In this article we discuss the 5 best artificial intelligence stocks for 2021. If you want to read our detailed analysis of the AI industry, go directly to 10 Best Artificial Intelligence Stocks for 2021.
5. Alphabet Inc. (NASDAQ: GOOG)
Number of Hedge Fund Holders: 157
Alphabet Inc. (NASDAQ: GOOG) is a California-based multinational technology company that is most famous for search engine Google. The company was one of the first technology firms to appreciate the power of artificial intelligence by establishing DeepMind in 2010, a research laboratory dedicated to artificial intelligence. The company has also restructured itself around artificial intelligence in recent years, with AI-driven programs in the automobile, smartphone, healthcare, and semiconductor businesses.
The company has a market cap of more than $1.52 trillion and posted a revenue of more than $182 billion in December 2020. New York-based market research firm Argus Research last week raised its price target on Alphabet to $2500 from $2400. Joseph Bonner, an analyst at the research firm, said that the company had recovered well from the COVID-19 slump and also won a copyright case against a rival, which bode well for the future. Alphabet Inc. is placed 5th on our list of top 10 best artificial intelligence stocks to buy for 2021.
Chris Hohn’s TCI Fund Management is one of the 157 hedge funds tracked by Insider Monkey having stakes in GOOG at the end of the fourth quarter. The fund owns over 2.95 million shares of the company. Based on our calculations, GOOG ranks 6th in our list of the 30 Most Popular Stocks Among Hedge Funds: 2020 Q4 Rankings.
Weitz Investment Management, in their Q4 2020 investor letter, mentioned Alphabet Inc. (NASDAQ: GOOG). Here is what Weitz Investment Management has to say about Alphabet Inc. in their Q4 2020 investor letter:
“Despite mounting regulatory scrutiny, Alphabet was the Fund’s largest contributor for the year. The stock rose materially as Google’s digital advertising businesses continued to chug along.”
4. Salesforce.com, Inc. (NYSE: CRM)
Number of Hedge Fund Holders: 97
Salesforce.com, Inc. (NYSE: CRM) is a California-based software company that provides customer relationship management services and other enterprise solutions on market automation, data analytics, and application development. Last year, the company bought Slack Technologies, another software firm focused on communications, in a deal worth $28 billion. The company’s Einstein Cloud technology empowers its CRM cloud to help its clients make better decisions.
The company has a market cap of more than $206 billion and posted more than $21 billion in revenue in January 2021. Earlier this week, Bank of America named the company among its top picks among software stocks for the first half of 2021. The bank maintained a Buy rating on the stocks and set the price target at $275, identifying the company as having a long runway for revenue growth and leading the market with digital transformation. Salesforce is placed fourth on our list of top 10 best artificial intelligence stocks for 2021.
As of the end of the fourth quarter, there were 97 hedge funds in Insider Monkey’s database that held stakes in Salesforce.com Inc., compared to 106 funds in the third quarter. Fisher Asset Management, with 12.5 million shares of CRM, is the biggest stakeholder in the company. Our calculations show that, CRM ranks 24th in our list of the 30 Most Popular Stocks Among Hedge Funds: 2020 Q4 Rankings.
Vulcan Value Partners, in their Q4 2020 investor letter, mentioned Salesforce.com, inc. (NYSE: CRM). Here is what Vulcan Value Partners has to say about salesforce.com, inc. in their Q4 2020 investor letter:
“We purchased Salesforce.com Inc. during the quarter. Salesforce is the dominant provider of customer relationship management (CRM) software and technology. Over the years, Salesforce has expanded its services to capture the entire lifecycle of a customer, including the ability to integrate third-party applications. Salesforce has high retention rates, pricing power, a large and growing addressable market, strong free cash flow, and a competitive moat. Salesforce is spending aggressively to capture a larger share of its rapidly growing total addressable market. As a result, we believe that Salesforce’s value should compound through continued investment in top line growth and margin expansion over time. The recent effects of COVID-19 have only improved its prospects and future returns. We purchased Salesforce.com just before the announcement of the Slack acquisition. The market reacted negatively to the acquisition, and its stock price fell, making Salesforce.com a material detractor to the portfolio during the quarter. We feel good about the acquisition of Slack as it allows for a more comprehensive CRM offering which will increase the company’s competitive moat.”
3. Microsoft Corp. (NASDAQ: MSFT)
Number of Hedge Fund Holders: 258
Microsoft Corp. (NASDAQ: MSFT) is a Washington-based multinational company that develops and sells computer software, electronics, computers and other related services. The company has a separate artificial intelligence unit called Microsoft AI that helps users, organizations, and governments across the world with machine learning, data analytics, robotics, and internet of things products. The firm has also integrated artificial intelligence into existing products like the Office software, Cortona, and several others.
The company has a market cap of close to $2 trillion and posted more than $143 billion in revenue in June 2020. California-based wealth management firm Wedbush earlier this month said that a recent Microsoft deal with the US army showed that the firm was gaining ground on rival Amazon on government projects. The firm maintained an Outperform rating and set a price target of $300 on Microsoft stocks. Microsoft Corporation thus ranks second on our list of top 10 best artificial intelligence stocks for 2021.
The company is also getting the attention of the smart money, as 258 hedge funds tracked by Insider Monkey reported owning stakes in the company at the end of the fourth quarter, up from 234 funds a quarter earlier. Based on our calculations, MSFT ranks 2nd in our list of the 30 Most Popular Stocks Among Hedge Funds: 2020 Q4 Rankings.
2. International Business Machines Corporation (NYSE: IBM)
Number of Hedge Fund Holders: 51
International Business Machines Corporation (NYSE: IBM) is a New York-based multinational technology firm that sells computer hardware, middleware, and software. The company has invested heavily in artificial intelligence and holds the unique record of filing the most number of patents for 28 years as a business firm. The company has maintained focus on high value profitable products since it was founded in 1911, and now offers artificial intelligence services to clients across the globe. It has operations in more than 170 countries.
The market cap of the firm is more than $120 billion and it posted a revenue of more than $70 billion in December 2020. The shares of the company gained more than 12% last month as the vaccine rollout reopened the economy and spending on information technology firms increased. IBM has a steady profit inflow and seems to have benefited from a market pivot to value stocks as growth stocks saw sell-offs during the first three months of the year. IBM is ranked second on our list of top 10 artificial intelligence stocks to buy for 2021.
As of the end of the fourth quarter of 2020, Arrowstreet Capital owns 2.7 million shares of IBM worth $344.97 million. IBM accounts for 0.48% of Arrowstreet’s total portfolio.
1. Facebook, Inc. (NASDAQ: FB)
Number of Hedge Fund Holders: 242
Facebook (NASDAQ: FB) is a California-based multinational technology firm that is famous for social media networks Facebook, Instagram, and messaging service WhatsApp. It also has stakes in other businesses and is one of the largest companies in the world. Facebook has an artificial intelligence initiative named Facebook AI that is working on the use of AI in image searches, cloud storage systems, data analytics, virtual reality, and other projects. Researchers at the company hope to develop human-level systems using AI breakthroughs.
The company has a market cap of more than $880 billion and posted nearly $90 billion in revenue in December 2020. Facebook stock has been steadily gaining since the start of the year on the back of increased digital advertising revenue. The firm has increased ad prices by 30% since March. Research firm eMarketer expects that Facebook ad revenue will cross $42.6B this year. The company is ranked first on our list of top 10 artificial intelligence stocks for 2021.
With a $3.3 billion stake in FB, SB Management owns 12 million shares of the company as of the end of the fourth quarter of 2020. Our database shows that 242 hedge funds held stakes in Facebook as of the end of the fourth quarter, versus 230 funds in the third quarter. Our calculations show that, FB ranks 3rd in our list of the 30 Most Popular Stocks Among Hedge Funds: 2020 Q4 Rankings.
You can also take a peek at Top 10 High Growth Stocks To Buy in 2021 and Unknown Billionaire Phill Gross’ Top 10 Stock Picks.
