In this piece, we will take a look at the Top 10 High-Flying AI Stocks This Week.
The US equity market is the most expensive it has ever been. After two years of blockbuster gains, most counters appear to be trading at all-time highs, leaving value investors with no option but to stay in cash. The eye-watering valuations have come against the backdrop of an artificial intelligence-driven rally.
The big question now is whether the AI-driven rally has come to an end, going by recent pullbacks across various counters. According to Morgan Stanley’s head of research, Katy Hubert, the AI-driven bull market is just getting started. Hubert is bullish in part because of where she thinks we are in the AI adoption and capital expenditure cycle.
“If we’re talking about ultimately a $10 trillion AI infrastructure investment, we’re at single-digit penetration today,” she said.
In terms of user adoption and business investment to expand the products, each technological development wave spanning decades is about ten times larger than the one before it. Given that about $10 trillion will need to be poured to accelerate developments around AI, the analyst expects the equity market to continue edging higher.
The fact that earnings revisions for the leading tech companies in the market still have a lot of upside potential when compared to the trajectory they took during the mobile internet cycle beginning in 2010 is another indication that we are still in the early stages of the AI cycle.
Building out infrastructure and training models to tackle tomorrow’s complex problems constituted the first wave of AI growth. With the continued infrastructure expansion, there is cause for optimism that AI will have another fantastic year.
According to Jensen Huang, upgrading the world’s $1 trillion worth of computers is necessary for accelerated computing, and it will take time. Furthermore, 2025 might be the year of agentic AI, or AI agents with the ability to reason, create solutions, and implement them. Businesses and industries may undergo radical change as a result of this and other practical applications.
As companies turn AI prototypes into products this year, cloud computing companies stand to gain from investments made in AI infrastructure over the past two years. However, it is not the only industry reaping the benefits of the AI revolution.
The fintech industry is expanding significantly due to technological advancements, artificial intelligence, and data analytics, especially in the banking, underwriting, legal, lending, risk, and treasury sectors. AI-powered banking solutions improve customer satisfaction, streamline processes, and facilitate in-the-moment decision-making. In return, they are giving rise to unique investment opportunities in the banking sector.
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Our Methodology
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. 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).
Top 10 High Flying AI Stocks This Week
10. UiPath Inc. (NYSE:PATH)
Number of Hedge Fund Holders: 34
UiPath Inc. (NYSE:PATH) provides an end-to-end automation platform embedded with artificial intelligence and machine learning capabilities to improve decision-making and information processing. On January 10 analysts at Barclays maintained a Hold rating on the stock with a $15 price target. The hold ratings comes amid growing expectation that the company is well positioned to benefit from rising demand for automation and advancement in AI and machine learning.
The company has already unveiled a new suite of generative AI features, such as Context Grounding and specialized LLMs like DocPATH and CommPATH to improve automated AI models for particular business requirements. Additionally, it has moved to combine its expertise in robotic process automation with generative AI.
UiPath Inc. (NYSE:PATH) has also unveiled the Agent Builder tool, allowing developers to design, build, evaluate, and publish AI-powered agents collaborating with traditional process automation tools. The company is promoting the idea of “agentic automation,” which emphasizes AI agents that are more advanced than conventional chatbots like ChatGPT.
9. Palo Alto Networks (NASDAQ:PANW)
Number of Hedge Fund Holders: 64
Palo Alto Networks (NASDAQ:PANW) is a technology company that provides cybersecurity solutions. It also provides cloud security solutions, including Prisma Cloud, a cloud-native application protection platform. On January 16, research firm KeyBanc Capital Markets reiterated an Overweight rating on the stock with a $435 price target.
The upgrade was in response to Palo Alto Networks (NASDAQ:PANW) inking a deal with the UK’s Emergency Services Network. The deal is worth $1.65 billion and, for seven years, is also in partnership with IBM. It is for the provision of security services such as network and cloud asset protection through Prisma Cloud.
Palo Alto Networks (NASDAQ:PANW) has also partnered with air transport technology specialist SITA. Under the terms of the deal, Palo Alto Network’s artificial intelligence-powered cybersecurity platform will be integrated into SITA’s cybersecurity portfolio. The deal paves the way for the cybersecurity company to expand its footprint and transform cybersecurity in the air transport industry.
8. Datadog, Inc. (NASDAQ:DDOG)
Number of Hedge Fund Holders: 71
Datadog, Inc. (NASDAQ:DDOG) operates an observability and security platform for cloud applications. Its products comprise infrastructure and application performance monitoring, log management, digital experience monitoring, continuous profiler and database monitoring. On January 16, Morgan Stanley downgraded the stock to an equal weight amid concerns over slower growth in the year’s first half.
A point of concern is that Datadog, Inc. (NASDAQ:DDOG) is operating under a tight budget environment that would make it difficult to strengthen its revenue base. Amid the concerns, the Morgan Stanley analysts expect the company’s revenue to grow by about 25% in 2025. It would be a significant slowdown considering Datadog revenue has grown by an average of 37% over the past five years.
The slowdown in revenue growth has to do with AI native customers optimizing their spending on the company’s solution after a period of rapid expansion. Consequently, there are concerns that Datadog, Inc. (NASDAQ:DDOG) might be forced to embark on favorable pricing to hold on to customers, which could result in growth deceleration.
7. Snowflake Inc (NYSE:SNOW)
Number of Hedge Fund Holders: 71
Snowflake Inc (NYSE:SNOW) is a technology company that provides a cloud-based data platform. Its platform offers Data Cloud, which enables customers to consolidate data into a single source of truth to drive meaningful business insights, build data-driven applications, share data and data products, and apply artificial intelligence (AI) to solve business problems. On January 16, Canto Fitzgerald reiterated an Overweight rating on the stock with a $201 price target.
Amid the rise of generative artificial intelligence, Snowflake Inc (NYSE:SNOW) has positioned itself for growth by inking strategic partnerships with Amazon, Microsoft, and Google to provoke data analytics and management software. It has also started integrating its technology into some of its hosted large language models. The moves are designed to cut down on the time and expense needed for artificial intelligence inferencing—the process of using trained models to produce outputs or make predictions based on fresh input data.
Snowflake Inc (NYSE:SNOW) has also introduced Swift, an optimization method for large languages. The method recycles information from earlier layers of an LLM to avoid repeating calculations of key-value caches for later layers. This increases the efficiency of the inference process.
6. ServiceNow, Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 78
ServiceNow, Inc. (NYSE:NOW) is a technology company that provides end-to-end intelligent workflow automation platform solutions for digital businesses. It operates the Now platform for end-to-end digital transformation, artificial intelligence, machine learning, robotic process automation, process mining, performance analytics, and collaboration and development tools. On January 16, Cantor Fitzgerald initiated coverage of the stock with an overweight rating and a $1332 price target.
The positive rating coincides with ServiceNow, Inc. (NYSE:NOW) moving to strengthen its growth metrics amid increased artificial intelligence adoption with the acquisition of Cuein. With the acquisition, NOW gains access to a leader in AI native conversation data analysis and insights.
Cuein will contribute to the advancement of ServiceNow AI Agents’ efficacy. It should improve their comprehension, processing, and transformation of data from fragmented customer interactions across various channels and systems into a thorough analysis with actionable insights. This acquisition strengthens ServiceNow, Inc.’s (NYSE:NOW) position as the AI platform for business transformation and advances its agentic AI roadmap.
5. Workday, Inc. (NASDAQ:WDAY)
Number of Hedge Fund Holders: 84
Workday, Inc. (NASDAQ:WDAY) provides enterprise cloud applications that help customers plan, execute, analyze, and extend to other applications and environments to manage their business and operations. While the company has been under pressure in recent months, analysts at Guggenheim believe the tide is slowly changing. On January 13, the analysts upgraded the stock to Neutral from a Sell, buoyed by the strategic moves to stimulate growth, such as collaborating more closely with partners and targeting small to medium-sized businesses (SMBs).
Workday, Inc. (NASDAQ:WDAY) is increasingly investing in artificial intelligence capabilities. It’s also leveraging its huge troves of data to provide cloud solutions that enhance customer efficiency and product innovation. Integrating AI into offerings has been the catalyst behind the company’s strong demand for its complete suite of HR and financial management solutions. Similarly, WDAY has started working on AI-powered solutions tailored to specific sectors such as education, healthcare, and government.
4. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 91
Oracle Corporation (NYSE:ORCL) is a technology company that offers products and services that address enterprise information technology environments worldwide. Its Oracle cloud software is a service offering that includes various cloud software applications. On January 17, Cantor Fitzgerald reiterated an overweight stock rating, reiterating that the company is a top player in AI software and infrastructure.
According to the research firm, Oracle Corporation (NYSE:ORCL) is well-positioned to benefit from the growing demand for AI-powered cloud infrastructure. The firm expects the company’s OCI business to jump 60% in the second half of the year as more AI workloads move to its platform. Even though capital expenses are expected to weigh on margins in the short term due to increased investment, Cantor expects them to fuel long-term growth.
Oracle Corporation (NYSE:ORCL) inked a strategic partnership with Nvidia early this year. The deal paves the way for the two companies to join forces in transforming the way financial institutions operate by enhancing AI adoption. The two are to offer solutions at multiple levels, from infrastructure to software-as-a-service.
3. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 116
Salesforce, Inc. (NYSE:CRM) provides Customer Relationship Management (CRM) technology that brings companies and customers together worldwide. Its service includes sales to store data, monitor leads and progress, forecast opportunities, and gain insights through analytics and artificial intelligence. On January 17, analysts at TD Cowen upgraded the stock to a Buy from a Hold, citing the company’s potential as it taps into the emerging agentic artificial intelligence (AI) technology.
Last year, Salesforce, Inc. (NYSE:CRM) unveiled its own agentic AI tool, Agentforce. The technology has the potential to propel the business into its next phase of expansion. While the company predicted 7% to 9% revenue growth in the fourth quarter, the growth estimate did not factor in the impact of Agentforce. Nonetheless, management is optimistic about Agentforce’s potential, characterizing it as a comprehensive AI system for businesses integrated into the Salesforce platform. CEO Marc Benioff anticipates that products such as Agentforce will transform global labour and change the way industries function and grow.
2. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 123
Adobe Inc. (NASDAQ:ADBE) is a diversified software company that offers products, services, and solutions that enable individuals, teams, and enterprises to create, publish, and promote content. It offers Document Cloud, a unified cloud-based document services platform. The company has been making strides around artificial intelligence technology as it looks to strengthen its product portfolio.
Likewise, analysts at BNP Paribas have taken note of the AI investments and innovations that the company is making and upgraded the stock on January 15 to Neutral from Underperforming. The upgrade comes on the heels of Adobe Inc. (NASDAQ:ADBE) unveiling two new AI-based tools for the Adobe Firefly web application. The new tools allow resizing up to 10,000 images in one click.
Additionally, the resizing tool will offer users a number of pre-made social media templates. Artificial intelligence will assist in expanding the background to the desired size in addition to shrinking the image. The two new AI tools follow the unveiling of features like Distraction Removal and Generative Shape Fill, which use AI to speed up creative workflows, as well as Photoshop and Illustrator.
1. Uber Technologies Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 136
Uber Technologies Inc. (NYSE:UBER) develops and operates proprietary technology applications. Its mobility segment connects consumers with a range of transportation modalities, while the delivery segment allows searching for and discovering restaurants, including grocery, alcohol, convenience, and other retail locations. Its Freight segment manages the transportation and logistics network. The stock has caught the Goldman Sachs analyst’s attention, who upgraded it to a Buy on January 15 with a $141.25 price target.
Analysts at Goldman Sachs remain bullish about Uber Technologies Inc.’s (NYSE:UBER) long-term prospects amid the integration of artificial intelligence into autonomous vehicle technology in the ride-sharing industry. The remarks come on Uber inking strategic collaboration with Nvidia to support the development of AI-powered autonomous driving technology. Uber is certain that its partnership with NVIDIA will accelerate the industry’s transition to safe and scalable autonomous driving solutions.
Uber Technologies Inc.’s (NYSE:UBER) AI-powered innovations, which are fueled by NVIDIA’s computational prowess, are intended to push the limits of driverless cars and revolutionize the transportation industry. With the potential to upend the entire autonomous driving market, this strategic partnership allows Uber to access new revenue streams.
As we acknowledge the growth potential of Uber Technologies Inc. (NYSE:UBER), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than UBER 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 was originally published at Insider Monkey.
