5 Best Machine Learning Stocks To Invest In

In this article, we discuss the 5 best machine learning stocks to invest in. To read a detailed analysis of the machine learning industry, go directly to the 13 Best Machine Learning Stocks To Invest In.

5. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 173

NVIDIA Corporation (NASDAQ:NVDA) is a tech company that provides a range of machine learning and analytics software libraries and software solutions, including RAPIDS, Deep Learning SDK libraries, NVIDIA GPU Cloud (NGC), and others. Additionally, NVIDIA Hopper and Ampere GPU graphics processing units are designed specifically for accelerating AI tasks, especially deep learning. One of the main features of these GPUs is their tensor cores which are specialized hardware units tailored for performing matrix multiplication operations commonly used in deep learning algorithms. The company takes the 5th spot on our list of best machine learning stocks to invest in.

Based on 39 Wall Street analysts’ ratings over the past three months, NVIDIA Corporation (NASDAQ:NVDA) has a consensus rating of Strong Buy. The average price target of $983.84 implies an upside of 12.41% from the price of $875.25 on April 8.

In Q4 of 2023, 173 hedge funds held positions in NVIDIA Corporation (NASDAQ:NVDA) and their stakes amounted to $33.764 billion. This is compared to 180 funds with positions in the stock in the preceding quarter worth $29.576 billion. As of December 31, 2023, GQG Partners is the most dominant shareholder in the company and has a position worth $6.88 billion.

Palm Valley Capital Management stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its first quarter 2024 investor letter:

“Such beguiling prognostications are indigenous to Wall Street—the biggest showcase of them all. The ferocious march higher of NVIDIA Corporation (NASDAQ:NVDA)’s stock on expectations of its continued dominance in artificial intelligence (AI) chips might even confound the galley slavedriver in Ben-Hur. Ramming speed!

Nvidia’s share price seems to imply the firm will soon control nearly the entire global semiconductor market (over half a trillion in sales vs. Nvidia’s current $60 billion) while maintaining an operating margin of 54%—unprecedented for a hardware company. Leading hardware firms rarely retain their supremacy forever: IBM, Hewlett Packard, Digital Equipment Corporation, Intel, and Cisco all fell from their storied perches…” (Click here to read the full text)

4. Alphabet Inc. (NASDAQ:GOOGL)

Number of Hedge Fund Holders: 214

Alphabet Inc. (NASDAQ:GOOGL) is heavily focused on machine learning and many of its subsidiaries have integrated machine learning across their products and services. Google Brain, part of DeepMind now, is focused on machine learning and AI. The company’s AI research division has made advancements in applications of AI in the early detection of cancer and also reinforcement learning. Alphabet Inc.’s (NASDAQ:GOOGL) Google also offers the Google Cloud Platform, one of the top platforms used by AI developers and enterprises worldwide to manage ML workflows and deploy models at scale.

According to Insider Monkey’s database, Alphabet Inc. (NASDAQ:GOOGL) was part of 214 hedge funds’ portfolios with positions worth $28.79 billion in the fourth quarter of 2023. This is compared to 221 funds in the third quarter with a total stake of $26.158 billion.

On April 4, Reuters reported that Alphabet Inc. (NASDAQ:GOOGL) is considering to acquire HubSpot, Inc. (NYSE:HUBS) in a mega deal. While neither the company nor HubSpot, Inc. (NYSE:HUBS) has made an official comment about the deal, the company met with investment bankers from Morgan Stanley (NYSE:MS) to gauge what antitrust regulators would do and determine how much to offer. As of April 8, HubSpot, Inc. (NYSE:HUBS) has a market capitalization of $33.714 billion.

Pershing Square Holdings stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its fourth quarter 2023 investor letter:

“In early 2023, we initiated an investment in Alphabet Inc. (NASDAQ:GOOG), the parent company of Google, at a highly attractive valuation during a period when apprehension about the company’s competitive positioning in AI overshadowed the high-quality nature of its business and strong growth prospects.

Since we initiated our position, the company has delivered impressive operating results. With two of the highest ROI and most resilient ad formats in Search and YouTube, Google occupies a dominant position in the secularly fast-growing digital advertising market. As the digital advertising market recovered over the course of the year, revenue growth in Google’s advertising business accelerated from 3% in Q1 2023 to 10% in Q4 2023. Moreover, the company realized significant progress on its substantial margin expansion opportunity and maintained a robust capital return program. In 2023, operating profit margins expanded by approximately 225 basis points (bps), excluding one-time severance and real estate charges, as the Cloud segment reached breakeven profitability. We expect continued cost control, automation efficiencies, and operating leverage in under-earning segments (Cloud & YouTube) to sustain margin expansion as Google invests behind AI initiatives.

The company is using its ample free cash flow to repurchase approximately 4% of its outstanding shares on an annual basis…” (Click here to read the full text)

3. Meta Platforms, Inc. (NASDAQ:META)

Number of Hedge Fund Holders: 242

Meta Platforms, Inc. (NASDAQ:META) utilizes machine learning across the organization as well as within its products and services. The company’s Meta AI division is engaged in the development of tools and software based on machine learning, including the PyTorch machine learning framework and Llama 2 large language model, among others. In February, Reuters reported that the company is planning to launch Lllama 3 in July. According to the report, in the new version, contentious questions will be answered better and context will be provided if any question is deemed controversial. Meta Platforms, Inc. (NASDAQ:META) is our third-best machine-learning stock to invest in.

As of the fourth quarter of 2023, 242 hedge funds have gone long on Meta Platforms, Inc. (NASDAQ:META) with a total stake worth $44.17 billion. This is compared to 234 hedge funds with stakes worth $35.24 billion in the preceding quarter. As of December 31, 2023, Rajiv Jain’s GQG Partners is the most prominent shareholder in Meta Platforms, Inc. (NASDAQ:META) with 11.15 million shares worth nearly $3.95 billion.

On April 9, TD Cowen analyst John Blackledge maintained a Buy rating on Meta Platforms, Inc. (NASDAQ:META) and raised its price by $90 to $590. TD Cowen also raised the company’s 1Q24 and 2024-2029 revenue estimates by 1%-4% annually.

Palm Valley Capital Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its first quarter 2024 investor letter:

“While we are not experts on the beanstalk tech stocks, we do have considerable experience observing behavior during bubbles. For the current crop of market leaders, we wonder: how good can it get? Google, Meta Platforms, Inc. (NASDAQ:META), and Amazon’s combined advertising revenue exceeded the total value of the U.S. advertising industry by 2020 and now accounts for nearly 50% of the entire $900 billion global ad market (GroupM estimate). Meta’s top advertiser last year was Temu, a retailer of cheap Chinese goods that is losing money on each U.S. order in an effort to take share from Amazon.

Meanwhile, Microsoft’s powerhouse Office division carried a 49% operating margin last year, Meta’s Facebook and Instagram segment had a 47% margin, and Google’s Search earned a 35% operating margin. In other words, purveyors of financial indexes that are primarily constructed by simple, easy-to-replicate formulas sport profit margins that make those of the most dominant technology franchises on Earth seem prosaic. …” (Click here to read the full text)

2. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 293

Amazon.com, Inc. (NASDAQ:AMZN) offers machine learning-related services and tools through its Amazon Web Services (AWS) division, including Amazon SageMaker, Amazon Bedrock, Amazon SageMaker Ground Truth, and more. Amazon SageMaker is a fully managed machine learning service that developers can use to build, train, and develop machine learning models in a shorter time frame. Additionally, AWS offers a wide range of ML and AI services for developers and data scientists. AWS purpose-built AI services are utilized by developers for vision, documents, and more. AWS offers services with generative AI built in like the Amazon CodeWhisperer which provides developers with code suggestions and recommendations. Among other applications, many of the AWS AI services are used to improve customer experience, decision-making, and business processes.

On April 1, Wells Fargo analyst Ken Gawrelski raised the price target on Amazon.com, Inc. (NASDAQ:AMZN) to $217 from $211 and maintained an Overweight rating. The company was added to the firm’s Q2 Tactical Ideas List as well.

Hedge fund sentiment was quite positive toward Amazon.com, Inc. (NASDAQ:AMZN) in the fourth quarter of 2023 as hedge funds with positions in the stock were 293 in the quarter, with positions worth $50.88 billion. This is compared to 286 funds with positions worth $38.9 billion in the previous quarter. Fisher Asset Management is the top investor in the company as of Q4 of 2023 with a position worth $6.348 billion.

Fred Alger Management mentioned Amazon.com, Inc. (NASDAQ:AMZN) in its fourth quarter 2023 investor letter:

“Amazon.com, Inc. (NASDAQ:AMZN) is a well-known online retailer and cloud computing leader. The company’s Amazon Web Services (AWS) business provides utility-scale cloud offerings that facilitate corporate America’s transition to digital systems. During the quarter, shares contributed to performance as Amazon reported strong fiscal third quarter results, where the company beat sales and earnings estimates. Moreover, AWS growth remained steady. contributing to Amazon’s better-than-expected operating income despite concerns around cloud cost optimizations, showing signs of increasing net new cloud workloads. While management noted that customers remain price-conscious and focused on deals, demand remains strong across all segments, leading the company to raise their fiscal fourth quarter revenue and operating income guidance.”

1. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 302

Microsoft Corporation (NASDAQ:MSFT) is engaged in machine learning through its offering of Azure Machine Learning service to manage and accelerate the machine learning project lifecycle and is used by ML professionals to develop models, deploy them, and oversee machine learning operations. The company had a long-standing partnership with OpenAI, an AI research and deployment company best known for its large language model ChatGPT. The company’s Azure OpenAI service grants users access to advanced AI capabilities and models, including OpenAI GPT-4, GPT-4 Turbo with Vision, GPT-3.5-Turbo, and Embeddings model series. Microsoft Corporation (NASDAQ:MSFT) occupies the top spot on our list of best machine learning stocks to invest in.

In the fourth quarter of 2023, 302 hedge funds held stakes in Microsoft Corporation (NASDAQ:MSFT), with positions worth $87.3 billion. As of December 31, 2023, the Bill & Melinda Gates Foundation Trust is the largest shareholder of the company with a position worth $14.37 billion.

On April 4, it was announced that Microsoft Corporation (NASDAQ:MSFT) and Cloud Software Group Inc. will be extending their collaboration via a strategic partnership over the next 8 years. Under the agreement, the company will use Citrix as the preferred Global Azure Partner solution for Enterprise Desktop as a Service when dealing with joint Azure customers and Microsoft Azure will be utilized as the preferred cloud solution by Citrix. Furthermore, Cloud Software Group Inc. committed $1.65 billion to the company’s cloud and its generative AI capabilities.

Diamond Hill Capital stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its fourth quarter 2023 investor letter:

“Other top Q4 contributors included Meta and Microsoft Corporation (NASDAQ:MSFT). Social media platform Meta’s digital ad revenues increased during the quarter, while it continued cutting costs — a combination which generated better-than-expected revenues and profits. Shares of software and information technology services provider Microsoft rose as its Azure cloud business continues growing and the company continues capitalizing on its attractive recurring revenue-based model to drive growth.”

Should you invest $1,000 in NVIDIA Corporation (NASDAQ:NVDA) right now?

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Disclosure: None. You can also look at the 12 Best All-Time Low Stocks To Invest In and the 10 Best US Chemical Stocks To Invest In Now.

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