In this article, we discuss the 15 AI news investors probably missed.
Investors have been looking for smart ways to play the artificial intelligence (AI) boom that has swept the global financial markets over the past two years. Most of the attention in this regard has been confined to obvious choices in semiconductors, software, and biotechnology. Even within these sectors, prominent companies and their AI initiatives have dominated headlines. However, there are several hidden gems within these sectors that offer the same bang for the buck, given present macro context, but are not in limelight as such. For example, Bernie Ahkong, an analyst at UBS, recently noted that the first phase of AI was interest towards chipmakers. In the second phase, investors moved towards the industrial companies which actually supply the components to the data centers. The present tilt towards utility and power firms is quite possibly the third phase of this AI focus.
Read more about these developments by accessing 33 Most Important AI Companies You Should Pay Attention To and 20 Industrial Stocks Already Riding the AI Wave.
A recent study on artificial intelligence by Stanford University in the United States reveals that businesses are already outpacing academics when it comes to training AI models. For example, in 2023, the AI industry was able to train nearly 51 notable machine learning models compared to just 15 for academia. This happened despite the costs associated with training models rising. For instance, ChatGPT 4, the latest iteration of the popular ChatGPT that launched the AI wave back in late 2022, cost nearly $80 million to train. Similarly, Gemini Ultra, an AI tool developed by Google, cost $191 million to compute. The number of AI patents is also increasing, evidenced by the fact that since 2010, the number of granted AI patents has increased more than 31 times.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.
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Our Methodology
For this article, we selected AI stocks by combing through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds.
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).
AI News Investors Probably Missed
15. UiPath Inc. (NYSE:PATH)
Number of Hedge Fund Holders: 29
UiPath Inc. (NYSE:PATH) provides an end-to-end automation platform that offers a range of robotic process automation (RPA) solutions primarily in the United States, Romania, and Japan. Daniel Dines, the CEO of the firm, said during the second quarter earnings call earlier this month that the firm exceeded the high end of guidance across all key financial metrics in the second quarter, a testament to improved execution and the compelling value that AI-powered automation platform delivered to customers. Dines detailed that UiPath Inc. (NYSE:PATH) ended the quarter with ARR of $1.551 billion, an increase of 19%, driven by net new ARR of $43 million. Second-quarter revenue was $360 million, and the company delivered non-GAAP adjusted free cash flow of $49 million.
14. nCino, Inc. (NASDAQ:NCNO)
Number of Hedge Fund Holders: 30
nCino, Inc. (NASDAQ:NCNO) provides cloud-based software applications to financial institutions in the United States and internationally. Pierre Naude, the CEO of the firm, said during the second quarter earnings call that through Banking Advisor, the firm had brought unique data capabilities and AI to financial services. Banking Advisor is a banker-focused, conversational co-pilot tool that provides financial institutions a modern approach to proactive portfolio management, helps streamline routine tasks to save significant time and effort, and takes the guesswork out of complex processes to help financial institutions track and comply with regulatory requirements. Per Naude, even though Banking Advisor only became generally available in the second quarter, nCino, Inc. (NASDAQ:NCNO) signed eight Banking Advisor deals in the quarter across the community, regional, and enterprise market segments in the US.
13. Parsons Corporation (NYSE:PSN)
Number of Hedge Fund Holders: 36
Parsons Corporation (NYSE:PSN) provides integrated solutions and services in the defense, intelligence, and critical infrastructure markets in North America, the Middle East, and internationally. Carey Smith, the CEO of the firm, told analysts during the first quarter earnings call that Parsons was applying artificial intelligence across the entire portfolio, citing a few example areas to consider across the federal tech and critical infrastructure segments that the company works with. Per Smith, the kinds of systems needed to counter unmanned aircraft was one of those applications. Smith described the usage of AI for that as how operators identify, detect and track a drone that was in a location it probably should not be. Cybersecurity and supply chain trustworthiness were the other two areas that Parsons Corporation (NYSE:PSN) was focusing on as it developed AI solutions.
12. EPAM Systems, Inc. (NYSE:EPAM)
Number of Hedge Fund Holders: 37
EPAM Systems, Inc. (NYSE:EPAM) provides digital platform engineering and software development services worldwide. As the AI boom forces businesses to digitize operations, EPAM has benefited from the rise in demand for custom AI applications, helping firms by providing product development in this regard. In the second quarter, this translated to a revenue of $1.15 billion, beating estimates of $1.14 billion. EPAM Systems, Inc. (NYSE:EPAM) also posted adjusted profit of $2.45 per share, compared with analyst estimates of $2.26 apiece. EPAM offers consulting, cybersecurity, software engineering and product development services. As global IT spend rises to above $5 trillion, EPAM is in pole position to capitalize on the emerging trends in AI.
11. GitLab Inc. (NASDAQ:GTLB)
Number of Hedge Fund Holders: 39
GitLab Inc. (NASDAQ:GTLB) develops software for the software development lifecycle in the United States, Europe, and the Asia Pacific. The firm beat market expectations on earnings per share and revenue in the second quarter earnings, prompting analysts to take note of the growth in the AI space. Wells Fargo increased the price target on GitLab Inc. (NASDAQ:GTLB) stock, bumping it up to $75 from $70, and maintained an Overweight rating. The advisory also highlighted that the artificial intelligence offerings of the software firm were gaining momentum. Sid Sijbrandij, the CEO of GitLab, said during the earnings call that enterprises were now looking beyond code generation to integrate AI into all aspects of software development to deliver tangible results.
10. Cognizant Technology Solutions Corporation (NASDAQ:CTSH)
Number of Hedge Fund Holders: 39
Cognizant Technology Solutions Corporation (NASDAQ:CTSH) is a professional services company, provides consulting and technology, and outsourcing services in North America, Europe, and internationally. Ravi Singisetti, the CEO of the firm, noted that the purchase of Belcan, a leading global supplier of engineering, research and development services, provided an opportunity for Cognizant Technology Solutions Corporation (NASDAQ:CTSH) to expand service offerings into growth vectors that helped move the physical world of manufacturing aerospace and automotive into the age of digital data and AI. Building onto this AI theme, Ravi detailed that the launch of a new product, Cognizant Moment, focused on next-generation experience services that were data-led and AI powered.
9. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 61
Cisco Systems (NASDAQ:CSCO) designs, manufactures, and sells Internet Protocol based networking and other products related to the communications and information technology industry. Scott Herren, the CFO at Cisco Systems (NASDAQ:CSCO), recently spoke at the Goldman Sachs Communacopia + Technology Conference, tackling questions on AI and future growth, among other things. Herren detailed that enterprises were spending to be AI ready, pointing to four large transactions — also discussed during the earnings call — with each $100 million in sales. Herren noted that if one looks at why they bought the products — such as switches, routers and wifi among other things — it was because the enterprises were refreshing their core infrastructure to be ready for AI.
8. ServiceNow, Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 97
ServiceNow, Inc. (NYSE:NOW) provides end-to-end intelligent workflow automation platform solutions for digital businesses in North America, Europe, the Middle East and Africa, Asia Pacific, and internationally. Latest reports suggest that ServiceNow, Inc. (NYSE:NOW) is planning to release much-awaited updates to the Now Assist AI platform it markets. The new updates would include a new feature enabling enterprises to bring AI agents to workflows. Per the reports, the Now Assist platform would enable users to access a library of AI agents and give them the ability to build prompts and skills into AI agents through the Now Assist Skill Kit. Dorit Zilbershot, vice president of AI at ServiceNow, told VentureBeat in an interview that ServiceNow wanted to give clients as much control as they wish around the agents and how much work it will do for them.
7. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 156
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) makes and sells integrated circuits and semiconductors. Latest reports suggest that the company is mulling plans to partner with electronics giant Samsung to build mega chip factories in the United Arab Emirates. These factories would help satisfy soaring demand for artificial intelligence computing, per The Wall Street Journal. Senior executives from the company have already visited sites in the Middle Eastern country for the purpose. Such projects cost more than $100 billion to complete, and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is already setting up such facilities in the United States, Japan, and Germany. The UAE has in the past few years tried to diversify away from a petrochemical economy, opening up to investments in areas like AI.
6. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 165
Alphabet Inc. (NASDAQ:GOOG) is a California-based technology company that owns and runs the internet search engine Google. At the recent Google Gemini at Work event, the company outlined a range of artificial intelligence agent use cases. Wall Street analysts, like those led by Scott Devitt at Wedbush, took note of this development. In an investor note, the analysts noted that they had come away from the keynote with increased conviction in the strength of Google’s enterprise generative AI offerings and their emerging contribution to Google Cloud growth. They added that Google was actively working with enterprise customers to develop AI agents across a variety of use cases. Wedbush has an Outperform rating on Alphabet Inc. (NASDAQ:GOOG) and a 12-month price target of $205.
5. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. Susquehanna analyst Chris Rolland recently released an investor note on the chipmaker, detailing that pricing on the Hopper line of products for NVIDIA Corporation (NASDAQ:NVDA) had remained strong ahead of the upcoming Blackwell line. Per the analyst, aftermarket prices for the H100 had been relatively stable at slightly less than $30,000. down 0.6% in the third-quarter. He further added that there had not been any rise in H100 supply in the secondary market, suggesting that companies were holding on to their purchases. At current pricing and 70% utilization, there was a relatively short five-month hardware payback period for cloud service providers renting the H100, which would justify the continued spending, Rolland added.
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 184
Apple Inc. (NASDAQ:AAPL) is a consumer electronics firm. TF International Securities analyst Ming-Chi Kuo has claimed that Apple is poised to unveil a new version of the Vision Pro mixed reality headset next year. In a blog post, the analyst noted that the new product would go into mass production in the second-half of 2025 and will be powered by the M5 chip, as the tech giant aims to create a better Apple Intelligence user experience on the device. Per the analyst, if Apple Inc. (NASDAQ:AAPL) integrates advanced AI models like Sora by OpenAI into the Vision Pro, the impact of text-to-video AI models on the head-mounted display device experience will likely be more impressive than on existing mainstream consumer electronics.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 219
Meta Platforms, Inc. (NASDAQ:META) engages in the development of products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide. Baird analyst Colin Sebastian recently penned an investor note on the company, noting that the the unveilings by Meta Platforms at the recent Connect event had brought it one step closer to being an artificial intelligence company. Sebastian underlined that Meta Platforms, Inc. (NASDAQ:META) focused on product and usability before monetization, although analysts continued to see a variety of monetization options, including search-based advertising, subscriptions, micro-transactions, and content sales, beyond higher engagement levels and better overall ad performance.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based technology company. Latest reports, published by The New York Times, reveal that generative AI startup OpenAI expects to lose roughly $5 billion this year, despite generating about $3.7 billion in sales. The losses are thought to be a result of high costs associated with developing and training AI models. Tech giant Microsoft Corporation (NASDAQ:MSFT), which has already pledged billions in funding for the startup, is already making plans to increase this investment in an upcoming funding round for OpenAI. The startup, whose claim to fame is ChatGPT, has plans to generate over $11 billion in revenue next year and up to $100 billion within the next five years. OpenAI intends to do this by hiking monthly membership fees for ChatGPT from $2 to $22, and then to $44 by 2029.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) operates as a technology conglomerate with core interests in the ecommerce business. The cloud division of the company, Amazon Web Services, recently announced a new collaboration with oilfield services firm SLB to bring key technologies from the Delfi digital platform of the latter to customers on AWS. This is not the first SLB deal with a major tech giant. The firm also disclosed a partnership with NVIDIA earlier this month to develop generative artificial intelligence solutions for the energy industry. Howard Gefen, the general manager of energy and utilities at AWS, has said that Amazon.com, Inc. (NASDAQ:AMZN) had been happy to expand the partnership with SLB to help the organization scale AI, data and cloud technologies.
While we acknowledge the potential of Amazon.com, Inc. (NASDAQ:AMZN) as an investment, our conviction lies in the belief that some 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 Amazon.com, Inc. (NASDAQ:AMZN) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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