market changes and pricing/packaging updates at Sprinklr were ongoing, and its management was confident that once implemented, the company would be in a much better position to accelerate growth.
1. Pegasystems Inc. (NASDAQ:PEGA)
Number of Hedge Fund Holders: 27
Pegasystems Inc. (NASDAQ:PEGA) develops, markets, licenses, hosts, and supports enterprise software in the United States. The company is an important player in the AI-powered workflow automation and decisioning market. One of the most popular AI innovations of the company is the Pega GenAI Blueprint, a tool which helps businesses revolutionize their processes by integrating generative AI capabilities to optimize decision-making and automate workflows. On the back of rising sales of this tool, the firm expects to reach close to $1.5 billion in revenue in 2024, up nearly 16% year-on-year. Additionally, Pega has been focusing on improving margins, particularly with their Pega Cloud, which achieved a gross margin of 77% in Q1 2024. It expects free cash flow to reach $350 million in 2024, up from $201 million in 2023.
Citi recently raised the price target on Pegasystems Inc. (NASDAQ:PEGA) stock to $92 from $87 and kept a Buy rating on the shares. The advisory updated models and preference rankings across the back office software group post the Q2 results, seeing potential for underappreciated SMID-cap software names to re-rate amid a more risk-on rate cut cycle with stability in IT budget spend and emerging AI opportunities.
While we acknowledge the potential of Pegasystems Inc. (NASDAQ:PEGA) 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 Pegasystems Inc. (NASDAQ:PEGA) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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