According to JP Morgan, the S&P will propel to new heights this New Year, and artificial intelligence is one of the reasons why. Besides AI, Strategist Dubravko Lakos-Bujas pointed to a resilient economy and the possibility of easier industry regulations as reasons for the boost, setting 6,500 as his 2025 target for the broad market index.
The U.S. will remain “the global growth engine with the business cycle in expansion, a healthy labor market, broadening of AI-related capital spending, and prospect of stronger capital market and deal activity”.
– Lakos-Bujas.
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US equities have already enjoyed a strong 2024, up 26% year to date due to enthusiasm around AI and a resilient economy. A tighter labor market, record wealth, and “potentially lower energy prices” are also reasons to celebrate. Investors have been happy about Donald Trump’s win as well, noted Lakos-Bujas, fueling their expectations of lower taxes and deregulation across industries.
“Heightened geopolitical uncertainty and the evolving policy agenda are introducing unusual complexity to the outlook, but opportunities are likely to outweigh risks. The benefit of deregulation and a more business-friendly environment are likely underestimated along with potential for unlocking productivity gains and capital deployment”.
In other news, artificial intelligence is stepping in to keep the Thanksgiving cheer alive, making sure holiday staples stay abundant and affordable for years to come.
“Cranberry production is challenging … [and] growers are really concerned about heat stress events”.
– Dr. Jeffrey Neyhart
Artificial intelligence is helping by speeding up the process of identifying heat-resistant varieties for cranberries. Researchers like Dr. Neyhart are using AI to save years of work and improve crop resilience in the face of climate change.
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10. Lumen Technologies, Inc. (NYSE:LUMN)
Number of Hedge Fund Holders: 26
Lumen Technologies, Inc. (NYSE:LUMN) is a facilities-based technology and communications company, whose AI-driven fiber deals and other digital services have been helping it benefit from AI growth.
On November 29, Citi analyst Michael Rollins raised the firm’s price target on Lumen Technologies, Inc. (NYSE:LUMN) to $8 from $6.50 and kept a “Neutral” rating on the shares. The analysts reviewed Q3 results that were “generally mixed with respect to the operations”, and stated that the potential to monetize fiber services is becoming more important for wireless carriers. This is because they are facing tough competition from cable companies offering combined mobile and broadband packages, the analysts noted. The company has been expanding its network infrastructure to support the increasing demand for fiber services, leveraging AI-driven technologies to optimize network performance and deliver enhanced connectivity.
9. SAP SE (NYSE:SAP)
Number of Hedge Fund Holders: 36
SAP SE (NYSE:SAP), a market leader in ERP software, leverages AI to enhance its enterprise resource planning (ERP) solutions.
On November 28, Stifel Nicolaus analyst Chandramouli Sriraman maintained a “Buy” rating on SAP SE (NYSE:SAP) and set a price target of €245.00. The buy rating comes from SAP SE’s robust growth prospects in its Cloud business, with projected mid-20s growth in Cloud revenue driven by the conversion of a large maintenance base, potentially adding over €25 billion in revenue. Moreover, SAP’s strategic initiatives, including the adoption of Business Technology Platform (BTP), RISE with SAP, and Cloud ERP Suite, are expected to boost cross-selling opportunities. Meanwhile, new AI tools from the company are further expected to bolster growth. These reasons, coupled with improving Cloud gross margins and economies of scale, justify the buy rating.