We recently published a list of 12 Most Promising AI Stocks According to Wall Street Analysts. In this article, we are going to take a look at where Pagaya Technologies Ltd. (NASDAQ:PGY) stands against other most promising AI stocks according to Wall Street analysts.
Artificial intelligence (AI) continues to accelerate rapidly, moving from emerging technologies to influencing how businesses carry out operations. As per SAP, the changes occurring in 2025 revolve around autonomous AI agents, specialized AI models, user interface design, and enterprise adoption patterns. On 13th January, an AI behemoth highlighted that the first Trump Administration focused on America’s strength and success in AI, boosting an environment where the broader US industry can compete.
Therefore, mainstream AI is now a critical part of every new application, which helps fuel economic growth, promote US interests, and make sure that America can sustain its leadership in cutting-edge technology. On a related note, Trump announced billions of dollars in private sector investment focused on building AI infrastructure in the country.
Trump Announces $500 Billion Investment for AI Infrastructure
US President Donald Trump announced a private sector investment of up to $500 billion focused on financing infrastructure for AI, targeting to outperform rival nations in the business-critical technology. Mr. President went on to add that ChatGPT’s creator OpenAI, SoftBank, and Oracle are discussing a JV called Stargate, which is expected to build data centers and create over 100,000 jobs in the US. Notably, these companies, together with several other equity backers of Stargate, decided to commit $100 billion for immediate deployment. The remaining investment is expected to take place over the upcoming 4 years.
As per Trump, this is the largest AI infrastructure project in history. Also, Stargate is expected to build the physical and virtual infrastructure which will focus on powering the next generation of AI, including data centers around the US.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
AI Rally to Continue in 2025, Says UBS
As per UBS, the AI rally has aided in driving 2 straight years of healthy returns for the NASDAQ Composite, which also includes a 28% rally last year. The Mag 7 group of technology stocks drove more than half of the S&P 500’s gains in 2024. In the previous year, continued upward revisions in AI capex from the Big 4 tech giants supported keeping the AI rally on track. UBS expects the upward revisions to continue over the near term.
Even though AI revenues might again lag behind capex in 2025, UBS expects that AI monetization will improve sharply in 2025. The AI adoption continues to accelerate across industries and is well-placed to broaden in 2025. Also, the arrival of more clearly useful AI agents is expected to further support return on investment (ROI).
Our Methodology
To list the 12 Most Promising AI Stocks According to Wall Street Analysts, we conducted extensive research and scanned through several online rankings. After getting an initial list of 15-18 stocks, we shortlisted the ones in which analysts saw upside potential. Finally, the stocks were arranged in ascending order of their average upside potential, as of January 21, 2025. We also mentioned hedge fund sentiments around each stock, as of Q3 2024.
At Insider Monkey we are obsessed with 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).
A shot of a financial trader’s hands pressing buttons rapidly on a trading terminal.
Pagaya Technologies Ltd. (NASDAQ:PGY)
Average Upside Potential: ~148.1%
Number of Hedge Fund Holders: 21
Pagaya Technologies Ltd. (NASDAQ:PGY) is a financial technology company, leveraging AI and data analytics to offer solutions for the broader financial services industry. John Hecht from Jefferies gave a “Buy” rating on the company’s shares, providing a price target of $25.00. The company’s technology allows it to provide a range of financial products, such as personal loans, auto loans, and point-of-sale financing. Therefore, this diversification strategy placed Pagaya Technologies Ltd. (NASDAQ:PGY) as a versatile player in the alternative lending space.
AI continues to drive broader US markets, with application companies such as Pagaya Technologies Ltd. (NASDAQ:PGY) well-placed to reap the benefits. Advancements in AI research are expected to improve the company’s proprietary machine learning models, allowing more accurate credit risk assessment. Furthermore, financial institutions continue to adopt AI to streamline operations and improve the decision-making process. Pagaya Technologies Ltd. (NASDAQ:PGY)’s AI-driven platform remains well-placed to tap this growing demand, mainly in fields such as credit underwriting, risk management, and investment strategies.
With AI adoption broadening, more industries (apart from traditional banking) can seek AI-driven financial solutions. Benchmark reaffirmed a “Buy” rating on the shares of Pagaya Technologies Ltd. (NASDAQ:PGY), issuing a $21.00 price target on 16th October.
Overall, PGY ranks 1st on our list of most promising AI stocks according to Wall Street analysts.. While we acknowledge the potential of PGY 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 PGY 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.
