The wave of artificial intelligence investments is heating up. Just weeks after the US President confirmed a $500 billion Stargate project to strengthen US data centre capacity, South Korea has joined the fray. An investor group has already confirmed plans to construct one of the world’s largest data centers, affirming the red-hot AI demand.
The investors are plotting a $35 billion data center that will pack up to 3 gigawatts of power in the Asian nation. It will be one of the biggest data centers and nearly three times the data centers that Softbank and its partners are planning to construct in Texas as part of the Stargate project.
AI models have grown more complex and require more chips that consume greater amounts of electricity. Amid this growth, the availability of power needed to run these AI models and data centers has become a significant problem, prompting companies and countries to invest in new sources of reliable power. By 2030, creating the biggest AI models will probably require more than 5 gigawatts of electricity, according to the research group Epoch AI.
The proposed South Korean data center would be competing against emerging data center campuses that are coming up in Malaysia, Thailand, and India whereby labor is cheap and space readily available.
“If they can do it cheaply and timely, there’s definitely an opportunity there” for the South Korean facility, said Jingwen Ong, a research manager overseeing the Asia-Pacific region at DC Byte.
Additionally, it will affirm the growing investments as countries and companies look to take advantage of the AI boom. The investment spree should allay fears of a potential cut in AI infrastructure spending following DeepSeek’s breakthrough with a cost-efficient AI model.
While the $35 billion investment in a data center might be a shocker, it underscores the willingness to spend and invest in the burgeoning AI sector. Elon Musk has already tabled a $97.4 billion buyout offer for OpenAI, underscoring the great lengths investors are willing to go to strengthen their prospects amid the AI revolution.
The board of OpenAI received the unsolicited offer of $97.4 billion from Musk and a group of investors to buy the nonprofit that owns OpenAI. While the board rejected the offer, Musk’s lawyers reiterated that they would only drop the takeover if OpenAI dropped plans to convert to a for-profit structure.
Musk’s attorney insists the OpenAI board should have considered the offer in good faith because the for-profit conversion essentially means the nonprofit’s assets are being put up for sale.
“They’re just selling it to themselves at a fraction of what Musk has offered,” he said, accusing the board of a “classic self-dealing transaction.”
Musk alleges that OpenAI and Sam Altman violated the company’s original agreement by prioritizing financial gain over benefits to humanity. Altman and OpenAI have refuted Musk’s claims and described his lawsuits as a rival’s attempt at distraction.
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. The hedge fund data was sourced from Insider Monkey’s Q4 2024 database.
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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9. Enovix Corporation (NASDAQ:ENVX)
Number of Hedge Fund Holders: 14
Enovix Corporation (NASDAQ:ENVX) designs, develops, manufactures, and sells lithium-ion batteries. Its batteries are used in mobile devices, electric vehicles, and energy storage. The high-performance battery company delivered solid fourth quarter and full year 2024 results on February 19. The company achieved record revenue of $9.7 million in the fourth quarter and $23.1 million for the entire year, up 202%.
Enovix Corporation (NASDAQ:ENVX) also achieved a significant milestone in securing a landmark prepaid purchase order for its XR batteries. The deal is from a global technology leader in artificial intelligence and immersive technologies. Consequently, Enovix’s batteries will start being used on next-generation smart eyewear. As a leader in high energy density battery technologies, Enovix plans to capitalize on emerging trends fueled by accelerating AI innovation. That’s part of the company’s plan to invest in the emerging AI-enabled smart eyewear market, which is backed by a battery cell tailored for the specific market.
8. Jones Lang LaSalle Incorporated (NYSE:JLL)
Number of Hedge Fund Holders: 31
Jones Lang LaSalle Incorporated (NYSE:JLL) is a commercial real estate and investment management company. It buys, builds, manages, and invests in commercial, industrial, residential, and retail properties. Additionally, the company provides cutting-edge and secure AI-enabled software services for the commercial real estate sector. Its secure artificial intelligence platform provides the framework for the rapid and efficient creation of safe applications that provide occupiers and real estate professionals with timely, valuable, and cost-effective insights.
Jones Lang LaSalle Incorporated (NYSE:JLL) delivered solid fourth quarter 2024 results on February 20, with 16% revenue growth to $6.8 billion as diluted earnings per share (EPS) increased $1.40 from the prior-year quarter to $4.97. The chief executive officer reiterated that they are utilizing AI to enhance productivity and efficiency in the JLL network. The company’s long-term focus will be on aligning business processes to use AI to achieve notable productivity gains.
7. Five9, Inc. (NASDAQ:FIVN)
Number of Hedge Fund Holders: 40
Five9, Inc. (NASDAQ:FIVN) is a software infrastructure company that offers intelligent cloud software for contact centers. It also offers a virtual contact centre cloud platform that delivers a suite of applications, which enables the breadth of contact centre-related customer service, sales, and marketing functions. The company confirmed on February 19 the availability of its Intelligent CX Platform powered by Five9 Genius AI on Google Cloud Marketplace.
Additionally, Five9, Inc. (NASDAQ:FIVN) announced the release of its new Five9 AI agents tailored explicitly for the Google Cloud. By leveraging Google Cloud technology, the cutting-edge AI-powered Five9 solutions allow businesses to create remarkable customer experiences while leveraging their Google Cloud credits to increase customer loyalty and business success. The availability of the solutions underscores the deepening relations between Five9 and Google Cloud.
“Bringing Five9 AI Agents to Google Cloud Marketplace will help customers quickly deploy, manage, and grow the solution on Google Cloud’s trusted, global infrastructure,” said Dai Vu, Managing Director and Marketplace & ISV GTM Programs at Google Cloud. “Five9 can now securely scale and support customers on their digital transformation journeys.
6. Dynatrace, Inc. (NYSE:DT)
Number of Hedge Fund Holders: 45
Dynatrace, Inc. (NYSE:DT) is a technology company that provides a software observability platform for multi-cloud environments. Its software platforms are used to monitor, analyze, and optimize the performance of applications and IT infrastructure. The company also utilizes artificial intelligence to monitor and analyse complex IT systems. Its AI-powered solutions make it easier to detect and diagnose performance issues.
Analysts at Stifel reiterated a Buy rating on the stock on February 19 and increased the stock’s price target to $69 from $65. The price adjustment follows a survey of 25 Dynatrace clients that spend more than $300,000 annually, which affirmed strong uptake of the company’s newer Log/Grail and Application Security solutions. The findings helped ease concerns amid the expected moderation in spending intentions over the next 12 months. Integration of AI into Dynatrace, Inc.’s (NYSE:DT) observability solutions have had a hand in triggering strong demand in the market.
5. Axon Enterprise, Inc. (NASDAQ:AXON)
Number of Hedge Fund Holders: 46
Axon Enterprise, Inc. (NASDAQ:AXON) is a public safety technology company. Its products include cameras, sensors, drones, robotics, and virtual reality training used by law enforcement agencies and military and civilians. Its solutions come integrated with artificial intelligence to enhance the processing of raw video frames and search video evidence for vehicles.
Axon Enterprise, Inc. (NASDAQ:AXON) was down by about 16% on February 19 after Northcoast Research analyst Keith Housum downgraded the stock from Buy to Neutral. The downgrade came amid concerns about the company’s prospects following the breakup with former partner Flock Safety. Additionally, the analysts raised concerns about Axon stock’s valuation as the company faces stiff competition following its split from Flock Safety, which offers automated license plate recognition technology.
An Axon spokesperson stated, “As Flock has increasingly imposed artificial barriers on integrations and access to agency-owned data, we have made the unfortunate decision to terminate our existing partnership with Flock.”
4. Analog Devices, Inc. (NASDAQ:ADI)
Number of Hedge Fund Holders: 63
Analog Devices, Inc. (NASDAQ:ADI) is a semiconductor company that designs and manufactures analogue, digital, and software solutions. As artificial intelligence opens up a whole new world of possibilities, from virtual assistants to self-driving cars, the company has unveiled a new line of AI microcontrollers to address the growing market needs. Similarly, Benchmark analyst David Williams has already touted the stock as one of the most attractive opportunities in the semiconductor space.
Conversely, on February 19, analysts at Morgan Stanley reaffirmed an Overweight rating on the stock and adjusted the price target from $250 to $248. The price hike comes on Analog Devices, Inc. (NASDAQ:ADI) delivering solid first quarter fiscal 2025 results. Earnings per share totaled $1.63, better than $1.54 a share expected. Analog Devices also logged $2.42 billion in revenues, beating estimates of $2.36 billion. A diversified market approach and a focus on expanding product offerings for AI systems, data centres and healthcare are some of the factors expected to drive growth.
3. Autodesk Inc. (NASDAQ:ADSK)
Number of Hedge Fund Holders: 70
Autodesk Inc. (NASDAQ:ADSK) is a technology company that develops and offers 3D design, engineering, and entertainment software. Professionals and amateurs use its software to design, visualize, and simulate ideas. In addition, the company is integrating artificial intelligence features to enhance its design and engineering software by providing predictive insights and automating repetitive tasks. On February 19, Baird analyst Joe Vruwink reiterated an Outperform rating on the stock while increasing the price target to $345 from $330.
The price hike comes amid growing optimism that Autodesk Inc.’s (NASDAQ:ADSK) long-term fundamental outlook remains solid despite differing from the short-term stock set-up. While the company’s guidance appears conservative, Vruwink believes significant margin improvements underscore why the stock is a buy. Autodesk is making significant investments in cloud computing and artificial intelligence (AI) to spur future expansion and keep its competitive edge. It also intends to monetize generative AI (GenAI) through new features and products and is using AI to increase productivity across its product line.
2. Applied Materials Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 74
Applied Materials Inc. (NASDAQ:AMAT) is a technology company that manufactures equipment and provides engineering solutions for creating semiconductors and displays. Its products are used to make chips used in electronics. The company also develops chips for powering artificial intelligence models and provides equipment and services for AI data centres. On February 19, it unveiled SEMVision™ H20, a defect review tool for enhancing the analysis of nanoscale defects in chips.
The defect review system combines electron beam (eBeam) technology with advanced AI image recognition to hasten the process of detecting defects in the most advanced chips. Keith Wells, Group Vice President of Imaging and Process Control at Applied Materials, explained, “Our new SEMVision H20 system allows the world’s leading chipmakers to better separate the signal from the noise amidst massive amounts of data provided by inspection tools. By combining advanced AI algorithms with the superior speed and resolution of our innovative eBeam technology, our system enables rapid identification of the smallest defects buried deep in 3D device structures, delivering faster and more accurate inspection results that can improve factory cycle time and yield.”
1. GE Vernova Inc. (NYSE:GEV)
Number of Hedge Fund Holders: 89
GE Vernova Inc. (NYSE:GEV) generates transfers, converts, and stores electricity. Its power segment designs, manufactures, and services gas, nuclear, hydro, and steam technologies. The company has also developed an AI-based platform that leverages machine learning to process visual inspection data and improve grid visibility. GEV also leverages AI to automate data collection and generate insights for images, enhancing grid visibility. On February 19, JPMorgan reiterated an Overweight rating on the stock with a $436 price target.
In January, GE Vernova Inc. (NYSE:GEV) inked a strategic partnership with Engine No. 1 and Chevron to develop scalable, reliable power solutions for data centres running on natural gas. To meet the substantial demand for electricity to power U.S. data centres, the companies plan to directly address the need for affordable, dependable energy, allowing for the development of both present and future generations of AI in the United States. The joint venture is to generate up to 4 GW, or enough energy, to power three to five million homes in the United States.
While we acknowledge the potential of GE Vernova Inc. (NYSE:GEV) as an investment, our conviction lies in the belief that 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 GEV 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 was originally published at Insider Monkey.
