Below we listed the 5 best robotics and artificial intelligence stocks to buy according to hedge funds. For a detailed analysis and a more comprehensive list please see Top 10 Robotics and Artificial Intelligence Stocks To Buy.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a look at the best robotics and AI stocks to buy:
5. Xilinx (NASDAQ:XLNX)
Unfortunately it is too late to buy XLNX. This morning Advanced Micro Devices (AMD) announced that it will be acquiring XLNX for $35 billion. About three weeks ago WSJ reported rumors that AMD might be buying Xilinx for more than $30 billion. Xilinx shares returned around 25% so far this year.
Xilinx is the fifth most popular artificial intelligence and robotics stock in our list. There were a total of 47 hedge funds with bullish XLNX positions at the end of June. The largest stake in Xilinx, Inc. (NASDAQ:XLNX) was held by Matrix Capital Management, which reported holding $242.5 million worth of stock at the end of June. It was followed by SoMa Equity Partners with a $196.8 million position. Other investors bullish on the company included Polar Capital, Alkeon Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position SoMa Equity Partners allocated the biggest weight to Xilinx, Inc. (NASDAQ:XLNX), around 7.7% of its 13F portfolio. Bronson Point Partners is also relatively very bullish on the stock, dishing out 5.21 percent of its 13F equity portfolio to XLNX.
4. Tesla (NASDAQ:TSLA)
Tesla is the fourth most popular artificial intelligence stock among the 800+ hedge funds tracked by Insider Monkey. Most investors are under the impression that hedge funds don’t love Tesla because short sellers like David Einhorn and Mark Spiegel are very vocal. The number of bullish hedge fund positions has been reaching a new high for the last 3 quarters. At the end of June there were a total of 63 hedge funds with bullish Tesla bets. This means Tesla is currently a Hedge Fund 100 stock.
Even though Tesla shares increased from $84 at the end of December to $425, the stock is very popular among investors and hedge fund managers. Worm Capital recently released its Q3 2020 Investor Letter, a copy of which you can download here, and said the following about Tesla:
“A good example of riding our winners this year is Tesla, which we have studied down to the cellchemistry level since 2015. In August, for instance, the bid for Tesla increased some 70%. Was this increase in bid itself a reason to sell our ownership, or even to trim? No. Tesla continues to be dramatically undervalued relative to its long-term, multi-year intrinsic value, in our view. As I have discussed in previous letters, I believe Tesla is perhaps the single best investment opportunity in the market today: It is a true disruptor competing in vast end markets (transportation, trucking, energy storage) that are each worth trillions of dollars of potential market cap.
By 2025, I expect Tesla to be trading at multiples of where it’s currently priced today. Of course, month-to-month or even quarter-to-quarter we may see the prices bounce around, but we don’t attempt to time the market. As a rule, industry juggernauts in their early stages tend to be more volatile. That’s why we think in terms of years and not days: It gives us the flexibility of opportunity to make multiples on our invested capital.”
3. JD.com (NASDAQ:JD)
JD.com is a China based retailer that focuses on cutting edge artificial intelligence research. They focus on deep learning, natural language processing, and speech recognition. JD is the third most popular artificial intelligence stock in our list. A total of 87 hedge funds had bullish JD positions at the end of June.
We recently shared Hayden Capital’s detailed comments on JD in this article. Billionaire Dan Loeb is also very optimistic about JD. Here is what he said about JD back in August:
“During the quarter, we took advantage of jitters about China’s relationships with Hong Kong and the U.S. that created an air pocket in trading of Chinese‐related shares to establish new positions in e‐commerce leaders Alibaba and JD.com. As we have articulated in prior letters, our outlook for Alibaba and the broader Chinese e‐commerce market is bright. We believe online gross merchandise value (“GMV”) will grow at a mid‐teens CAGR over the next five years, propelled by both (1) rising consumption per capita, as the Chinese retail market is equal in size to the U.S. despite four times as many consumers, and (2)increased penetration of retail by online, a trend which we believe has been structurally accelerated by the COVID‐ 19 pandemic.
As the e‐commerce market matures, we believe Alibaba & JD will leverage scale and growing repositories of transaction data to increase monetization of their platforms through targeted advertising to improve revenue yields (revenues as a percentage of GMV) from a starting point of less than 4% today. As a point of comparison, brick‐and‐mortar retail store rent expenses in China are greater than 10% of sales on average, which provides a significant umbrella for online marketplaces to take a greater share of GMV through a combination of commission and advertising spending as online retailer cost structures converge with brick‐ and‐mortar retail.
2. NVIDIA Corporation (NASDAQ: NVDA)
NVIDIA Corporation (NASDAQ: NVDA) is a gaming and crypto company. We discussed NVDA in detail in this article. The company has a market capitalization of $331bn. NVIDIA has been one of the best performers in the U.S. stock market over the last few years. The stock was changing hands for $30 at the beginning of 2016 and currently trades at $535, representing a nearly than eighteen-fold jump. The company recently surpassed Intel (NASDAQ: INTC) to become the largest U.S. semiconductor maker.
Based on this performance, it is no surprise that the stock is in the portfolio of 92 hedge funds. Fisher Asset Management and GQG Partners held the largest equity positions in NVDA in our database at the end of March.
1. Alphabet Inc (NASDAQ:GOOGL)
Alphabet Inc previously owned Boston Dynamics but sold it. So, currently it is in our list because it is probably the #1 artificial intelligence company in the world. Google AI is the company’s division that focuses exclusively on artificial intelligence and Waymo is probably the most advanced autonomous driving technology company in the world (though Chinese competitors are catching up fast).
Alphabet is the #1 stock in our list, but it is also one of the 5 most popular stocks among hedge funds. Ensemble Capital recently said the following about Alphabet:
“Google: After rallying by over 20% in July and August, Google’s share price pulled back sharply in September during the market wide correction. We believe that Google’s shares remain undervalued and that while the pandemic has hurt business performance in 2020, that the core value of Google Search, YouTube and their other properties such Google Maps has not been permanently impaired in any way and in fact the post-COVID world likely depends even more heavily on Google’s digital tools.””
