We recently compiled a list of the 10 AI Stocks That Will Skyrocket. In this article, we are going to take a look at where C3.ai, Inc. (NYSE:AI) stands against the other AI stocks.
DWS, an expert in active, passive, and alternative asset management, believes that expectations around the usage of Artificial Intelligence (AI) across industries acted as one of the critical stock market drivers over the previous 2 years. In 2025, AI developments are expected to make significant strides throughout various domains. The firm anticipates a shift from generalized applications to industry-specific solutions. Notably, companies are expected to refine their strategies to target specific use cases providing measurable results.
Generative AI CapEx Will Continue to Increase, Says DWS
DWS, while quoting Bloomberg estimates, highlighted that some of the big technology firms can collectively increase capex to ~$200 billion in 2025. More than $90 billion in incremental capital spending in 2024-25 vs. 2023 is projected to be earmarked mainly for expanding Gen AI infrastructure. On a related note, Goldman Sachs Asset Management believes that the AI capex from well-established hyperscalers is projected to surpass $250 billion in 2025. This hints at optimism that hyperscalers remain confident in the ROI (Return on Investment) they will witness from such significant investments.
DWS sees the de-globalization movement spreading to data and AI, with countries spending a significant amount to subsidize “sovereign AI.” To provide a brief overview, it refers to a nation’s capabilities to establish, control, and deploy its own AI technologies. It spans both physical and data infrastructures. Notably, in the past year, the governments of the US and China have pledged $40 billion – $50 billion each dedicated towards AI investments.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Key AI Trends to Watch Out
Appinventiv believes that conversational AI, Predictive Analytics, AI Democratization, Agentic AI, and Generative AI, among others, are some of the key trends to watch out for. While conversational AI focuses on streamlining customer interactions, generative AI has been revolutionizing content creation across fields including healthcare. Additionally, multi-modal Al remains one of the most popular AI trends in business. It focuses on leveraging machine learning trained on multiple modalities, including speech, images, and traditional numerical data sets. As a result, there will be a more holistic and human-like cognitive experience.
Appinventiv opines that companies can capitalize on multi-modal Al and develop intelligent systems analyzing diverse data streams, which can help improve natural language understanding and voice recognition for better user experiences.
Our Methodology
To list the 10 AI Stocks That Will Skyrocket, we sifted through several online rankings and shortlisted the companies catering to the broader AI sector. Next, we chose the ones that analysts see significant upside to. Finally, the stocks are arranged in ascending order of their average upside potential, as of February 24. We also mentioned hedge fund sentiments around each stock, as of Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A computer engineer debugging a complex AI application on a powerful workstation.
C3.ai, Inc. (NYSE:AI)
Average Upside Potential: 42.4%
Number of Hedge Fund Holders: 25
C3.ai, Inc. (NYSE:AI) operates as an enterprise AI software company. The company’s platform for building and deploying AI applications, together with its pre-built solutions for numerous industries, places it well to improve market share. One of the critical developments for the company has been its expanded partnership with Microsoft. The collaboration focuses on accelerating enterprise AI adoption by integrating C3.ai, Inc. (NYSE:AI)’s suite of Enterprise AI application software on the Microsoft Commercial Cloud Portal.
Through this integration, the company can gain access to Microsoft’s significant global sales force and customer base. This collaboration can result in the acceleration of customer acquisition and revenue growth, mainly in enterprise markets where Microsoft has a healthy presence. Next, C3.ai, Inc. (NYSE:AI) appears to be well-placed for growth amidst elevated demand for AI in the federal sector. With government entities increasingly prioritizing AI investments, the company remains well-placed to capture an improved market share. Its existing relationships can offer a competitive advantage and fuel growth moving forward.
On a related note, C3.ai, Inc. (NYSE:AI) and Collins Aerospace, an RTX business, announced expanded joint initiatives to develop and deliver AI solutions throughout the defense and intelligence space. The initiatives focus on leveraging AI for critical defense operations, accelerating technology adoption in support of federal priorities.
Overall AI ranks 4th on our list of the AI stocks that will skyrocket. While we acknowledge the potential of AI as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than AI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.