In this article, we will take a detailed look at the 8 Best AI PC Stocks to Buy Now.
When the AI revolution began with the launch of ChatGPT, no one would have thought that down the road it would bring a huge growth catalyst for the PC industry, notorious for its cyclical nature and unpredictability. Fast forward to today, everyone is talking about PCs equipped with AI-focused equipment capable to process generative AI workloads. But in just a matter of few months why did the market feel the need for AI PCs? It all boils down to costs. GPT-4 costs $0.03 per 1,000 tokens for prompts and $0.06 for completion according to Microsoft’s estimates. Consider millions of users prompting LLMs from their phones and computers. The costs of scaling such systems are not feasible. That’s why the market thought allowing users to process AI-intensive workloads natively instead of using the Cloud is the future. And that caused the AI PC boom. Tech market analyst firm Canalys says AI PC shipments are expected to soar to 170 million in 2027, from 25 million in 2022. That would be a 60% share of the total PC market. The firm also expects AI PC shipments to double from 2023 to 2024 and double gain from 2024 to 2025.
Canalys also expects vendors to ship 205 million AI-capable PCs in 2028, representing a CAGR of 44% from 2024 through 2028.
For this article we scanned Insider Monkey’s database of 919 hedge funds and picked 8 AI PC stocks with the highest number of hedge fund investors. 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).
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8. Arm Holdings Plc (NASDAQ:ARM)
Number of Hedge Fund Investors: 29
Goldman Sachs said in a report last month that the biggest beneficiaries of the AI PC wave include Arm Holdings Plc (NASDAQ:ARM), in addition to some other companies.
UK-based semiconductor company Arm Holdings Plc (NASDAQ:ARM) is positioned well to benefit from the rise of AI PCs. Arm CEO Rene Haas said at the COMPUTEX 2024 event in Taiwan that the company plans to ready 100 billion Arm devices for AI across the globe. Arm’s moat lies in the fact that major companies are using its architecture to develop their own chips to cut reliance on chip makers like Nvidia and AMD. For example, Alphabet Inc. (GOOG) earlier this year said ARM-based Axion CPUs will be available for Google Cloud customers later this year. Media reports also say Microsoft was planning to launch ARM-powered Azure Cobalt CPU for Azure customers. Amazon’s CPU Graviton4 SoC for AWS clients is also ARM-based. On June 12, Reuters reported that MediaTek is developing an Arm-based personal computer chip that will run Microsoft’s Windows operating system.
However, since Arm Holdings Plc (NASDAQ:ARM) is still linked to the processors market that depends on the PC and smartphone industry (unlike NVDA, AMD which are focusing on GPUs), the skeptics have voiced concerns over the sustainability of its growth. Arm Holdings Plc (NASDAQ:ARM) has a Price/Sales ratio of 40, much higher than peers and even more than high-growth software players like Palantir. Its Price/Cash Flow ratio is 96, which represents a rather unrealistic growth expectation. The stock’s Forward P/E ratio of 103.09 is also much higher than the industry average of 30 and dwarfs that of NVDA and AMD.
As of the end of the first quarter of 2024, 29 hedge funds tracked by Insider Monkey reported owning stakes in Arm Holdings Plc (NASDAQ:ARM).
7. HP Inc (NYSE:HPQ)
Number of Hedge Fund Investors: 46
Microsoft has named HP Inc (NYSE:HPQ) as one of its notable partners in the production of AI PCs. HP Inc (NYSE:HPQ) is also making waves in the AI PC market with HP Inc’s (NYSE:HPQ) OmniBook X AI PC and HP Inc (NYSE:HPQ) EliteBook Ultra G1q AI PCs. HP Inc (NYSE:HPQ) recently posted strong Q2 results, which also indicated HP Inc (NYSE:HPQ) has started to see a new AI-powered PC refresh cycle. Morgan Stanley analyst Erik Woodring said in a note that HP Inc’s (NYSE:HPQ) PC business saw growth for the first time since April 22. The analyst also maintained his Overweight rating and increased the stock’s price target to $37 from $36.
HP Inc (NYSE:HPQ) shares have gained about 18% so far this year. HP Inc (NYSE:HPQ) is also a dividend-paying company, with a 3% dividend yield as of June 4 market close. HP Inc (NYSE:HPQ) shares are trading at 9.53X HP Inc’s (NYSE:HPQ) 2025 estimated earnings per share, which makes the stock undervalued given the industry’s forward P/E median sits at 22. According to data from Yahoo Finance, HP Inc (NYSE:HPQ) earnings are expected to grow at 6.70% next year and at 5.10% for the following five years on a per-annum basis.
As of the end of the first quarter of 2024, 46 hedge funds tracked by Insider Monkey reported owning stakes in HP Inc (NYSE:HPQ). Cliff Asness’s AQR Capital Management owns a $257 million stake in HP Inc (NYSE:HPQ).
Greenlight Capital stated the following regarding HP Inc. (NYSE:HPQ) in its first quarter 2024 investor letter:
“The title of our Sohn presentation was “Solve AI,” which was a play on Solvay’s corporate name. Nonetheless, we established another new long position that actually stands to benefit from AI, which we believe is not reflected in the current stock price. HP Inc. (NYSE:HPQ) sells computers, printers and adjacent products and supplies. We established an initial position at an average price of $30.76 per share, which is about 9x current year earnings estimates. Recent results reflect a two-and-a-half-year cyclical downturn in demand for computers, which followed a mini-boom driven by COVID and related demand for equipment to work-from-home. We believe that we are, at a minimum, on the cusp of a normal PC refresh cycle, which should drive earnings above estimates. HPQ has committed to return 100% of free cash flow to shareholders through buybacks and dividends. The shares have a 3.6% dividend yield and we estimate HPQ has the capacity to buy back 25-30% of the outstanding shares over the next three years.
The more exciting opportunity is through a possible AI-driven PC adoption cycle, fueling higher unit prices and a more robust PC market recovery. Currently, investor attention around AI is focused on cloud service providers and related equipment. This summer, Intel plans to release a neural processing unit (NPU), which will allow AI functionality on local devices. Microsoft has teased AI features that are coming in the next Windows update later this year, which may require a computer with an NPU to fully function. One such application is believed to be ‘AI Explorer,’ which is described as an “advanced Copilot” with a built-in history/timeline feature that turns everything you do on your computer into a searchable repository using natural language. It is said to work across any application and allows users to search for previously opened conversations, documents, web pages and images. While we have spoken with experts that are divided between being enthusiastic and skeptical of an AI PC cycle, we don’t believe any of the optimism is currently reflected in the share price. HPQ ended the quarter at $30.22 per share.”
6. QUALCOMM Inc (NASDAQ:QCOM)
Number of Hedge Fund Investors: 78
QUALCOMM Inc (NASDAQ:QCOM) was seen as a laggard in the AI arms race but all of a sudden the stock has a new growth catalyst: AI PCs. Microsoft has announced that its Surface Laptop and Surface Pro will be powered by QUALCOMM Inc (NASDAQ:QCOM) chips. These devices can run several AI tasks without the internet. QUALCOMM Inc (NASDAQ:QCOM) is a key partner of Microsoft to deliver Copilot+ PCs.
As of the end of the first quarter of 2024, 78 hedge funds out of the 919 funds tracked by Insider Monkey reported owning stakes in QUALCOMM Inc (NASDAQ:QCOM).
In addition to AI PCs, AI smartphones is another emerging growth catalyst for QUALCOMM Inc (NASDAQ:QCOM). The company’s Snapdragon 8 Gen 3 Mobile Platform can power smartphones to process up to 10 billion parameters of generative AI models, effectively making them intelligent personal assistants.
Wall Street expects Qualcomm’s revenue to grow 10% in 2025 and earnings to rise by 13.10% in the year. Despite these growth catalysts, QUALCOMM Inc (NASDAQ:QCOM) is trading at a forward P/E of 18.42, lower than the industry median of 23.73.
Madison Sustainable Equity Fund stated the following regarding QUALCOMM Incorporated (NASDAQ:QCOM) in its fourth quarter 2023 investor letter:
“QUALCOMM Incorporated (NASDAQ:QCOM) also reported a solid fourth fiscal quarter with better than expected results. The company guided the first quarter ahead of expectations despite headwinds from Samsung as the inventory headwinds dissipate. Qualcomm remains well positioned in the mobile handset market and should benefit as Artificial Intelligence moves to edge devices which could drive an upgrade cycle.”
5. Dell Technologies Inc. (NYSE:DELL)
Number of Hedge Fund Investors: 82
Dell Technologies Inc. (NYSE:DELL) shares tumbled last month amid lackluster Q1 results but Wall Street believes AI server and PC growth is just getting started and Dell Technologies Inc. (NYSE:DELL) is positioned well to benefit from this cycle. Bank of America analyst Wamsi Mohan said in a note after Q1 earnings that he reiterated his Buy rating for Dell Technologies Inc. (NYSE:DELL). The analyst believes we are still in the early stages of AI adoption and expects momentum around AI servers. Mohan set a $180 price target for Dell Technologies Inc. (NYSE:DELL), which shows a 33% upside potential from the current levels.
Last month, Dell Technologies Inc. (NYSE:DELL) announced expansion of its AI PC portfolio, with new Copilot+ PCs powered by Snapdragon® X Elite and Snapdragon® X Plus processors. Microsoft has also named Dell Technologies Inc. (NYSE:DELL) as its manufacturing partner for Copilot PCs.
Dell Technologies Inc.’s (NYSE:DELL) bulls believe the market’s reaction to Dell Technologies Inc.’s (NYSE:DELL) Q1 report was irrational. Dell Technologies Inc.’s (NYSE:DELL) revenue jumped about 6.2% on a YoY in the quarter to $22.2 billion. Wall Street expects Dell Technologies Inc.’s (NYSE:DELL) EPS this year to come in at $7.71, and at $9.1 next fiscal year (2026). Based on this 2026 estimate, Dell Technologies Inc. (NYSE:DELL) is trading at around 15x its future earnings, which is lower than the industry median P/E of 23.08. According to Yahoo Finance, Wall Street has a $155.14 price target on Dell Technologies Inc. (NYSE:DELL) on average, which presents an upside potential of 14%. Based on high growth expectations from both AI PCs and servers, Dell Technologies Inc. (NYSE:DELL) is an undervalued stock to buy right now, according to analysts.
4. Advanced Micro Devices Inc. (NASDAQ:AMD)
Number of Hedge Fund Investors: 124
Advanced Micro Devices Inc. (NASDAQ:AMD) is making waves with its new AI PC offerings. Earlier this month, Advanced Micro Devices Inc. (NASDAQ:AMD) revealed new AMD Ryzen™ AI 300 Series processors equipped with Neural Processing Unit (NPU)1. Advanced Micro Devices Inc. (NASDAQ:AMD) has also introduced next-gen AMD Ryzen™ 9000 Series processors for desktops. Citi recently said in a report that Advanced Micro Devices Inc. (NASDAQ:AMD) is expected to take about 10% of the data center GPU market. This market share would be worth about $15 billion according to Citi’s calculations. Citi analyst Christopher Danely reiterated a Buy rating on the stock with a $176 price target.
Advanced Micro Devices Inc. (NASDAQ:AMD) is a pioneer when it comes to AI PCs. Advanced Micro Devices Inc. (NASDAQ:AMD) announced AMD Ryzen 7040 in January last year. It was the first chip to have built-in AI acceleration. Advanced Micro Devices Inc. (NASDAQ:AMD) later launched Ryzen 8040. Laptops powered by AMD’s Ryzen AI 300 series are expected to hit the market by July this year.
Advanced Micro Devices Inc. (NASDAQ:AMD) is also a strong player in the data center space. Advanced Micro Devices Inc. (NASDAQ:AMD) has teased 5th Generation Epyc Gen CPUs (codename Turin) and their Instinct MI-300 series GPU accelerators. Advanced Micro Devices Inc.’s (NASDAQ:AMD) serve chips are built on Zen5 core CPU architecture.
Average analyst estimate for Advanced Micro Devices Inc. (NASDAQ:AMD) is $187.2, which presents an upside potential of 17%. Wall Street analysts expect Advanced Micro Devices Inc. (NASDAQ:AMD) to grow 33% this year and 59% next year. For the next five years the growth will then moderate to 32% on a per-annum basis, which is still high. Based on Advanced Micro Devices Inc.’s (NASDAQ:AMD) 2025 EPS forecast, the stock is trading at around 28.6X forward P/E ratio, which isn’t high given Advanced Micro Devices Inc.’s (NASDAQ:AMD) growth trajectory and catalysts.
Meridian Contrarian Fund stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its fourth quarter 2023 investor letter:
“Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global semiconductor chip maker specializing in central processing units (CPUs), which are considered the core component of most computing devices, and graphics processing units (GPUs), which accelerate operations running on CPUs. We invested in 2018 when it was a mid-cap value stock plagued by many years of underperformance due to lagging technology and lost market hi share versus competitors Intel and Nvidia. Our research identified that changes and investments made by current management under CEO Lisa Su had, over several years, finally resulted in compelling technology that positioned AMD as a stronger competitor to Nvidia and that its latest products were superior to Intel’s. We invested on the the belief that AMD’s valuation at that that time did not reflect the potential for its technology leadership to generate significant market share gains and improved profits. This thesis has been playing out for several years. During the quarter, AMD unveiled more details about its upcoming GPU products for the AI market. The stock reacted positively to expectations that AMD’s GPU servers will be a viable alternative to Nvidia. Although we pared back our exposure to AMD into strength as part of our risk-management practice, we maintained a position in the stock. We believe AMD will continue to gain share in large and growing markets and is reasonably valued relative to the potential for significantly higher earnings.”
3. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 150
Morgan Stanley said in a report last month that Apple Inc (NASDAQ:AAPL) is one of the stocks that could benefit from the rise of AI PCs. Apple Inc (NASDAQ:AAPL) skeptics have long believed that Apple Inc (NASDAQ:AAPL) is a laggard in the AI race, but experts say Apple Inc (NASDAQ:AAPL) almost always makes its own way and Apple Inc (NASDAQ:AAPL) will come roaring back in the AI competition and surpass Microsoft and Alphabet. The first signs of Apple Inc’s (NASDAQ:AAPL) AI capabilities are here. Last month, Apple Inc (NASDAQ:AAPL) revealed new M4-powered iPad Pro and claimed that its devices, powered by Neural Engine, will be “more powerful than any neural processing unit in any AI PC today.” Apple Inc’s (NASDAQ:AAPL) Neural Engine is Apple Inc’s (NASDAQ:AAPL) neural processing unit (NPU) that accelerates AI workloads.
After the latest AI announcements at the WWDC event, Apple Inc. (NASDAQ:AAPL) shares added over $215 billion in market cap and closed at a record high on June 11. TF International Securities analyst Ming-Chi Kuo said in a fresh note that Apple has a competitive edge over others with its on-device AI.
Notable Wall Street analyst and Deepwater Asset Management Managing Partner Gene Munster recently made waves when he said in a post on Twitter that Apple Inc (NASDAQ:AAPL) is a better investment than Nvidia for the long term. Munster believes owning Apple Inc (NASDAQ:AAPL) over the next year will have a higher return because the market is in “denial” about Apple’s AI potential.
Apple Inc (NASDAQ:AAPL) is trading at 26X its 2025 EPS estimate ($7.22). This multiple, though higher than the industry average of 30, does not show the stock’s overvalued, given Apple Inc (NASDAQ:AAPL) sales growth of 6.40% for fiscal 2025 and 10.50% growth for the next five years on a per-annum basis.
RiverPark Large Growth Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its first quarter 2024 investor letter:
“Apple Inc. (NASDAQ:AAPL): Apple shares were a top detractor in the quarter. The company’s stock was pressured by negative news items including a government antitrust case, an Apple Watch patent dispute, and slowing China iPhone sales. Ultimately the company’s fiscal 1Q24 earnings report delivered a slightly better than expected quarter, but with guidance that disappointed investors. 1Q24 revenue and gross margin were better than feared, buoyed by stronger than expected worldwide iPhone sales which grew 6% despite a slight decline in China iPhone sales. Services revenue in the quarter was as expected and signaled the third quarter in a row of accelerating growth. Gross margins were also stronger than expected at 45.9%, the highest level in more than a decade. Guidance of $90 billion of revenue for 2Q24 was light however, due to weaker than expected iPhone sales in the current period and year-over-year declines in other hardware products facing difficult year-over year comps.
Although near-term trends are a bit muted, Apple is carrying lean inventory into an iPhone refresh cycle later this year. With an installed base of 2.2 billion active devices and significant growth of the company’s recurring revenue Services segment, we believe that Apple remains one of the most innovative, best positioned and most profitable companies in the mobile technology industry.”
2. NVIDIA Corporation (NYSE:NVDA)
Number of Hedge Fund Investors: 186
NVIDIA Corporation (NYSE:NVDA) is a no-brainer name when it comes to the best AI PC stocks, thanks to NVIDIA Corporation’s (NYSE:NVDA) wide range of chips it’s providing to power AI workstations and laptops. NVIDIA Corporation (NYSE:NVDA) is specifically targeting the AI PC market with NVIDIA Corporation (NYSE:NVDA) GeForce RTX™ GPUs and NVIDIA AI Enterprise software. NVIDIA Corporation (NYSE:NVDA) recently teased RTX AI laptops at Computex 2024.
While NVIDIA Corporation (NYSE:NVDA) is one of the best AI PC stocks based on hedge fund sentiment, many circles have voiced concerns over NVIDIA Corporation’s (NYSE:NVDA) valuation and whether the stock would be able to continue on its growth trajectory. NVIDIA Corporation (NYSE:NVDA) expects $28.0 billion in revenue for the second quarter of fiscal 2025, which was a sharp decline in growth rate according to many. Analysts also believe competitive threats to NVIDIA Corporation (NYSE:NVDA) are growing. AMD Ryzen AI 300 Series processors are powering many AI PCs developed by partners which include Microsoft. Microsoft CEO Satya Nadella recently praised AMD and said his company was “excited” to partner with AMD to deliver these new Ryzen AI powered Copilot+ PCs. Microsoft will be using MI300X Accelerators to power Azure’s OpenAI workloads. NVIDIA Corporation’s (NYSE:NVDA) long-term growth of its Blackwell chips is also under threat from Chinese competitors like Huawei.
While NVIDIA Corporation (NYSE:NVDA) is still one of the top AI picks of hedge funds and Wall Street, there are some lesser known AI stocks with long-term growth potential and low valuations. If you are looking for an AI stock that is as promising as NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
RiverPark Large Growth Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its first quarter 2024 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA): NVDA shares were our top contributor in the quarter following blowout 4Q results and 1Q guidance driven by strong data center sales. The company reported quarterly revenue of $22.1 billion, up 265% year-over-year, and EPS in the quarter of $5.16, up 487% year-over-year and 12% ahead of expectations. Revenue guidance for 1Q of $24 billion was 8% above very high expectations. The artificial intelligence arms race kicked-off by ChatGPT and Alphabet’s Bard, among others, has generated tremendous demand for Nvidia’s next generation graphic processors.
NVDA is the leading designer of graphics processing units (GPU’s) required for powerful computer processing. Over the past 20 years, the company has evolved through innovation and adaptation from a predominantly gaming-focused chip vendor to one of the largest semiconductor/software vendors in the world. Over the past decade, the company has grown revenue at a compound annual rate of over 20% while expanding operating margins and, through its asset light business model, producing ever increasing amounts of free cash flow. Following recent results, Jensen Huang, founder and CEO of NVIDIA stated in the company’s press release, “a trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Investors: 293
Satya Nadella’s plan to pack AI chips and AI-focused software into special PCs and label them as “AI PCs” was pure genius. Microsoft Corporation’s (NASDAQ:MSFT) announcement of Copilo+PCs seems to have given the struggling PC industry a new life, with several traditional PC players riding the wave. But Microsoft Corporation (NASDAQ:MSFT) is the best AI PC stock because of its moat in the enterprise software space which makes Microsoft Corporation’s (NASDAQ:MSFT) PCs a one-stop solution for anyone looking to own AI-powered machines for using AI-driven software.
Baron Fifth Avenue Growth Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its first quarter 2024 investor letter:
“Our second largest purchase during the quarter was the software platform, Microsoft Corporation (NASDAQ:MSFT), which we continued to add to, after initiating a position in the fourth quarter of 2023. Microsoft continues to report strong quarterly results, with revenue growth of 16% year-over-year in constant currency thanks to better-than-expected demand in its intelligent cloud segment, which saw revenue growth of 19% year-over-year, driven by Azure growth of 28% with AI contributing 6pts to growth compared with 3pts in the prior quarter. While the adoption of GenAI remains in its early stages, Microsoft has disclosed positive initial data points with 53,000 Azure AI customers as of its December quarter up from 18,000 in the prior quarter, 1.3 million paid GitHub Copilot subscribers (up 30% sequentially) and more than 230,000 organizations who have used AI capabilities in the power platform (up 80% sequentially). Management also noted that large cloud optimizations that started a year or so ago have largely finished. Profitability also continues to be strong with 44% non-GAAP operating margins, which was 120bps better than expected.”
While we acknowledge the potential of Microsoft Corporation’s (NASDAQ:MSFT), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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