We recently compiled a list of the 17 Latest AI News and Analyst Ratings You Should Not Miss. In this article, we are going to take a look at where Meta Platforms, Inc. (NASDAQ:META) stands against the other AI stocks under hedge funds’ radar.
It is no surprise that companies in the United States and China are leading the rest of the world when it comes to artificial intelligence. Conservative estimates about the impact of AI on the global economy, made by market experts at professional services firm PwC, reveal that AI-related gains, equal to close to $11 trillion, will account for nearly 70% of total global economic impact by 2030. In China, AI is expected to contribute to a nearly 26% boost to the GDP within the next six years, while this figure in the US will likely be 15%. AI no doubt represents the biggest commercial investment opportunity in this fast-paced world economy.
Smart companies are seizing on this opportunity. According to market research firm IDC, investments in AI infrastructure will cross $30 billion this year and are projected to grow to $47 billion by 2028. This represents approximately 30% of the total global spending in AI. One of the most prominent AI use cases is in the customer service world. In this area, global businesses have spent more than $16 billion in 2024 so far. The impact of these investments in AI will be significant down the road. AI is likely to contribute to a $15 trillion boost to the global economy by 2030, up 14% from current levels.
Like other sectors of the economy, Wall Street is no stranger to AI. The debut of ChatGPT in November 2022 marked the beginning of the AI revolution in the world of finance. Since then, according to the International Monetary Fund (IMF), sales of software, hardware, and services for AI systems have climbed rapidly and will top $400 billion in 2027. Financial sector spending is likely to double to nearly $100 billion in 2027, with a compound annual growth rate of close to 30% — the fastest of five major industries. Hedge funds, often the pioneers of cutting-edge technology, are embracing generative AI as well.
Our Methodology
For this article, we selected AI stocks based on the latest news and analyst ratings. 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).
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A team of developers working in unison to create the company’s messaging application.
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. The firm recently beat market expectations on earnings for both the top and bottom lines, but left some investors concerned after it raised guidance for capital expenditures. The increased guidance for 2024, now up to $37 billion to $40 billion, reflected the rather large investments in the AI space. CEO Mark Zuckerberg recently said the firm was working hard to figure out the level of infrastructure needed to train advanced AI models as it looked at the compute clusters and data it needed to train future Meta AI products.
This level of commitment towards AI and the historical financial track record of Meta Platforms, Inc. (NASDAQ:META), which has over 3.2 billion daily active users across the platforms it owns and was able to grow twice as fast as rival Alphabet in the digital ad market space in the second quarter, has earned bullish calls from Wall Street. Investment bank UBS has a Buy rating on the shares with a price target of $635.
Overall META ranks 4th on our list of the best AI stocks to buy. While we acknowledge the potential of META 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 META but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.