In this article, we will take a detailed look at the Top 10 AI News and Analyst Ratings You Should Not Miss.
Investors are on tenterhooks as Jensen Huang’s AI giant is about to release earnings. Gene Munster, Deepwater Asset Management managing partner, said in an interview with CNBC that the broader market can see a pullback if Blackwell-related delays show a wider impact on the AI chips market. The analyst predicted that it’s going to be a “difficult week” for major tech companies.
However, Munster is highly bullish on the broader AI space for the long term.
“I still think that we are in an early innings of a 3 to 5 year tech bull market that is powered by AI, and I think all these big tech companies are going to do well over the next couple of years,” Munster said.
The analyst said that Jensen Huang has indicated in the previous quarters that the demand for AI chips is more than what his company could manage in the short term, and if he reiterates this in the upcoming results, it would give a strong signal to investors about the AI potential.
“There is a lot of awareness about AI but I think the significance of what it’s gonna do is still underappreciated by the market.”
In this article, we compiled the most important latest AI news and analyst ratings around major AI tech stocks. With each company we have mentioned the number of hedge fund investors. 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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10. Corning Inc (NYSE:GLW)
Number of Hedge Fund Investors: 35
Corning Inc (NYSE:GLW) makes high-tech glass for flat panel displays like TVs and smartphones, optical fibers for telecommunications, and specialized materials for electronics, defense, and environmental applications.
Mizuho recently upgraded Corning (NYSE:GLW) to Outperform from Neutral, citing the recent drop in the stock price despite the company’s strong growth outlook. The firm’s analyst noted that Corning’s Optical glass fiber and related products represent Corning’s largest segment, making up 34% of sales and accounting for over 50% of the company’s targeted sales growth through 2027.
But what makes Corning Inc (NYSE:GLW) a promising AI stock? The company says the new data center boom has created a demand for fibers that would have fiber connections ten times more than traditional data centers. This would create strong line-feet demand for Corning’s optical fiber and fiber-optic hardware and connectors.
Corning Inc (NYSE:GLW) recently signed an agreement with Lumen (LUMN) to reserve 10% of its global fiber capacity over the next two years to interconnect artificial intelligence-enabled data centers.
“This marks the first outside-plant deployment of Corning’s new gen-AI fiber and cable system, which will enable Lumen to fit anywhere from two-to-four times the amount of fiber into their existing conduit,” said Corning CEO Wendell Weeks.
O’keefe Stevens Advisory stated the following regarding Corning Incorporated (NYSE:GLW) in its Q2 2024 investor letter:
“Corning Incorporated (NYSE:GLW), another long-time holding, announced Q2 results would come in better than anticipated due to outperformance in their optical connectivity products used for Generative AI. Corning has long been a disappointing investment; with leading-edge technology, it consistently underperforms expectations. Their “springboard” plan, which revolves around $3 billion of excess capacity, seems to be the first sign in a long time that they are ready for a surge in growth. Management has frequently discussed the potential for operating leverage in nearly every conference call, anticipating a return to normal business conditions. Margins should expand over the coming quarters, driving EPS growth. The $3B in incremental sales could be worth in excess of $900m in EBITDA.”
9. Pure Storage Inc (NYSE:PSTG)
Number of Hedge Fund Investors: 38
Pure Storage Inc (NYSE:PSTG) is another under-the-radar AI stock that recently got attention from Wall Street. Piper Sandler started covering the stock with a Neutral rating, acknowledging the company’s strong position in the IT data storage market, which is increasingly shifting towards all-flash solutions like those Pure offers. Analysts James Fish and Quinton Gabrielli pointed out that while the data storage market isn’t growing rapidly, the rise of AI data centers could boost spending on high-performance storage.
For example, Meta Platforms is using Pure’s FlashArray and FlashBlade products for its AI Research SuperCluster. However, Piper Sandler remains cautious about the high valuation and is waiting for a better entry point.
What makes Pure Storage Inc (NYSE:PSTG) a promising stock? The world is moving swiftly towards flash storage from hard disk drives (HDDs). However, about 90% of the enterprise world is still dependent on HDDs, and the AI and data center boom and the need for higher data retrieval speeds have lit a fire under their plans to move to all-flash storage solutions, which Pure Storage Inc (NYSE:PSTG) sells. Pure Storage believes that by 2028, almost all new data center storage will be flash-based, a trend that could significantly boost its business, as the company exclusively offers flash storage.
Another problem Pure Storage Inc (NYSE:PSTG) is solving relates to data fragmentation. A lot of companies are still fetching data from various sources, which makes the speed of their AI engines and processing slow. Pure Storage is offering a platform for data integration. The company talked about this in the latest earnings call
“AI inevitably calls customers’ attention to the fragmented state of their data caused by their disparate data storage infrastructure. Data stored on widely diverse platforms, with different operating and management systems, which are siloed and individually managed are unable to feed real-time data to AI inference engines. The Pure Storage Inc (NYSE:PSTG) platform strategy provides a unified and integrated data storage and delivery system across customers’ various data environments. It facilitates seamless management and data access across data centers and the cloud, with simplified universal policies and management.”
8. Palantir Technologies Inc (NYSE:PLTR)
Number of Hedge Fund Investors: 44
Palantir Technologies Inc (NYSE:PLTR) has been posting explosive growth thanks to its AI platform. Recently, Northland Capital initiated coverage on Palantir (NYSE:PLTR) with a Market Perform rating. The firm’s analyst Michael Latimore said that Palantir’s AI operating system, fueled by their Ontology software, “addresses many of the challenges hindering widespread adoption and is accelerating AI use across the enterprise sector.”
The analyst highlighted that Palantir Technologies Inc (NYSE:PLTR) AI tech doesn’t only automate insight creation. It also automates decision-making, which is a key part of the next wave of AI.
The analyst set a $35 price target for Palantir Technologies Inc (NYSE:PLTR).
Palantir Technologies’ Inc (NYSE:PLTR) stunning growth posted in the second-quarter results and long-term trends show it’s a promising AI software stock. During the June quarter, overall revenue rose 27% year over year while US commercial revenue grew by a whopping 55%.
What makes Palantir Technologies Inc (NYSE:PLTR) one of the top AI stocks? Its technologies are actually solving the problems of businesses. Palantir’s data technology Ontology is solving the famous hallucination problem for AI systems, thanks to the company’s years of experience with military and defense systems. Earlier this year at an event with customers, Palantir Technologies Inc (NYSE:PLTR) shared some specifics on how its customers are being able to reduce costs and increase profits due to its artificial intelligence platform (AIP) that was launched about a year ago.
Airbus accelerated A350 production by 33%, BP reduced costs per barrel by 60%, and Jacobs Connect cut power usage by 30%. Panasonic decreased waste by 12%, ESI Group sped up ERP harmonization by 70%, and PG&E reduced transformer ignitions by 65%. Eaton boosted productivity by 25%, while Tyson Foods achieved $200 million in cost savings.
Carillon Scout Mid Cap Fund stated the following regarding Palantir Technologies Inc. (NYSE:PLTR) in its first quarter 2024 investor letter:
“The top contributor to return for the quarter was Palantir Technologies Inc. (NYSE:PLTR). Sentiment improved on Palantir after it reported stronger than expected commercial customer revenue and free cash flow. U.S. commercial growth was especially encouraging, as U.S. commercial revenue was up by a large percentage year over year for the fourth quarter and U.S. commercial customer count grew nearly as much. We expect Palantir to become one of the premier artificial intelligence (AI) software providers, built on its Foundry and AIP platforms.”
7. ON Semiconductor Corp (NASDAQ:ON)
Number of Hedge Fund Investors: 45
Bank of America analyst Vivek Arya said in a latest note that if volatility dips in the semiconductor industry and the broader market sees a resurgence, ON Semiconductor Corp (NASDAQ:ON) would be one of the outperformers.
Aristotle Atlantic Large Cap Growth Strategy stated the following regarding ON Semiconductor Corporation (NASDAQ:ON) in its Q2 2024 investor letter:
“We sold ON Semiconductor Corporation (NASDAQ:ON) and have become more cautious on the global automotive market, especially for electric vehicles, which we believe will see a period of slower sales due to both new infrastructure requirements and consumers becoming more knowledgeable about the potential costs and issues with owning EVs. In addition, the market is becoming a lot more competitive on the supply side, with many new models being launched simultaneously, which we believe will lead to pricing pressures for the OEMs, which could create pricing headwinds for suppliers such as ON Semiconductor. While we see global EV penetration as continuing to increase over the next decade, supported by government incentives, we remain cautious in the near term and believe we are entering a period of lower sales trends following the explosive growth of the past three years.”
6. Micron Technology Inc (NASDAQ:MU)
Number of Hedge Fund Investors: 120
Bank of America analyst Vivek Arya said in a latest note that if volatility dips in the semiconductor industry and the broader market sees a resurgence, Micron Technology Inc (NASDAQ:MU) would be one of the outperformers.
BofA Securities believes Micron Technology Inc (NASDAQ:MU) is one of the best beaten-down tech stocks presenting an attractive entry point following the latest selloff.
Bank of America analyst Vivek Arya recently also talked about the latest declines in semiconductor stocks. However, the analyst said most of the declines were due to temporary factors and fundamentals are still “intact.”
“AI still the strongest and most dependable area of capex, driven by domestic US tech companies with solid balance sheets, proven monetization and mission-critical imperatives…” Arya said.
Micron Technology Inc (NASDAQ:MU) posted quarterly results recently which came in better than expected but the market didn’t welcome the in-line guidance and rising expenses. However, this short-term view misses the fact that Micron Technology Inc (NASDAQ:MU) is investing heavily in high bandwidth memory (HBM) production that is expected to generate billions in sales by fiscal 2025 compared with just hundreds of millions in 2024.
After the earnings, Arya reiterated a Buy rating and gave a $170 price target on Micron Technology Inc (NASDAQ:MU).
“Mgmt emphasized both CY24 and CY25 volumes are now fully sold out with pricing generally secured, providing visibility to its healthy sales and margin expansions (HBM is GM accretive),” Arya said.
Here is what Micron Technology Inc (NASDAQ:MU) said about HBM during fiscal Q3 earnings call:
“Our HBM shipment ramp began in fiscal Q3, and we generated over $100 million in HBM3E revenue in the quarter, at margins accretive to DRAM and overall Company margins. We expect to generate several hundred million dollars of revenue from HBM in fiscal 2024 and multiple billions of dollars in revenue from HBM in fiscal 2025. We expect to achieve HBM market share commensurate with our overall DRAM market share sometime in calendar 2025. Our HBM is sold out for calendar 2024 and 2025, with pricing already contracted for the overwhelming majority of our 2025 supply. We are making significant strides toward expanding our HBM customer base in calendar 2025, as we design-in our industry-leading HBM technology with major HBM customers. We have sampled our 12-high HBM3E product and expect to ramp it into high-volume production in calendar 2025 and increase in mix throughout 2025.”
ClearBridge Value Equity Strategy stated the following regarding Micron Technology, Inc. (NASDAQ:MU) in its Q2 2024 investor letter:
“Stock selection in the IT sector proved to be the largest contributor to performance, particularly driven by the strong performance of Micron Technology, Inc. (NASDAQ:MU) The company, which designs, develops, manufactures and sells memory and storage products, continued its strong performance alongside other AI beneficiaries as the anticipated demand for new and additional storage essential for housing and training large language AI models continues to grow.”
5. Broadcom Inc (NASDAQ:AVGO)
Number of Hedge Fund Investors: 130
Bank of America analyst Vivek Arya said in a latest note that if volatility remains elevated in the semiconductor industry Broadcom Inc (NASDAQ:AVGO) would be one of the outperformers.
“Volatility could persist through NVDA earnings and then into Sep, historically the worst month for SOX, down 70% of the time. US elections and ongoing geopolitical tensions add an extra layer of uncertainty,” analyst Vivek Arya wrote in an investor note.
TD Cowen in a fresh note named Broadcom Inc (NASDAQ:AVGO) as one of the stocks that can benefit from the rise in AI spending. Analysts at the firm said there are “no signs” of generative AI demand abating and highlighted that Broadcom Inc (NASDAQ:AVGO) recently raised its full-year AI outlook. Broadcom Inc (NASDAQ:AVGO) expects AI-related revenue for 2024 at $11 billion.
Broadcom Inc (NASDAQ:AVGO) recently reported second-quarter results. Revenue in the quarter rose about 43% year over year. AI revenue in the period rose a whopping 280% year over year. Broadcom’s revenue stream is diverse and does not rely on a single source. It includes enterprise, networking, storage, data center/hyperscaler, industrial, and consumer space. For 2024 AVGO has increased its annual revenue guidance to over $51 billion, anticipating growth of over 40%. A significant portion of this growth is expected to come from software, which would also help margins.
The company’s Ethernet business is also strong amid partnerships with Arista Networks (ANET), while the company is also collaborating with Dell (DELL), Juniper (JNPR), and Super Micro (SMCI) in the networking business and other segments. Broadcom has also developed ASIC AI chips in partnership with Google and Meta Platforms.
Baron Opportunity Fund stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q2 2024 investor letter:
“Broadcom Inc. (NASDAQ:AVGO) is a global technology leader that designs, develops, and supplies a broad range of semiconductor and infrastructure software solutions. The stock rose during the quarter as it reported strong earnings on the back of its two key growth drivers, AI semiconductors and its acquired VMware software business. The company once again increased its outlook for AI-related revenue, now expecting $11 billion or more this year (versus prior guidance for $10 billion), on the back of strength in both hyperscale custom compute and networking chips, where Broadcom maintains dominating share. In networking, Broadcom’s solutions are critical to enabling AI training factories to scale towards 100,000 chip clusters in the near term and 1 million chip clusters over the coming years. In AI custom compute, Broadcom designs custom accelerators for large consumer- internet AI companies (such as Google and Meta), who are building increasingly large AI clusters to drive improvements in user engagement and targeted advertising on their consumer media platforms. VMware remains on track to continue rapid sequential growth while simultaneously reducing operating expenses, driving faster-than-expected margin expansion and accretion, as management has simplified the product offering and is converting customers from a license model to subscriptions. We believe VMware will grow beyond the $4 billion near-term quarterly target, well above current analyst expectations. These two factors combined have caused a re-rating to the growth profile for the overall company. To quote CEO Hock Tan, “there is only one Broadcom. Period.”
