5 Tech Stocks Benefiting From The AI Boom

In this article, we will be taking a look at 5 tech stocks benefiting from the AI boom. To see more of these stocks, you can go directly to see the 10 Tech Stocks Benefiting From The AI Boom.

5. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 132

Morgan Stanley holds an Overweight rating on NVIDIA Corporation (NASDAQ:NVDA) shares as of June 16. The firm also raised its price target on the stock from $450 to $500.

In the first quarter, 132 hedge funds were long NVIDIA Corporation (NASDAQ:NVDA). Their total stake value was $12.3 billion.

NVIDIA Corporation (NASDAQ:NVDA) may be the first stock that comes to one’s mind when looking for AI plays at this time. The company is a leader in generative AI chip-making.

Saltlight Capital mentioned NVIDIA Corporation (NASDAQ:NVDA) in its first-quarter 2023 investor letter:

“In May 2021, we shared our thoughts on AI with a particular focus on NVIDIA Corporation (NASDAQ:NVDA), expressing our belief that it was poised to become a significant enabler of AI technology. At the time, it felt like our insights were being carried away by the wind.

Our thesis hinged on the idea that NVIDIA’s GPUs would form the fundamental computing hardware for neural networks. This hardware would not only develop AI tools and infrastructure but also democratise access to AI technology.

At the end of that letter, we included a substantial excerpt from an interview with NVIDIA’s CEO, Jensen Huang. Looking back, his words now seem eerily prophetic. He suggested, albeit vaguely, a solution to the complexity problem. He said:

“But finally, we have this piece of this new technology called artificial intelligence that can write that complex software so that we can automate it. The whole goal of writing software is to automate something. We’re in this new world where, over the next 10 years, we’re going to see the automation of automation””…(Click here to read the full text)

4. Alphabet Inc. (NASDAQ:GOOG)

Number of Hedge Fund Holders: 155

Alphabet Inc. (NASDAQ:GOOG) is a big tech company that is an obvious choice to play the AI boom since it has been adopting AI features across its software portfolios. It is one of TD Cowen’s top AI picks so far.

As of June 8, Wells Fargo holds an Equal Weight rating on Alphabet Inc. (NASDAQ:GOOG) shares.

Our hedge fund data shows 155 funds long Alphabet Inc. (NASDAQ:GOOG) in the first quarter, with a total stake value of $18.6 billion.

Mairs & Power made the following comment about Alphabet Inc. (NASDAQ:GOOG) in its first-quarter 2023 investor letter:

“As we have mentioned in previous months, we have slowly reduced our underweight position in the Technology sector over the past several years, as we have added a number of names that fit our investment strategy. Many of the these investments had impressive returns in the quarter and our relative performance in the tech sector was a bright spot. Four out of our top 5 performing names in the quarter were either Technology or Technology-related names, including: NVIDIA (NVDA), Alphabet Inc. (NASDAQ:GOOG), Littelfuse (LFUS), and Microsoft (MSFT). The stocks all benefited from a positive shift in investor sentiment in the quarter toward growth stocks, reversing last year’s trend. NVIDIA, Alphabet, and Microsoft also all benefited from their exposure to artificial intelligence and the headlines garnered from the widespread launch of ChatGPT a large language model developed by Microsoft partner, OpenAI. In the current tight labor market, there is a lot of enthusiasm around the efficiency this technology could bring to many industries. Alphabet and Microsoft are working furiously to build it into their products and NVIDIA has benefited as it currently has the best hardware to train and run large AI algorithms.”

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

Number of Hedge Fund Holders: 220

Meta Platforms, Inc. (NASDAQ:META) was found in the 13F holdings of 220 hedge funds at the end of the first quarter, with a total stake value of $25.1 billion.

Meta Platforms, Inc. (NASDAQ:META) is expected to benefit from the AI boom since it has been spending immensely on generative AI software. John Blackledge at TD Cowen believes AI can, in particular, boost the company’s ad sales across all its social networks.

As of June 5, Oppenheimer holds an Outperform rating on Meta Platforms, Inc. (NASDAQ:META).

Here’s what Baron Funds said about Meta Platforms, Inc. (NASDAQ:META) in its first-quarter 2023 investor letter:

“Shares of Meta Platforms, Inc., the world’s largest social network, were up 76.0% this quarter due to decisive cost discipline actions, improving adoption of new advertising products, the company’s work in generative artificial intelligence (AI), and the broader rally in technology stocks. Meta is the mega-cap technology company most focused on profitability through cost cutting, including layoffs of more than 20% of its staff and reductions in its data center and office footprint. On the top line, Meta continues growing its user base with daily average users up 5% year-over-year in the last quarter. Engagement remains healthy with impressions up 23% year-over-year, and newer advertising formats (like Instagram Reels) are reportedly picking up steam with 40% of advertisers now using Reels. Longer term, we believe Meta will utilize its leadership in mobile advertising, massive user base, innovative culture, and technological scale to sustain durable growth for years to come, with further monetization opportunities ahead in newer areas such as WhatsApp.”

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

Number of Hedge Fund Holders: 243

Justin Post at Bank of America holds a Buy rating on Amazon.com, Inc. (NASDAQ:AMZN) as of June 12.

John Blackledge at Cown holds that Amazon.com, Inc. (NASDAQ:AMZN) provides many AI tools to Amazon Web Services customers, meaning the company can benefit from increasing demand for cloud-computing services.

There were 243 hedge funds long Amazon.com, Inc. (NASDAQ:AMZN) in the first quarter. Their total stake value was $25.8 billion.

This is what Baron Funds said about Amazon.com, Inc. (NASDAQ:AMZN) in its first-quarter 2023 investor letter:

“Amazon is probably the best example of a company that was built with an ability to rapidly adapt to change from its very inception. We have written a lot over the years about how Amazon’s culture and organizational structures prioritize and enable rapid innovation. Historically, programming code was written in a sequential waterfall fashion, creating significant interdependencies between different developer teams in the organization and slowing down innovation. Amazon famously required all developers to expose their work externally via standardized Application Programming Interfaces (APIs). A novel and risky approach, it enabled development teams to work in parallel, created a rapid feedback loop with customers, and turned Amazon into one of the most innovative companies in the world. The culture of constant experimentation and the willingness to take risks and fail fast (remember the Amazon Fire phone?) became the core pillars of the company’s culture and led to revolutionary ideas like third-party sales (letting competitors sell similar products alongside your own), Amazon Prime Video, and Amazon Web Services (AWS), making the company a disruptor and leader in multiple multi-trillion-dollar industries.”

1. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 289

Microsoft Corporation (NASDAQ:MSFT) is another obvious AI beneficiary considering it has also been adopting AI features across its platforms.

Microsoft Corporation (NASDAQ:MSFT) was spotted in the portfolios of 289 hedge funds in the first quarter, with a total stake value of $57.9 billion.

As of June 15, Gregg Moskowitz at Mizuho holds a Buy rating on Microsoft Corporation (NASDAQ:MSFT) shares.

Mairs & Power made the following comment about Microsoft Corporation (NASDAQ:MSFT) in its first-quarter 2023 investor letter:

“As we have mentioned in previous months, we have slowly reduced our underweight position in the Technology sector over the past several years, as we have added a number of names that fit our investment strategy. Many of the these investments had impressive returns in the quarter and our relative performance in the tech sector was a bright spot. Four out of our top 5 performing names in the quarter were either Technology or Technology-related names, including: NVIDIA (NVDA), Alphabet (GOOG), Littelfuse (LFUS), and Microsoft Corporation (NASDAQ:MSFT). The stocks all benefited from a positive shift in investor sentiment in the quarter toward growth stocks, reversing last year’s trend. NVIDIA, Alphabet, and Microsoft also all benefited from their exposure to artificial intelligence and the headlines garnered from the widespread launch of ChatGPT a large language model developed by Microsoft partner, OpenAI. In the current tight labor market, there is a lot of enthusiasm around the efficiency this technology could bring to many industries. Alphabet and Microsoft are working furiously to build it into their products and NVIDIA has benefited as it currently has the best hardware to train and run large AI algorithms.”

See also 10 Technology Dividend Stocks Billionaires Are Loading Up On and 10 Internet of Things (IoT) Stocks Billionaires Are Loading Up On.