5 Fastest Growing AI Stocks To Buy

In this article, we discuss the 5 fastest-growing AI stocks to buy. To read the detailed analysis of the AI segment, go directly to the 10 Fastest Growing AI Stocks To Buy.

5. Oracle Corporation (NYSE:ORCL)

1-year stock price growth as of August 29: 62.73%

Number of Hedge Fund Holders: 84

Oracle Corporation (NYSE:ORCL) is an American computer hardware, software, and cloud computing company headquartered in Texas. The company already has AI products in its portfolio. Nevertheless, it is still making investments in the generative AI segment. Oracle Corporation (NYSE:ORCL) announced the introduction of generative artificial intelligence features into its human resources software, Oracle Fusion Cloud HCM, on July 28.

On August 29, UBS analyst Karl Keirstead upgraded Oracle Corporation (NYSE:ORCL) from Neutral to Buy on the basis of the analyst’s belief that the company’s Oracle Cloud Infrastructure is being used increasingly by AI start-ups. The analyst also raised his price target to $140 from $120.

Oracle Corporation (NYSE:ORCL) is one of the most advanced AI companies in the market.

Madison Investments made the following comment about Oracle Corporation (NYSE:ORCL) in its second quarter 2023 investor letter:

“Oracle Corporation (NYSE:ORCL) reported a solid fiscal fourth quarter and provided guidance for the first quarter that continued to support solid growth for the company. Revenues grew 17% and were primarily driven by Cloud Services (up 29%) with Oracle’s cloud infrastructure (OCI) business growing 89% in the quarter. Oracle has messaged that this business has price-performance advantages as compared to the other infrastructure companies (Amazon, Microsoft, Google) and appears to be winning business as a result. On the earnings call, management made the case that OCI will play a significant role in the Generative AI workloads which bodes well for continued growth.”

4. Adobe Inc. (NASDAQ:ADBE)

1-year stock price growth as of August 29: 44.13%

Number of Hedge Fund Holders: 109

Adobe Inc. (NASDAQ:ADBE) is a California-based computer software company. The company has recently made strides in generative AI for creatives with Adobe Firefly. The company is looking to patent a system that is expected to introduce AI to the diversity, equity, and inclusion framework of organizations.

In the second quarter, Adobe Inc. (NASDAQ:ADBE)’s hedge fund holders increased to 109 from 99 in the previous quarter. Citadel Investment Group owned over 1.34 million of the company shares worth $657.605 million, making it the largest stakeholder in Adobe Inc. (NASDAQ:ADBE).

On August 17, Bank of America analyst Brad Sills upgraded Adobe Inc. (NASDAQ:ADBE)’s stock to Buy from Neutral and raised his price target to $630 from $575. The analyst believes that the company will experience incremental growth in 2024 due to AI.

Polen Capital made the following comment about Adobe Inc. (NASDAQ:ADBE) in its second quarter 2023 investor letter:

“While Adobe Inc. (NASDAQ:ADBE)’s growth has moderated from high teens to low teens during the past couple of years, Adobe continues to deliver solid growth, and management raised its full-year guidance during the most recent quarter. The company also introduced some AI product enhancements, which seem to have helped shift the narrative from “AI is going to be bad for Adobe” to “AI is going to be good.” Finally, the company continues to work towards the Figma acquisition.

It’s still uncertain whether antitrust regulators will allow this acquisition to close. That said, the stock seems to have been recovering from the initial reaction that the pricey acquisition indicated something more troubling about Adobe’s growth and competitive position. Solid ongoing fundaments have helped dispel that notion. We think it would be a big positive if the acquisition closes, but we remain confident in Adobe’s business even if it doesn’t.”

3. Salesforce, Inc. (NYSE:CRM)

1-year stock price growth as of August 29: 32%

Number of Hedge Fund Holders: 122

Salesforce, Inc. (NYSE:CRM) provides customer relationship management (CRM) software and application services to its clients. The company’s Salesforce Einstein helps organizations’ processes and data to utilize machine learning and advanced deep learning concepts. Salesforce, Inc. (NYSE:CRM) was founded in 1999 and is headquartered in California.

Salesforce, Inc. (NYSE:CRM) reported its Q2 FY 2024 earnings on August 30. The company posted a non-GAAP EPS of $2.12, exceeding the Wall Street expectations by 24 cents. Its revenue was up 11.4% year-over-year to $8.6 billion. For the third quarter Salesforce, Inc. (NYSE:CRM) expects a revenue of $8.70 billion to $8.72 billion and raised its full year revenue guidance to the range of $34.7 billion to $34.8 billion.

In the second quarter, Salesforce, Inc. (NYSE:CRM) stock was owned by 122 hedge funds.

The Ithaka Group said the following about Salesforce, Inc. (NYSE:CRM) in its first-quarter 2023 investor letter:

“Salesforce, Inc. (NYSE:CRM) is the largest pure-play cloud software company, holding a leading market share in customer relationship management applications and a top-five market share position in the company’s other clouds (Marketing, Service, Platform, Analytics, Integration, and Commerce). The company’s software subscription term-license model differs from the traditional perpetual-license software model in two respects: (1) the software is hosted on centralized servers and delivered over the internet, as opposed to traditional enterprise software that is loaded directly onto customers’ hard drives or servers; and (2) the revenue model is subscription-based, typically charging monthly fees per user as opposed to charging one-time licensing fees. The stock’s strong relative performance followed a strong F4Q23 earnings release that easily beat Street expectations on the top- and bottom-lines. In addition to the beat, management announced a number of initiatives that activist investors have been clamoring for, specifically a halt to large M&A transactions and a focus on operating profitability.”

2. NVIDIA Corporation (NASDAQ:NVDA)

1-year stock price growth as of August 29: 215.39%

Number of Hedge Fund Holders: 175

NVIDIA Corporation (NASDAQ:NVDA) has had an amazing year so far as its stock has gone up by 215.39% in the last twelve months and 240.79% year-to-date (YTD) as of the August 29 market close. 

Hedge funds were also quite bullish on NVIDIA Corporation (NASDAQ:NVDA)’s stock in the second quarter. According to the Insider Monkey database, 175 hedge funds held a stake in the company in the second quarter, compared to 132 in Q1. The total hedge fund investments increased from $12.3 billion in the first quarter to nearly $26 billion in Q2.

Rajiv Jain’s GQG Partners increased its stake in NVIDIA Corporation (NASDAQ:NVDA) by 70% to 13.938 million shares worth $5.896 billion and was the most significant stakeholder in the second quarter. NVIDIA Corporation (NASDAQ:NVDA)’s third largest hedge fund holder in Q2 was D E Shaw which increased its stake in the company by 232% to 4.3 million shares worth $1.82 billion.

Mairs & Power made the following comment about NVIDIA Corporation (NASDAQ:NVDA) in its second quarter 2023 investor letter:

“Regarding stock selection in the first half, NVIDIA Corporation (NASDAQ:NVDA) was a massive outperformer, up 189.54%. Amazon and Microsoft were also positive contributors, up 55.19% and 42.66%, respectively. All three stocks benefited from a renewed interest in growth stocks by investors in the first half of the year. Nvidia is the leading provider of processors used for artificial intelligence (AI) computation for both learning and inferencing, and its stock rallied significantly on a massive earnings report in the first quarter as cloud data center companies invested heavily in AI.”

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

1-year stock price growth as of August 29: 89.61%

Number of Hedge Fund Holders: 225

Meta Platforms, Inc. (NASDAQ:META) started this year with a stock price of nearly $125 and its stock price has been rallying ever since. The company’s stock closed at $297.99 on August 29, registering an almost 139% YTD increase. Among the US Big Five, Meta Platforms, Inc. (NASDAQ:META) has registered the highest YTD gain.

In the second quarter, Meta Platforms, Inc. (NASDAQ:META) stock was owned by 225 hedge funds with a stake worth $30.92 billion, up from 220 hedge funds with a stake worth $25.09 billion in the previous quarter. Tiger Global Management LLC increased its stake in the company by 15% and became Meta Platforms, Inc. (NASDAQ:META)’s largest stakeholder in Q2.

Meta Platforms, Inc. (NASDAQ:META)’s new addition to its AI portfolio was announced on August 24. The company is launching a large language model (LLM) called Code Llama. The LLM is Meta Platforms, Inc. (NASDAQ:META)’s new model for coding and is free for research and commercial use.

Giverny Capital Asset Management made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its second quarter 2023 investor letter:

“I have believed for a while that we’re better served with a lower weight to the tech giants – we own Alphabet (8.1% of our model portfolio at the end of June) and Meta Platforms, Inc. (NASDAQ:META) (5.2%) for a 13.3% exposure, or about half the Index’s weight in the giants. And while Alphabet’s 36% return for the first half and Meta’s 138% return were gratefully received, I’m pleased to report that if we strip out that contribution to our overall return, the other 23 stocks we own, constituting 85% of our portfolio (with cash making up the balance), were up 10.2% on a weighted basis.

GCAM owns two of the seven tech mega caps in Alphabet and Meta, and they enjoyed similar rises. As mentioned, Alphabet A&C shares rose 36% while Meta rose 138%. Together, they added 2.38 percentage points to the overall Index return, meaning these seven tech giants cumulatively generated 12.4 percentage points of return, or roughly three-quarters of the Index’s return.

Alphabet and Meta combined sport a $2.25 trillion market cap and between them should generate roughly $120 billion of pretax profit this year. That’s a multiple of 19 times pretax profit, a substantial discount to Microsoft and Apple, and an even larger discount to Amazon, Nvidia and Tesla.”

You can also look at the 10 Best Value Penny Stocks To Buy and the 15 Highest Paying Countries for Economists.

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