In this article, we’re going to talk about the 7 unstoppable artificial intelligence (AI) stocks to buy now.
Is Predictive AI Taking Over GenAI?
Generative AI is taking the world by storm. This groundbreaking technology is capable of creating new content, such as text, images, and even music, based on the patterns it learns from existing data. The impact of this advancement in AI on businesses has been profound, with businesses using it to automate tasks, improve efficiency, and generate innovative solutions through personalized content.
While there are still challenges, GenAI’s potential is undeniable. AI companies have rolled out GenAI platforms, integrating large language models in them, that are a click away from the general public’s access. We talked about this earlier in our article about the 10 Best Small Cap AI Stocks to Buy According to Short Sellers. Here’s an excerpt from it:
“Large language models are a type of AI that uses deep learning techniques and massive datasets to understand, generate, and predict human language. They’re trained for all of this through statistical relationships from vast amounts of text. The reason why they became so popular in such a short time is because they can be fine-tuned for specific tasks or understand language better through specific prompts. LLMs like Gemini and ChatGPT-4 are Multimodal AI platforms that allow processing and generating multiple types of data simultaneously, such as text, audio, and visual inputs.”
GenAI has been popular recently due to advancements that have brought us models like ChatGPT-4, but predictive AI (or enterprise machine learning) has been prevalent in the business world for a longer period. It’s been used extensively for tasks like fraud detection, customer churn prediction, and market analysis. GenAI excels at creating new content, but predictive AI is better suited for tasks that involve forecasting future trends or predicting outcomes based on historical data.
Mature organizations with streamlined processes use predictive AI as it helps deliver high returns and improve the customer experience. Forbes reported that UPS saves $35 million annually by optimizing package delivery planning. A medium-sized bank could save $16 million annually by predicting fraudulent transactions. A marketing campaign could increase profit 5x by predicting consumer behavior.
GenAI spending was less than 7% of predictive AI last year. However, predictive AI’s potential remains largely untapped due to challenges in operationalization. It can operate autonomously, while GenAI often requires human oversight. It is also cheaper and has a smaller footprint than the latter. The global predictive AI market is expected to grow from $14.9 billion in 2023 to $108 billion by 2033, with a CAGR of 21.9% from 2024 to 2033, according to a report published by market.us.
Google AI’s investment of $100 billion in responsible AI initiatives, focusing on areas like healthcare, climate change, and cybersecurity, indicates this sector’s importance and potential. Similarly, SoftBank’s $3.5 billion fund for predictive AI startups and Sequoia Capital’s substantial investment in PreCog are also examples of this. In 2023, the Large Enterprises segment captured more than a 65% share in the Predictive AI market.
Predictive AI is used for large-scale operations, learning from data to predict outcomes and behaviors, and guiding millions of daily operational decisions. Such use cases are further a testament to how artificial intelligence is now an integral part of major industries of the world, whether directly or indirectly. In this context, we are here with a list of 7 unstoppable artificial intelligence (AI) stocks to buy now.
Methodology
To compile our list, we sifted through ETFs, online rankings, and internet lists to compile a list of 15 AI stocks. We then selected the 7 stocks that were the most popular among elite hedge funds and had gained at least 30% year to date. The stocks are ranked in ascending order of the year-to-date performance, as of September 4.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
7 Unstoppable Artificial Intelligence (AI) Stocks To Buy Now
7. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 130
Performance (Year-to-Date) as of September 4: 36.88%
Broadcom Inc. (NASDAQ:AVGO) makes devices that help people connect to the internet wirelessly. It makes chips for routers, gateways, and access points that use Wi-Fi, manufacturing a wide range of semiconductor components and integrated circuits, as well as software solutions. Moreover, it makes custom ASICs, which are specialized powerful processors for specific tasks, and is a monopoly-holder in the ASICs market.
In Q2, Broadcom Inc.’s (NASDAQ:AVGO) AI revenue jumped 280% year-over-year, hitting a record value of $3.1 billion. The total revenue growth was 42.99%, generating $12.49 billion in revenue. But if VMware (a subsidiary of the company) revenue was excluded, the revenue was up only 12%. Infrastructure software segment revenue of $5.3 billion was up 175% year-on-year.
Since VMware was acquired, the company modernized the product SKUs from over 8,000 disparate SKUs to just 4 core product offerings. This helped reduce problems between sales partners, and now instead of buying VMware products all at once, it’s moving towards a subscription model.
Almost 3,000 of the company’s biggest 10,000 customers are using the new cloud service now. These customers have agreed to use the service (from VMware products) for several years.
The company is also working with big tech companies to create new AI chips. CEO, Hock Tan, said that the total AI sales for 2024 are projected at $11 billion. The company’s Ethernet technology is used in 7 of the 8 biggest AI systems being used today. They say that all large-scale AI systems will use Ethernet by 2025. This means that the networking business will grow by 40%, compared to the prior guidance of 35%.
Such guidance positions Broadcom Inc. (NASDAQ:AVGO) for success. As of June 30, 130 hedge funds have stakes in it. GQG Partners is the company’s largest shareholder with a position worth $5.2 billion.
Mar Vista Investment Partners, LLC stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q2 2024 investor letter:
“During the quarter, we established new investments in Broadcom Inc. (NASDAQ:AVGO) and Meta Platforms. We initiated a position in Broadcom in Q2. As a skilled aggregator, Broadcom acquires firms, streamlines their operations, and invests R&D dollars in mission critical products that generate industry leading profit margins, robust cash flows and high returns on invested capital. Its primary markets include AI accelerators targeting generative AI applications, networking & wireless semiconductors, and mission-critical infrastructure software solutions.
Broadcom is well-positioned to benefit from the rapidly expanding demand for custom AI accelerator chips that support the evolution of the generative AI market. The company is the second-largest producer of AI accelerator chips behind Nvidia and leads the market in custom AI ASIC chips. Its customers include leading hyper scalers like Alphabet and Meta who are turning to Broadcom for custom silicon due to its performance and cost advantages. We believe the company is a direct beneficiary of a multi-year capital cycle driven by hyper scalers building out next-generation AI factories.
Broadcom recently acquired VMware, the leader in virtualization software targeting the enterprise market. The integration of VMware is tracking ahead of plan as management has simplified its product bundles, transitioned to a subscription revenue model, and reduced operating costs. We believe this simplified go-to-market structure will result in strong top-line revenue growth and expanding operating margins. We believe Broadcom will compound intrinsic value per share in the mid-20% range over the intermediate term as it benefits from the AI-infrastructure build-out, a cyclical recovery in its legacy semiconductor business, and modestly accelerating growth from its infrastructure software business as VMware is successfully integrated.”
6. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 156
Performance (Year-to-Date) as of September 4: 54.32%
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s largest contract chip manufacturing company, designing microchips used in electronics and other industries, including healthcare and communications.
It makes up 60% of the total chip and 90% of the advanced chip manufacturing industry. Currently, it is held by 156 hedge funds, with the largest stake valued at $4,937,464,673, held by Fisher Asset Management.
The company’s 2024 capital budget is now estimated to be $30-$32 billion, up from the previous estimate of $28-$32 billion. This increased investment reflects the strong demand for AI-related technologies. Most of the capital will be allocated to advanced chip manufacturing processes, with a smaller portion dedicated to specialized technologies and advanced packaging.
In Q2 2024, the revenue generated was $20.58 billion, recording a 33.30% year-over-year growth. The earnings per share for the period were $1.48, higher than the $1.38 in Q1. This growth was supported by strong demand for industry-leading 3-, 7-, and 5-nanometer technologies.
The company’s leadership in advanced processes will drive customer growth, stable production, and lower costs. Management estimates a 10% growth in the overall semiconductor market (excluding memory) for the full year 2024. Such outlooks make it one of the best AI stocks.
Ariel Global Fund stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q2 2024 investor letter:
“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) also traded sharply higher in the quarter, following its annual shareholder meeting where management highlighted robust earnings visibility. The boom in AI investment is driving significant demand for the semiconductor hardware that enables it. TSMC currently holds a dominant position in relevant chip manufacturing and packaging. Additionally, although AI investments have been mostly focused on the datacenter market, Apple’s recent announcement on “Apple Intelligence” kickstarted an Edge AI race—which will likely drive greater than expected semiconductor growth in smartphones. TSMC is Apple’s sole foundry partner which bodes well for the future. Overall, we continue to view TSMC’s scale, technology, business model, customer service and execution favorably. The fact the company remains committed to returning capital to shareholders through both buybacks and dividends is another plus.”
5. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 44
Performance (Year-to-Date) as of September 4: 77.69%
Palantir Technologies Inc. (NYSE:PLTR) is a company that specializes in software platforms for big data analytics, which means that it uses AI to help other companies make better, data-driven decisions, by understanding, visualizing, and analyzing large amounts of complex data.
The company specializes in deploying enterprise AI in production. The expertise and focus position it uniquely to capitalize on the $600 billion AI opportunity. Last quarter, it signed 27 deals worth more than $10 million.
In June, Tampa General signed a 7-year expansion to use the company’s AI platform (AIP) for care coordination, resulting in a 30% reduction in patient length of stay. Panasonic Energy of North America signed a three-year expansion to use AIP across finance, quality control, and manufacturing operations. AARP is leveraging AIP to deliver personalized experiences to its 29 million monthly visitors.
In August, it partnered with Wendy’s to use AI for supply chain optimization and partnered with Microsoft to bring AI to US national security, integrating Microsoft’s Azure OpenAI Service into Palantir’s AI Platform. Later, it also partnered with Sompo, a Brazilian insurer.
In its 27% year-over-year improvement for Q2 2024, the revenue generated was $678.13 million, with $0.09 in earnings per share. Both of these numbers came out higher than Street estimates for the quarter.
A venture capital firm, Sequoia, noted that the revenue expectations from the AI ecosystem’s infrastructure build-out for Palantir Technologies Inc. (NYSE:PLTR) have grown from $200 billion to $600 billion per year in just nine months. Such growth is suggestive of a promising future, making this AI stock one of the top ones. 44 hedge funds are long in it as of June 30. The largest shareholder is Renaissance Technologies, with a position of $1,000,922,777.
Carillon Scout Mid Cap Fund stated the following regarding Palantir Technologies Inc. (NYSE:PLTR) in its first quarter 2024 investor letter:
“The top contributor to return for the quarter was Palantir Technologies Inc. (NYSE:PLTR). Sentiment improved on Palantir after it reported stronger than expected commercial customer revenue and free cash flow. U.S. commercial growth was especially encouraging, as U.S. commercial revenue was up by a large percentage year over year for the fourth quarter and U.S. commercial customer count grew nearly as much. We expect Palantir to become one of the premier artificial intelligence (AI) software providers, built on its Foundry and AIP platforms.”
4. MicroStrategy Inc. (NASDAQ:MSTR)
Number of Hedge Fund Holders: 26
Performance (Year-to-Date) as of September 4: 93.66%
MicroStrategy Inc. (NASDAQ:MSTR) is a software company that specializes in enterprise analytics software, providing AI-powered tools and platforms that help businesses analyze large amounts of data to make data-driven decisions.
This company remains the world’s largest corporate holder of Bitcoin, owning 226,500 bitcoins, with a total market value of $15 billion as of August this year. During the first and second quarters of 2024, the total Bitcoin holdings increased by 13.3% and 5.6%, respectively.
Year-to-date, bitcoin’s price has appreciated, significantly boosted by the approval of Spot Bitcoin Exchange Traded Products (ETPs). This development has attracted substantial institutional interest. It is currently held by 26 hedge funds, with total shares amounting to 13,864,000. The largest stake has a position of $1,909,738,272, held by Citadel Investment Group.
Yet, the company underperformed Street expectations in Q2 of 2024. There was a 7.44% year-over-year decline in revenue, generating a $111.44 million revenue. The loss per share was $0.57. In this quarter, it continued its shift towards cloud offering, resulting in subscription services revenue of $24 million, an increase of 21% year-over-year. This growth was due to cloud migrations and new customers.
MicroStrategy Inc.’s (NASDAQ:MSTR) introduction of Auto Express (a no-code tool for building AI BI bots), availability of MicroStrategy ONE on Google Cloud Marketplace, and joining Azure and AWS, are instances of how the company leverages AI features for its growth. This positions it as a leader in the AI industry.
Artisan Small Cap Fund stated the following regarding MicroStrategy Incorporated (NASDAQ:MSTR) in its Q2 2024 investor letter:
“Regarding MicroStrategy Incorporated (NASDAQ:MSTR), our decision to avoid this company comes down to a lack of conviction in its franchise characteristics. The stock has worked this year due to a rebound in the price of bitcoin. Since 2020, MicroStrategy has been focused on converting its cash and cash equivalent holdings, as well as issuing debt, to fund the purchase of bitcoin, which now makes up most of the company’s value.”
3. SoundHound AI (NASDAQ:SOUN)
Number of Hedge Fund Holders: 15
Performance (Year-to-Date) as of September 4: 115.09%
SoundHound AI (NASDAQ:SOUN) uses voice AI in speech recognition and understanding, connecting people to brands through customized conversational experiences with voice-enabled products, services, and apps for greater control and brand ownership of the customer experience.
It’s the first company to offer ChatGPT-like features in car assistants in Japan and Latin America. By partnering with Perplexity, they’ve added advanced online language models to their SoundHound Chat AI, which will be available soon. Automakers are willing to pay more for this upgrade, and management expects higher revenue per unit.
SoundHound AI (NASDAQ:SOUN) announced the acquisition of the AI startup, Amelia AI, for $80 million in the second quarter of 2024. In June, it also bought Allset, an ordering platform for restaurants. It also expanded its customer base by winning deals with 5 of the top 15 QSRs (Quick-Service Restaurants) based on the number of locations.
The company recorded 50% revenue growth per year since 2021. Second quarter revenue was up 54% and cumulative subscriptions and bookings backlog roughly doubled year-over-year to $723 million and annual query volume exceeded 5 billion. As of June 30, 15 hedge funds were long in the company.
SoundHound AI’s (NASDAQ:SOUN) AI technology is resonating with customers. It offers advanced capabilities, data protection, and a strong foundation model. Customers are switching to its product, Polaris, for improved performance and efficiency. This makes the company well-positioned for future growth among other AI stocks.
2. NVIDIA Corp. (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
Performance (Year-to-Date) as of September 4: 118.08%
NVIDIA Corp. (NASDAQ:NVDA) is the pioneer of GPU-accelerated computing, specializing in products and platforms for the large, growing markets of gaming, professional visualization, data center, and automotive. In other words, it’s a designer and manufacturer of graphics processing units (GPUs).
GenAI is driving data center growth. Next-gen models need 10-20x more compute and data and that’s where Nvidia comes in with its extremely powerful chips.
In FQ2 2025, there was a 122.40% year-over-year improvement in the company’s revenue. Data center revenue alone was up 54%. Cloud service providers represented roughly 45% of data center revenue. Compute revenue grew more than 2.5 times, and networking revenue grew more than 2 times from the last year.
In August, management approved a buyback of $50 billion in equity shares. Its shares were held by 179 hedge funds. Fisher Asset Management is the biggest shareholder with shares worth $11.54 billion, as of June 30.
The company unveiled Blackwell, a new architecture for AI factories and data centers. It combines multiple GPUs, CPUs, DPUs, and networking components to power next-GenAI. The GB 200 NVL72 system delivers up to 30 times faster inference for LLMs and workloads.
Demand for Blackwell and Hopper is strong, with Blackwell production starting in FQ4. Spectrum-X, a high-performance Ethernet platform, is gaining traction in the market. Sovereign AI opportunities are expanding as countries prioritize AI development.
NVIDIA Corp.’s (NASDAQ:NVDA) future success depends on continued innovation in AI. Market experts are forecasting a shift to robotics for the company’s growth. Management expects AI revenue to reach low-double-digit billions this year.
Aoris International Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“If Information Technology was the dominant sector for the quarter, NVIDIA Corporation (NASDAQ:NVDA), which is the largest supplier of microprocessors used for generative AI applications, was the dominant company. NVIDIA’s share price rose by a third in the quarter and has increased by 255% so far this year. Since the beginning of 2023, its market value has risen by 8.3x, or $4.3 trillion, making NVIDIA the third largest company in the world by this measure.
As a result of the unusually strong stock price performance from NVIDIA and a few other large companies, equity markets have become increasingly concentrated. You can see this in the chart below, which shows that on 30 June, 27% of the market value of the 500 largest US companies was attributable to just five companies, more than twice the average of the last 20 years.
The composition of the Aoris International Fund will always be very different to that of the broader equity market. There will be periods, such as the most recent quarter, where this contributes to our performance lagging that of our benchmark. When it comes to NVIDIA and other AI-centric companies, rapid growth is exciting, but it makes it difficult for us to judge what is normal. Our preference is to own established leading companies where we can make a more confident, evidence-based judgement about their growth and profitability.”
1. AppLovin Corp. (NASDAQ:APP)
Number of Hedge Fund Holders: 54
Performance (Year-to-Date) as of September 4: 121.15%
AppLovin Corp. (NASDAQ:APP) makes technologies that help app publishers of any size connect to their ideal customers by providing end-to-end software and AI solutions for publishers to reach, monetize, and grow their global audiences. Its products are used by both its gaming advertisers and the connected television market which relies on the Internet.
The company’s platform is gaining traction and attracting higher spend from advertisers, however, they are still working on finding users who meet revenue goals of the advertisers. As its technology improves, the company will find more users which will lead to increased ad spend and growth. Management aims to grow the software business by 20-30% long-term.
In-app advertising has a lot of growth potential. CEO Adam Foroughi emphasized the MAX platform’s role in driving this growth by transitioning from inefficient waterfall methods to programmatic bidding. He expressed optimism about maintaining steady growth rates of 5% to 7% quarter-over-quarter in the software business.
By the end of the second quarter, the company was held by 54 hedge funds. The largest one is valued at $1,105,913,583 by GQG Partners. During Q2, improvement in the company’s software platform generated $711 million in revenue, while app revenue was $369 million. The overall revenue for Q2 2024 was $1.08 billion, a 43.98% year-over-year increase.
AppLovin Corp. (NASDAQ:APP) is well-positioned for growth in the mobile advertising market with its AI-powered platform and strong partnerships. Management has plans to invest in organic growth, focusing on engineering and business development to support AXON technology and e-commerce expansion.
ClearBridge Select Strategy stated the following regarding AppLovin Corporation (NASDAQ:APP) in its first quarter 2024 investor letter:
“We also added AppLovin Corporation (NASDAQ:APP), a disruptor in the IT sector that helps developers market and monetize their mobile apps. Powered by its proprietary targeting engine, the company’s software segment grew robustly in 2023 and should benefit from improving AI efficiency. We believe growth of the company’s targeting engine is still in the early innings as precision continues to improve, its adoption and dataset grow and AppLovin starts to license the engine to e-commerce advertisers, which could open up a brand new multibillion dollar market.”
While we acknowledge the growth potential of AppLovin Corp. (NASDAQ:APP), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than the ones on this list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
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