Developing and maintaining advanced artificial intelligence systems can be financially challenging. Likewise, spending on the much-needed AI infrastructure is not expected to slow soon. That’s because big tech companies are expected to spend more than $500 billion by early next decade as the focus shifts to running AI models rather than training them.
High-end technology, such as GPUs and TPUs, are necessary for building and running AI models and training big AI models. These parts are costly as they cost thousands of dollars and require frequent maintenance and upgrading. Operational costs are further increased by the processing and storage capacity needed to handle large datasets for model training.
In addition to hardware, companies must contend with personnel expenses since hiring and keeping specialized AI talent such as researchers, engineers, and data scientists comes with extremely competitive pay that is frequently greater than that of other IT industries.
Hyperscale companies or the big tech giants in the US are on course to spend $371 billion in building out data centers and other computing resources in 2025. According to a new study by Bloomberg Intelligence, the amount is expected to increase by over $525 billion by 2032. The surge starkly contrasts initial concerns of a shift of focus into developing cost-effective AI models following DeepSeek revelations.
“Capital spending growth for AI training could be much slower than our prior expectations,” Mandeep Singh, an analyst with Bloomberg Intelligence, wrote in the report. But the immense amount of attention on DeepSeek, he wrote, will likely push tech firms to “increase investments” in inference, making it the fastest-growing segment in the generative AI market.
The introduction of the DeepSeek models raised concerns about the necessity of funding AI infrastructure, but it also increased interest in reasoning models, which demand higher inference costs. Bloomberg analysis predicts that by 2032, training-related expenditures will account for only 14% of hyperscalers’ AI budgets, down from over 40% this year. On the other hand, about half of all AI spending that year may come from inference-driven initiatives.
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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 in Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
9. DXC Technology Company (NYSE:DXC)
Number of Hedge Fund Holders: 24
DXC Technology Company (NYSE:DXC) is an information technology services and solutions company. It offers analytics services and an extensive partner ecosystem that helps customers gain insights and automate operations. On March 17, Portuguese fashion brand Parfois selected the company to provide solutions for enhancing customer experience through data-driven personalization.
The collaboration entails the deployment of the Snowflake data platform to assess customer information utilizing predictive AI models. It will also include the setup of an analytics platform, data engineering, development of AI models, and business intelligence dashboards. The agreement highlights DXC’s expertise in data analytics and AI, specifically the execution of Snowflake’s data platform, which will facilitate predictive AI models and provide Parfois with real-time customer insights. This collaboration underscores DXC Technology Company’s (NYSE:DXC) ongoing progress in acquiring new businesses within their primary service areas and assisting organizations with IT modernization.
8. NICE Ltd. (NASDAQ:NICE)
Number of Hedge Fund Holders: 28
NICE Ltd. (NASDAQ:NICE) is a technology company that provides cloud platforms for AI-driven digital business solutions. It offers CXone, a native cloud open platform, and Enlighten, an AI engine for the customer engagement market. On March 17, the company launched CXone Mpower Orchestrator, a new solution that automates customer service workflows with agentic AI.
The solution reduces cost and accelerates resolution across various back-office operations. Orchestrator integrates third-party apps, enterprise-wide workflows, and AI-driven insights into a single, automated, efficient framework. Additionally, it proactively finds and applies enhancements throughout the whole service ecosystem by dynamically analyzing, forecasting, and optimizing operations. The AI-powered solution is a significant breakthrough that improves NICE Ltd.’s (NASDAQ:NICE) standing in the cutthroat market for customer experience platforms and may lead to both an increase in the wallet share of current customers and the acquisition of new ones.
7. RingCentral Inc. (NYSE:RNG)
Number of Hedge Fund Holders: 36
RingCentral Inc. (NYSE:RNG) is a technology company that provides cloud business communications, contact center, video, and hybrid event solutions. Its products include RingEX, a unified communications as a service platform for collaboration across voice, messaging, and video. On March 17, the company confirmed that its new AI Receptionist solution, RingCentral AIR, is gaining traction rapidly, with over 200 customers.
The AI-powered solution offers instant call answering, intelligent routing and natural conversations. The RingCentral AIR solution is attracting increased usage in industries like security services, hospitality, and legal, as it democratizes AI for businesses. Pricing for the AI-powered solution starts at $30, although it is currently under controlled availability.
“We’re seeing very noticeable efficiency gains. RingCentral AI Receptionist saves each employee 50% in time spent on inbound calls. We’ve turned those saved hours into revenue-generating activities. Now our team can focus more on lead generation and client follow-ups, all without adding headcount,” said April Chastain, Director of Operations at Owen Security.
6. DocuSign, Inc. (NASDAQ:DOCU)
Number of Hedge Fund Holders: 51
DocuSign, Inc. (NASDAQ:DOCU) is a technology company that offers electronic signature solutions. It also provides Intelligent Agreement Management (IAM) solutions that enable businesses to create, sign, and manage agreements electronically. It also uses AI to transform agreement data into insights and actions. William Blair upgraded the stock to outperform on March 17 on optimism that the IAM platform has the potential to drive double-digit growth.
According to William Blair, IAM has already shown strong traction, going by the high single-digit percentage of deal volume in the fourth quarter. Additionally, DocuSign, Inc. (NASDAQ:DOCU) is projecting a low double-digit percent growth in its subscription book. The research firm also remains bullish about the stock owing to significant investments in product-led growth, artificial intelligence and enterprise solutions.
5. Keysight Technologies, Inc. (NYSE:KEYS)
Number of Hedge Fund Holders: 51
Keysight Technologies, Inc. (NYSE:KEYS) is a technology company that offers electronic design and test solutions. It also provides oscilloscopes, electronic design automation software, instrument measurement software and instrument workflow. On March 18, the company introduced AI insight, an upgrade of its Vision Network Packet Brokers designed to enhance AI-driven cybersecurity activities such as threat detection.
Integrating AI directly within the packet broker layer facilitates smarter data preprocessing, such as detecting anomalies and identifying application signatures before the data reaches security tools. This method can significantly decrease false positives and direct security efforts towards real threats. This innovation is aimed at helping enterprise IT, and security operations teams expedite threat identification while ensuring they maintain operational efficiency and compliance.
4. Maplebear Inc. (NASDAQ:CART)
Number of Hedge Fund Holders: 60
Maplebear Inc. (NASDAQ:CART) is an internet retail company that provides online grocery shopping services to households. The company also provides advertising services and software-as-a-service solutions. On March 18, the company introduced Smart Shop, leveraging generative artificial intelligence to enhance shopping experience.
The AI-powered solution is designed to make online grocery shopping seamless and intuitive by analyzing customer habits and dietary preferences. Maplebear Inc.’s (NASDAQ:CART) newest functionalities should allow shoppers to purchase items based on their specific dietary needs and household preferences, making it easier to locate suitable products and make better-informed grocery decisions. The company also introduced Health Tags, an AI-driven system that provides nutrition information across 500,000 items.
“By combining our new Smart Shop technology, Health Tags and Inspiration Pages, we’re not just improving online grocery shopping – we’re reimagining it, making it seamless to go from intention to action. By customizing your shopping journey to match your personal health goals or fit your dietary restrictions, we can unlock possibilities that weren’t even on the table before,” said Daniel Danker, Chief Product Officer at Instacart.
3. GE HealthCare Technologies Inc. (NASDAQ:GEHC)
Number of Hedge Fund Holders: 64
GE HealthCare Technologies Inc. (NASDAQ:GEHC) is a health information services company that develops and markets products, services, and complementary digital solutions. Its solutions are used in diagnosing, treating, and monitoring patients. It also leverages artificial intelligence to help streamline mammography screenings. On March 17, the company launched new AI-powered enhanced cardiac procedure solutions, AltiX AI.i edition of Mac-Lab™, CardioLab™ and ComboLab™.
The new solutions are designed to enhance user experience and elevate workflow in the cardiac catheterization (cath) lab. They should also strengthen the company’s position in the high-margin cardiovascular segment that addresses the needs of 500 million people worldwide. Artificial intelligence integration in the cardiac procedure solution should be a crucial differentiator that strengthens GE Healthcare Technologies’ competitive edge.
“AltiX AI.i is built on more than two decades of experience, leadership and innovation in invasive cardiology to enhance cath labs and EP procedures and empower clinicians to deliver the best possible outcomes,” said Jyoti Gera, CEO of CardioVascular & Interventional Solutions, and GE HealthCare. “By automating routine tasks and streamlining workflow, AltiX AI.I allows clinicians to focus on what truly matters – providing exceptional patient care.”
2. Coherent Corp. (NYSE:COHR)
Number of Hedge Fund Holders: 71
Coherent Corp. (NYSE:COHR) is a technology company that develops and markets networking and lasers for industrial, communications, electronics, and instrumentation markets. The leader in photonics launched its 2D Collimator Array on March 17. The advanced optical assembly is designed specifically for optical circuit switches (OCS), targeting solutions for AI machine learning and high-performance computing data centers.
By combining a 2D lens and fibre array, the 2D Collimator Array improves OCS performance by providing high port density, accuracy, and dependability. Coherent Corp. (NYSE:COHR) strongly emphasizes design customization, allowing for client collaboration to produce specialized optical solutions. Coherent’s VP of R&D, Guanglong Yu, emphasized the array’s innovative technology as a solution for expanding demands of supercomputing switching systems and artificial intelligence.
1. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 105
Oracle Corporation (NYSE:ORCL) is a leading technology company providing a fully integrated suite of cloud applications and platform services. On March 18, Oracle Corporation (NYSE:ORCL) and NVIDIA announced a pioneering integration between NVIDIA’s accelerated computing and Oracle’s AI infrastructure to streamline the development of AI applications.
The collaboration brings over 160 AI tools and 100+ NVIDIA NIM™ microservices to the Oracle Cloud Infrastructure (OCI) Console, with no-code deployment of AI Blueprints and enhanced vector search in Oracle Database 23ai via the NVIDIA cuVS library.
According to Safra Catz, CEO of Oracle, “Oracle has become the platform of choice for both AI training and inferencing, and this partnership enhances our ability to help customers achieve greater innovation and business results. NVIDIA’s offerings, paired with OCI’s flexibility, scalability, performance, and security, will speed AI adoption and help customers get more value from their data.”
While we acknowledge the potential of Oracle Corporation (NYSE:ORCL) 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 time frame. If you are looking for an AI stock that is more promising than ORCL 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 30 Best Stocks to Buy Now According to Billionaires.
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