In this article, we discuss Coatue’s 35 most important AI stocks.
Artificial intelligence (AI) has fueled a major rally in the technology sector, driving up key market indices. Over the past year, the S&P 500, heavily influenced by tech giants, has risen by nearly 22%, while the tech-heavy NASDAQ Composite has surged over 26%. Initially, market analysts had predicted an increase in interest around growth options for 2024 due to easing inflation and potential rate cuts. However, AI has taken this expected interest and amplified it into an economy-wide wave of optimism. While tech stocks have been the primary beneficiaries, AI’s influence is expanding across industries such as manufacturing, supply chain, transportation, entertainment, and retail.
Investment in AI is growing rapidly across various sectors. A recent Goldman Sachs report estimates that global businesses will invest nearly $1 trillion in AI infrastructure over the next few years. Venture capital (VC) investments in AI startups are also on the rise. In the first half of 2024 alone, VC firms made approximately 200 AI-related deals, injecting nearly $22 billion into the sector. The average AI startup funding round now exceeds $100 million, with company valuations averaging over $1 billion. In contrast, non-AI startups typically receive around $20 million in funding and have valuations near $200 million, indicating AI’s outsized appeal to investors.
Companies that were early adopters of AI have experienced significant gains, particularly those specializing in graphics processing units (GPUs), AI chips, and generative AI technologies. The median returns of AI-linked firms in the S&P 500 stand at 20%, compared to just 2% for non-AI stocks. AI companies are also responsible for 90% of the total returns on the NASDAQ Composite Index. These gains are expected to drive earnings growth and contribute to broader economic expansion. According to Joseph Briggs, a senior global economist at Goldman Sachs, AI is projected to automate 25% of all work tasks in the next decade, increasing US productivity by 9% and boosting GDP growth by more than 6%.
Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.
Philippe Laffont of Coatue Management argues that AI could be the start of a new “super cycle” in the tech industry. Previous cycles included the rise of personal computers in the 1980s, networking in the 1990s, wired internet in the 2000s, and mobile internet in the 2010s, leading to the cloud era. However, software and internet experts Kash Rangan and Eric Sheridan highlight a key difference: this time, companies are linking AI investments directly to revenue generation, providing a financial safety net that was absent in past cycles.
Since the launch of ChatGPT by OpenAI in early 2023, the industry’s focus has shifted from software to AI hardware and infrastructure. AI infrastructure companies have collectively added nearly $6 trillion to their market capitalization since Q1 2023. Before large-scale AI automation becomes commonplace—MIT economist Daron Acemoglu estimates this will take more than a decade—AI infrastructure is expanding into areas such as utilities, energy, internet, and industrials. Interestingly, companies in these sectors that support AI development have posted returns rivaling those of traditional AI firms.
The growing demand for AI-driven data centers is also driving investments in the energy and utilities sectors. Goldman Sachs analysts Carly Davenport and Alberto Gandolf expect AI adoption to drive a surge in electricity demand not seen in decades. However, whether AI’s growth will align with energy infrastructure investments remains uncertain due to regulatory constraints and supply chain limitations in the utilities sector. Even if necessary investments materialize, their full benefits may take years to reach AI companies.
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.
Some investors remain cautious, fearing an AI bubble similar to the dot-com crash of the early 2000s. However, current data suggests that AI valuations are far more grounded than those of the dot-com era. At the height of the dot-com bubble, software firms traded at price-to-earnings (P/E) ratios of 132x, compared to a five-year average of 37x in 1999. In contrast, in 2023, even the biggest AI stocks had P/E ratios around 39x, with a five-year average of 40x. These figures suggest that AI valuations are not overinflated, reinforcing investor confidence in AI’s long-term potential.
AI companies are increasingly targeting multi-trillion-dollar valuations, comparable to today’s largest software and internet firms. Over the past decade, tech giants have scaled their businesses to unprecedented levels, combining billions of users, hundreds of billions in revenue, and tens of billions in net income. Today, a handful of firms account for 80% of the valuation of the Fortune 500. These companies dominate industries such as smartphones, e-commerce, cloud computing, and software-as-a-service (SaaS), all of which AI is poised to disrupt. As a result, these firms are aggressively incorporating AI into their business strategies to maintain market leadership.
Some investors worry that AI firms could overshadow software companies, impacting long-term valuations. The price-to-sales (P/S) ratio for software stocks, which peaked in 2021, is now at an all-time low. Slower earnings growth has also contributed to negative sentiment in the sector. Coatue’s research shows that over the next twelve months, only 1% of SaaS companies expect 30% earnings growth, down from 30% during the SaaS boom. However, as human-machine interaction shifts towards natural language processing and generative AI, software companies that successfully integrate AI into their platforms are likely to thrive.
As inflation cools, rate hikes ease, and prospects for a soft economic landing improve, AI’s macroeconomic outlook remains strong. AI is now the primary driver of future earnings growth in the S&P 500. According to Coatue’s projections, AI-linked stocks are expected to grow at a compound annual rate of nearly 20% over the next three years, outperforming non-AI stocks by approximately 14%. Additionally, 40% of future tech sector earnings are expected to be fueled by AI advancements. All available data points to a bright future for AI investments, with its influence extending far beyond traditional tech firms. As companies continue integrating AI into their operations, productivity and economic growth are set to accelerate, making AI one of the most transformative forces in modern history.
For this article, we selected AI stocks by combing through a note on the AI industry by Coatue Management. These stocks are also popular among other 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).
An overhead view of a modern networking technology suite in a data center.
Coatue’s Most Important AI Stocks
35. STMicroelectronics N.V. (NYSE:STM)
Number of Hedge Fund Holders: 18
STMicroelectronics N.V. (NYSE:STM) makes and sells semiconductor products. In the fourth quarter of 2024, ST reported net revenues of $3.32 billion, a 22.4% decrease compared to the same period in 2023. The company achieved a net income of $341 million for the quarter. Looking ahead, ST projects first-quarter 2025 revenues of $2.51 billion, which would represent a 27.6% decline from the previous year. Analysts had anticipated revenues of $2.72 billion for this period. Despite these challenges, ST maintains a strong position in the AI sector. The company supplies semiconductors to major clients like Tesla and Apple, contributing to AI-driven applications in automotive and consumer electronics. ST’s CEO, Jean-Marc Chery, has emphasized the company’s focus on strategic areas, including AI, to drive future growth.
34. Semtech Corporation (NASDAQ:SMTC)
Number of Hedge Fund Holders: 32
Semtech Corporation (NASDAQ:SMTC) develops, manufactures, and markets analog and mixed-signal semiconductors and advanced algorithms. In the third quarter of fiscal year 2025, the company reported net sales of $236.8 million, marking a 10% sequential increase. Notably, data center sales reached a record $43.1 million, up 58% from the previous quarter. This surge in data center revenue is closely linked to the growing demand for AI applications, which require advanced semiconductor solutions. Semtech’s products, such as its CopperEdge and FiberEdge lines, are designed to provide high-speed, low-latency data transmission essential for AI workloads. The company’s partnership with NVIDIA further enhances its position in the AI market, enabling the development of innovative solutions for AI networking and data center applications.
33. Super Micro Computer, Inc. (NASDAQ:SMCI)
Number of Hedge Fund Holders: 33
Super Micro Computer, Inc. (NASDAQ:SMCI) develops and manufactures high-performance server and storage solutions based on modular and open architecture. The report for the fourth quarter of 2024 shows the company’s strong financial performance. For instance, reported net sales were $5.31 billion versus $3.85 billion in the third quarter of fiscal year 2024 and $2.18 billion in the same quarter of last year. The reported net income was $353 million versus $402 million in the third quarter of fiscal year 2024 and $194 million in the same quarter of last year. Moreover, the company’s strategic collaboration with Fujitsu aims to develop green AI computing technology and liquid-cooled data centre solutions. The duo also plans to develop and market a platform with a new processor designed for high performance and energy efficiency and targeted for release in 2027.
32. Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders: 38
Arm Holdings plc (NASDAQ:ARM) architects, develops, and licenses central processing unit products and related technologies for semiconductor companies and original equipment manufacturers. The company demonstrated a strong year-over-year growth in royalty revenue and annualized contract value (ACV) in the second quarter of 2024. Revenue rose 5% year-over-year to $844 million due to record levels of royalty revenue and continued strength in license revenue. Royalty revenue rose 23% year-over-year to $514 million, driven primarily by the continued adoption of Armv9 and smartphone market recovery. During the quarter, the company and Meta also announced the optimization of Meta’s Llama 3.2 for Arm CPUs. The optimization of Meta’s new Llama 3.2 3B LLM with Arm’s Kleidi AI libraries has driven a 5x improvement in time to first token processing and a 3x improvement in token generation compared to Llama 3.2 without Kleidi. The company also plans to extend momentum in the automotive market with leading Armv9 AI-enabled ADAS and IVI solutions.
31. Celestica Inc. (NYSE:CLS)
Number of Hedge Fund Holders: 40
Celestica Inc. (NYSE:CLS) offers a range of product manufacturing and related supply chain services. The report for the fourth quarter of 2024 shows strong financial growth of the company. For instance, the reported revenue was $2.55 billion, an increase of 19% compared to $2.14 billion for the fourth quarter of the prior year. Also, GAAP earnings from operations were 8%, compared to 5.1% for the fourth quarter of the prior year. As per the same report, the company anticipates revenue of $10.7 billion in the next year, an increase from the previous outlook of $10.4 billion due to the demand environment for data center hardware, as evidenced by recent customer forecasts as well as the new AI program awards over the last 90 days, including the second and third 1.6T program wins.
30. Fabrinet (NYSE:FN)
Number of Hedge Fund Holders: 42
Fabrinet (NYSE:FN) offers optical packaging, along with precision optical, electro-mechanical, and electronic manufacturing services. The company produces fiber-optic cables that power telecommunications, AI data centers, and the global Internet infrastructure. As per the report for the fourth quarter of 2024, revenue was $753.3 million, compared to $655.9 million for the fourth quarter of the prior year. GAAP net income was $81.1 million, compared to $60.8 million for the fourth quarter of the prior year. Fabrinet’s datacom revenue surged 150%, fueled by AI demand and the NVIDIA partnership. In addition to this, the company is also advancing in high-speed data solutions like 800 gig and future 1.6 terabyte options to meet growing data needs.
29. Teradyne, Inc. (NASDAQ:TER)
Number of Hedge Fund Holders: 43
Teradyne, Inc. (NASDAQ:TER) designs, develops, manufactures, and sells automated test systems and robotics products globally. As per the report for the third quarter of 2024, the company recorded revenue of $737 million in the third quarter of this year, showing an increase of 5% from the third quarter of the prior year. The higher earnings than initially projected reflect better operational efficiency for the company’s products. Moreover, the company also reported revenue of $737 million for the third quarter of 2024, of which $543 million was in Semiconductor Test, $73 million in System Test, $33 million in Wireless Test and $89 million in Robotics. This reflects a strong foundation in semiconductor testing while maintaining diversification across multiple technology-driven sectors. In addition, Teradyne Robotics and Analog Devices began a strategic partnership to accelerate the adoption of AI and advanced robotics-driven collaborative automation in manufacturing.
28. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 43
Palantir Technologies Inc. (NASDAQ:PLTR) is a public American company that specializes in software platforms for big data analytics. The report for the third quarter of 2024 shows the company’s financial growth. For instance, the reported US revenue grew 44% year-over-year and 14% quarter-over-quarter to $499 million, and US commercial revenue grew 54% year-over-year and 13% quarter-over-quarter to $179 million. This suggests that the company is experiencing solid growth, with a diverse customer base contributing to its increasing revenue. The company has expanded its contract with the US Special Operations Command (USSOCOM) to deliver technology solutions in support of enterprise capabilities. The one-year delivery is valued at $36.8 million and establishes Palantir as the lead software integrator for USSOCOM’s Mission Command System (MCS) while expanding the technology solutions supporting US Special Operations Forces (SOF) globally.
27. Juniper Networks, Inc. (NYSE:JNPR)
Number of Hedge Fund Holders: 47
Juniper Networks, Inc. (NYSE:JNPR) designs, develops and sells network products and services worldwide. This company is an exceptional investment option for various reasons. The report for the third quarter of 2024 shows a strong picture of the company’s financial growth. For instance, net revenues were $1,331 million, showing an increase of 12% sequentially. GAAP operating margin was 7.1%, an increase from 6.3% in the third quarter of the prior year and an increase from 3.8% in the second quarter of 2024. This performance was driven by strong demand for networking equipment, particularly from cloud customers investing in AI infrastructure. The company has also been selected by AI pioneer ionstream to provide data center switching and automated operations for its AI-managed services to enterprises.
26. NRG Energy, Inc. (NYSE:NRG)
Number of Hedge Fund Holders: 49
NRG Energy, Inc. (NYSE:NRG) operates as an energy and home services company in the United States and Canada. The report for the third quarter of 2024 signals robust financial growth. For instance, the company produced Adjusted EBITDA of $1,055 million and free cash flow before growth investments of $815 million in the quarter, an increase of $68 million and $460 million, respectively, over the same period in the prior year. Year-over-year improved financial performance was driven primarily by margin expansion across all NRG reporting segments. The company’s collaboration with Renew Home would bring 1 gigawatt (GW) of capacity to the Texas grid by 2035, aiming to make it more resilient while helping residents save on energy costs. The company’s collaboration with Google Cloud would also maximize the power plant’s effectiveness.
25. Coherent Corp. (NYSE:COHR)
Number of Hedge Fund Holders: 51
Coherent Corp. (NYSE:COHR) develops, manufactures, and markets engineered materials, optoelectronic components, and devices worldwide. The report for the fourth quarter of 2024 shows a promising picture of the company’s financial growth. For instance, the revenue was $1.314 billion, which grew 9.1% year-over-year, GAAP gross margin was 32.9%, which grew 437 bps year-over-year, and non-GAAP gross margin was 37.2%, showing an increase of 132 bps year-over-year. This demonstrates strong growth in both revenue and profitability, with the company improving its cost management and achieving better financial results compared to the same period last year. This 9% increase in revenue on a sequential basis was primarily driven by ongoing AI-related strength in the datacom transceiver business.
24. Equinix, Inc. (NASDAQ:EQIX)
Number of Hedge Fund Holders: 55
Equinix, Inc. (NASDAQ:EQIX) is a California-based real estate trust that operates data centers and other technology assets. In the third quarter of 2024, Equinix reported revenues of $2.20 billion, a 2% increase from the previous quarter. The company projects fourth-quarter revenues between $2.26 billion and $2.30 billion, surpassing analyst expectations. The surge in AI applications has been a key driver of this growth. AI workloads require substantial computing power and low-latency connectivity, services that Equinix’s data centers are well-equipped to provide. To further capitalize on the AI boom, Equinix has expanded its AI capabilities. The company offers Equinix Private AI with NVIDIA DGX, a turnkey, ready-to-run AI development platform that bridges on-premises and cloud environments, providing a unified view of all resources. The increasing demand for AI infrastructure has also allowed data center operators like Equinix to raise rents, especially as vacancy rates in primary North American markets have hit record lows.
23. Dell Technologies Inc. (NYSE:DELL)
Number of Hedge Fund Holders: 60
Dell Technologies Inc. (NYSE:DELL) designs, develops, manufactures, markets, sells, and supports various comprehensive and integrated solutions, products, and services. As per the report for the fourth quarter of 2024, the revenue was $22.3 billion, and full-year revenue was $88.4 billion, reflecting healthy demand for products or services. Also, full-year operating income was $5.2 billion, and non-GAAP operating income was $7.7 billion, demonstrating strong performance of the company’s core business. In addition, the company is at the forefront of technological advancements. Collaborations with industry leaders like NVIDIA and Hugging Face have enhanced Dell’s AI ecosystem, providing seamless integration and compatibility across the AI infrastructure stack. The company has expanded the Dell Generative AI Solutions portfolio with support for the AMD Instinct MI300X accelerator in Dell E9680 servers.
22. Analog Devices, Inc. (NASDAQ:ADI)
Number of Hedge Fund Holders: 63
Analog Devices, Inc. (NASDAQ:ADI) designs, manufactures, tests, and markets integrated circuits (ICs), software, and subsystems products. The report for the fourth quarter signals great financial growth for the firm. For instance, the reported revenue was more than $2.4 billion, above the midpoint of guidance with sequential growth across all end markets. Also, fiscal revenue was more than $9.4 billion, operating cash flow was $3.9 billion, and free cash flow was $3.1 billion. These metrics demonstrate excellent business performance, with the company exceeding revenue targets, achieving robust growth across all sectors, and generating strong cash flow, positioning it for continued success. The US Department of Commerce has also signed four separate non-binding preliminary memoranda of terms (PMT) under the CHIPS and Science Act to provide up to $105 million in proposed direct funding to the company.
21. ASML Holding N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders: 64
ASML Holding N.V. (NASDAQ:ASML) makes and sells advanced semiconductor equipment systems. The report for the third quarter of 2024 reflects the robust financial growth of the company. The reported net sales were €7.5 billion, gross margin was 50.8%, and net income was €2.1 billion. Also, quarterly net bookings were €2.6 billion, of which €1.4 billion is EUV. This reflects great financial performance, with strong revenue growth, high profitability, and solid demand for advanced technology products like EUV systems. The company’s EXE systems are the latest generation in EUV lithography with a numerical aperture (NA) of 0.55, and their innovative new optics provide higher contrast and print with a resolution of just 8 nm. This platform will support high-volume chip manufacturing in 2025–2026, enabling geometric chip scaling into the next decade.
20. Lam Research Corporation (NASDAQ:LRCX)
Number of Hedge Fund Holders: 58
Lam Research Corporation (NASDAQ:LRCX) markets semiconductor processing equipment. The company is the third leading supplier of wafer fab equipment. In the quarter ending December 29, 2024, the company reported revenues of $4.376 billion, with a gross margin of $2.073 billion, representing 47.4% of revenue. This positive trajectory is largely driven by the escalating demand for advanced AI chips, which require sophisticated semiconductor manufacturing equipment. Lam Research’s CEO, Tim Archer, highlighted the increasing need for higher chip performance, a trend that benefits the company. To further strengthen its position in the AI sector, Lam Research has been integrating AI into its operations. A groundbreaking study by the company demonstrated that a human-machine hybrid model could reduce process development costs by 50% and accelerate time-to-market.
19. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 68
Intel Corporation (NASDAQ:INTC) markets key technologies for smart devices. There are several reasons why this company is a worthwhile investment. As per the report for the third quarter of 2024, total revenue was $13.3 billion, which shows that the company is generating substantial sales, a healthy indicator of ongoing market activity and business operations. Also, the company continues to lead the AI PC category and will ship more than 100 million AI PCs by the end of 2025. Intel and Amazon Web Services (AWS) are also finalizing a multi-year, multi-billion-dollar commitment to expand the companies’ existing partnership to include a new custom Xeon 6 chip for AWS on Intel 3 and a new AI fabric chip for AWS on Intel 18A.
18. Amphenol Corporation (NYSE:APH)
Number of Hedge Fund Holders: 69
Amphenol Corporation (NYSE:APH) specializes in designing, manufacturing, and marketing electrical, electronic, and fiber optic connectors. As per the report for the fiscal year 2024, reported sales were $15.2 billion, showing an increase of 13% organically compared to the full year 2023. GAAP Diluted EPS was $1.92, showing an increase of 24% compared to the prior year and adjusted diluted EPS was $1.89, increasing 25% compared to the prior year. This reflects robust business expansion, with the company achieving strong sales growth and profitability improvements in both its core operations and overall financial performance. The company sells connectors that are integral to building AI data centers.
17. Arista Networks, Inc. (NYSE:ANET)
Number of Hedge Fund Holders: 70
Arista Networks, Inc. (NYSE:ANET) engages in the development, marketing, and sale of data-driven, client-to-cloud networking solutions for data center, campus, and routing environments. The third quarter report for 2024 shows revenue of $1.811 billion, an increase of 7.1% compared to the second quarter of 2024 and an increase of 20% from the third quarter of the prior year. GAAP gross margin of 64.2%, compared to GAAP gross margin of 64.9% in the second quarter of 2024 and 62.4% in the third quarter of the prior year. This reflects healthy business growth with consistent profitability, signaling that the company is performing well in both revenue generation and cost management. In addition, investors should pay attention to the Stargate AI project, a $500 billion joint venture focusing on AI infrastructure that would benefit networking companies like Arista Networks.
16. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 74
Applied Materials, Inc. (NASDAQ:AMAT) provides equipment, services, and software for the semiconductor industry. As per the report for the fiscal year 2024, Applied Materials generated record revenue of $27.18 billion. On a GAAP basis, the company recorded a gross margin of 47.5%, a record operating income of $7.87 billion or 28.9% of net sales, and a record EPS of $8.61. On a non-GAAP adjusted basis, the company reported a gross margin of 47.6%, a record operating income of $7.92 billion or 29.2% of net sales, and a record EPS of $8.65. This reflects the company’s outstanding financial results, which have reached new milestones in revenue and profitability, underscoring its strong market position and effective operations.
15. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 74
QUALCOMM Incorporated (NASDAQ:QCOM) develops and sells foundational technologies for the wireless industry. In the report for the fourth quarter of 2024, the company reported revenue of $10.24 billion and adjusted earnings per share (EPS) of $2.69, surpassing market expectations. This underscores the company’s strong sales driven by smartphone chips, particularly in the Chinese market. The company has also expanded collaboration with Panasonic Automotive Systems, which aims to transform in-vehicle experiences with the Snapdragon Cockpit Elite Platform. This new phase of the relationship would bring generative AI to the forefront of automotive innovation, setting a new benchmark for next-generation in-vehicle technology that includes immersive multimedia features, optimized gaming, and advanced 3D graphics.
14. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 78
Constellation Energy Corporation (NASDAQ:CEG) generates and sells electricity in the United States. The report for the third quarter of 2024 signals robust growth in revenue, making it a promising investment avenue. GAAP Net Income reported was $3.82 per share, and Adjusted (non-GAAP) Operating Earnings was $2.74 per share for the third quarter of 2024. The firm also narrowed the full-year 2024 Adjusted (non-GAAP) Operating Earnings guidance range to $8.00 – $8.40 per share. This demonstrates that the company is optimistic about its performance in the remainder of the year, expecting continued strong earnings. The company has also experienced an 80% increase in stock value over the past six months, attributed to the anticipated rise in electricity demand needed to support new AI data centers. This growth reflects the company’s strategic positioning to capitalize on the expanding AI sector.
13. GE Vernova Inc. (NYSE:GEV)
Number of Hedge Fund Holders: 89
GE Vernova Inc. (NYSE:GEV) is an energy company that engages in the provision of various products and services that generate, transfer, orchestrate, convert, and store electricity. The firm demonstrated a strong financial performance in 2024, with revenues reaching $18.1 billion, a 4% increase from the previous year, and a segment EBITDA margin improvement of 260 basis points to 12.5%. This growth is attributed to robust demand for gas power equipment and services. The company has been actively integrating AI into its operations to enhance efficiency and sustainability. For instance, GE Vernova’s Autonomous Tuning leverages AI and machine learning to automate gas turbine tuning, optimizing performance under varying conditions and contributing to fuel cost savings. In partnership with Chevron and Engine No. 1, GE Vernova plans to construct natural gas power stations to support AI data centers in the US. This initiative aims to provide up to 4 gigawatts of power by the end of 2027.
12. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Holders: 91
Vertiv Holdings Co (NYSE:VRT) designs, manufactures, and services critical digital infrastructure technologies and life cycle services for data centers, communication networks, and commercial and industrial environments. The report for the third quarter of 2024 signals the company’s financial growth as net sales reported were $2,074 million, 19% higher than the third quarter of the prior year. Also, the operating profit was $372 million, showing an increase of 48% from the third quarter of the prior year. Adjusted operating margin was 20.1%, showing an increase of 310 basis points compared to the third quarter of the prior year. This demonstrates strong business performance, with the company seeing solid growth in both sales and profits, along with healthy demand for its products. The company’s expansion of the global liquid cooling portfolio with the announcement of two new high-capacity coolant distribution units to support AI applications is a development worthy of investor attention as well.
11. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Holders: 97
Vistra Corp. (NYSE:VST) operates as an integrated retail electricity and power generation company. As per the report for the third quarter of 2024, GAAP net income was $1,837 million, and cash flow from operations was $1,702 million, which reflects strong net income and better performance of the company’s core operations. Also, net income from ongoing operations was $1,855 million, and ongoing operations Adjusted EBITDA was $1,444 million. This demonstrates solid cash flow from operations and operational stability. The company has also positioned itself to capitalize on the growing needs of AI data centers. This makes the company a significant player in AI infrastructure, highlighting its potential to benefit from increased electricity demand driven by AI applications.
10. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 107
Advanced Micro Devices, Inc. (NASDAQ:AMD) operates as a semiconductor manufacturer. As per the report for the third quarter of 2024, the company reported revenue of $6.8 billion, gross margin of 50%, operating income of $724 million, and net income of $771 million. This demonstrates robust financial health, with strong sales, healthy margins, and efficient cost management, positioning the company as a solid performer in the market. In addition, the new AMD Instinct MI325X accelerators deliver leadership performance and memory capabilities for the most demanding AI workloads. AMD also shared new details on next-gen AMD Instinct accelerators planned to launch in 2025 and 2026. The company has also announced its new gaming products, Ryzen 9900X3D and 9950X3D Series desktop processors, offering unprecedented performance for desktop gamers.
9. Micron Technology (NASDAQ:MU)
Number of Hedge Fund Holders: 107
Micron Technology (NASDAQ:MU) makes and sells memory and storage products. The report for the fiscal year 2024 shows a promising picture of the company’s portfolio, making it a lucrative choice for investment. For instance, the company reported a revenue of $25.11 billion versus $15.54 billion for the prior year and GAAP net income of $778 million, or $0.70 per diluted share. This demonstrates a strong revenue growth driven by increased sales, market demand, and expansion into new areas. Also, Micron plans to invest $50 billion in gross capex for US domestic leading-edge memory manufacturing with the support of a $6.1 billion CHIPS grant through 2030. These facilities would create 75,000 US jobs, build supply chain resilience, and ensure US economic and national security.
8. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 128
Broadcom Inc. (NASDAQ:AVGO) supplies semiconductor infrastructure software solutions. The report for the third quarter of 2024 shows a promising picture of the company’s financial growth. As per the report, the company reported revenue of $14,054 million, increasing 51% from the prior year period, GAAP net income of $4,324 million, and non-GAAP net income of $6,965 million. This demonstrates the company’s exceptional growth in revenue and operational efficiency. The company has also raised its AI revenue outlook to $12 billion, up from the previous estimate of $11 billion. The company’s strong partnership with tech giants like Meta, Google, and ByteDance shows its commitment to integrating AI and advancing AI technologies. These collaborations aim to develop customer processors optimized for AI workloads, positioning Broadcom as a key player in the AI hardware ecosystem.
7. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 158
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) makes and sells integrated circuits and semiconductors. The report for the fourth quarter of 2024 makes this company a strong investment avenue. For instance, the company reported net revenue of approximately $26,884 million and gross profit of $15,861 million, resulting in a gross margin of 59%. The significant revenue and gross profit figures suggest continued growth, likely driven by increasing demand for advanced chips. The company continues to invest in R&D as it intensifies its focus on new specialty technologies such as RF and 3D intelligent sensors for 5G and smart IoT applications. TSMC research also aims to develop novel materials, processes, devices and memories that may be adopted in the distant future, ten years and beyond.
6. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) is a consumer electronics firm. In October 2024, the company launched Apple Intelligence, a personal AI system for iPhone, iPad, and Mac, designed to assist users in writing, expressing themselves, and completing tasks efficiently. This system emphasizes user privacy by processing data on-device, ensuring personal information remains secure. Financially, Apple reported a record revenue of $94.9 billion in the September 2024 quarter, marking a 6% increase from the previous year. CEO Tim Cook attributed this growth to the introduction of new products, including the iPhone 16 lineup, Apple Watch Series 10, and AirPods 4. Despite the introduction of AI features, the iPhone 16 series did not experience a significant sales boost, leading to concerns about the immediate financial benefits of AI.
5. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 160
Alphabet Inc. (NASDAQ:GOOG) is a California-based technology company that owns and runs the internet search engine Google. The report for the fourth quarter of 2024 signals robust financial growth, making Alphabet a promising investment choice. For instance, Google Cloud revenues increased 35% to $11.4 billion, which was led by accelerated growth in the Google Cloud Platform across AI Infrastructure, Generative AI Solutions, and core GCP products. Total operating income increased by 34%, and operating margin expanded by 4.5 percentage points to 32%. The company has also developed specialized chips designed to accelerate machine learning tasks called Tensor Processing Units (TPUs). As per analysts, Alphabet’s TPU and DeepMind AI units could be valued at approximately $700 billion, highlighting the significant potential of its AI hardware and research divisions.
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. In the report for the fourth quarter of 2024, GAAP earnings per diluted share was $4.93, showing an increase of 33% from the previous quarter and up 765% from a year ago. Non-GAAP earnings per diluted share was $5.16, showing an increase of 28% from the previous quarter and up 486% from a year ago. These metrics indicate strong financial performance driven by higher revenues and improved margins, positioning the company for continued success. Also, record quarterly data center revenue was $18.4 billion, showing an increase of 27% from the third quarter, indicating heightened demand for data center products or services, possibly driven by trends like cloud computing expansion. The company has also launched AI foundation Models for RTX AI PCs. These models offered as NVIDIA NIM microservices, are accelerated by new GeForce RTX 50 Series GPUs, which feature up to 3,352 trillion operations per second of AI performance and 32GB of VRAM.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 235
Meta Platforms, Inc. (NASDAQ:META) engages in the development of products that enable people to connect and share with friends and family. As per the report for the fourth quarter of 2024, ad impressions delivered across the company’s apps increased by 6% and 11% year-over-year, respectively. The average price per ad increased by 14% and 10% year-over-year for the same period. This demonstrates positive growth in both ad impressions and ad pricing, signaling strong demand for the company’s advertising services and effective monetization strategies. Meta is also increasing its investment in AI as it plans to allocate between $60 billion and $65 billion on capex in 2025. This includes constructing a 2 GW data center in Louisiana and adding 1.3 million GPUs to enhance AI capabilities. Further, the company aims to develop AI-powered tools to serve over a billion users as advanced assistants.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based technology company. In the fiscal quarter ending December 2024, the company reported total revenue of $69.6 billion, a 12% increase year-over-year, and a net income of $24.1 billion, up 10% from the previous year. A substantial contributor to this growth is Microsoft’s AI segment, which has achieved an annual revenue run rate of $13 billion, reflecting a 175% year-over-year increase. This surge is largely driven by the integration of AI services into Microsoft’s Azure cloud platform, where AI services contributed 13 percentage points to Azure’s 31% revenue growth in the same quarter. To support and expand its AI capabilities, Microsoft has significantly increased its capital expenditures, reaching $22.6 billion in the December quarter, primarily allocated to AI and data center infrastructure. The company plans to invest a total of $80 billion in AI infrastructure during the current fiscal year.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 286
Amazon.com, Inc. (NASDAQ:AMZN) operates as a technology conglomerate with core interests in the ecommerce business. In the report for the third quarter of 2024, operating cash flow increased 57% to $112.7 billion for the trailing twelve months, compared with $71.7 billion for the trailing twelve months ended September of the prior year. Free cash flow also increased to $47.7 billion for the trailing twelve months, compared with $21.4 billion for the trailing twelve months ended September of the prior year. This demonstrates the company’s strong cash generation, with significant improvements in both operating cash flow and free cash flow over the past year. In addition, the company’s strategic collaboration with Databricks aims to accelerate the development of custom models built with Databricks Mosaic AI on AWS and for Databricks to leverage AWS Trainium chips as the preferred AI chip. This would help customers improve price performance when building generative AI applications, solidifying the company’s position in the competitive market.
While we acknowledge the potential of Amazon.com, Inc. (NASDAQ:AMZN) as an investment, our conviction lies in the belief that some stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a 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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