We recently compiled a list of the 10 AI Stocks That Will Skyrocket. In this article, we are going to take a look at where Varonis Systems, Inc. (NASDAQ:VRNS) stands against the other AI stocks.
DWS, an expert in active, passive, and alternative asset management, believes that expectations around the usage of Artificial Intelligence (AI) across industries acted as one of the critical stock market drivers over the previous 2 years. In 2025, AI developments are expected to make significant strides throughout various domains. The firm anticipates a shift from generalized applications to industry-specific solutions. Notably, companies are expected to refine their strategies to target specific use cases providing measurable results.
Generative AI CapEx Will Continue to Increase, Says DWS
DWS, while quoting Bloomberg estimates, highlighted that some of the big technology firms can collectively increase capex to ~$200 billion in 2025. More than $90 billion in incremental capital spending in 2024-25 vs. 2023 is projected to be earmarked mainly for expanding Gen AI infrastructure. On a related note, Goldman Sachs Asset Management believes that the AI capex from well-established hyperscalers is projected to surpass $250 billion in 2025. This hints at optimism that hyperscalers remain confident in the ROI (Return on Investment) they will witness from such significant investments.
DWS sees the de-globalization movement spreading to data and AI, with countries spending a significant amount to subsidize “sovereign AI.” To provide a brief overview, it refers to a nation’s capabilities to establish, control, and deploy its own AI technologies. It spans both physical and data infrastructures. Notably, in the past year, the governments of the US and China have pledged $40 billion – $50 billion each dedicated towards AI investments.
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Key AI Trends to Watch Out
Appinventiv believes that conversational AI, Predictive Analytics, AI Democratization, Agentic AI, and Generative AI, among others, are some of the key trends to watch out for. While conversational AI focuses on streamlining customer interactions, generative AI has been revolutionizing content creation across fields including healthcare. Additionally, multi-modal Al remains one of the most popular AI trends in business. It focuses on leveraging machine learning trained on multiple modalities, including speech, images, and traditional numerical data sets. As a result, there will be a more holistic and human-like cognitive experience.
Appinventiv opines that companies can capitalize on multi-modal Al and develop intelligent systems analyzing diverse data streams, which can help improve natural language understanding and voice recognition for better user experiences.
Our Methodology
To list the 10 AI Stocks That Will Skyrocket, we sifted through several online rankings and shortlisted the companies catering to the broader AI sector. Next, we chose the ones that analysts see significant upside to. Finally, the stocks are arranged in ascending order of their average upside potential, as of February 24. We also mentioned hedge fund sentiments around each stock, as of 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).
A close up of a software engineer typing on a laptop keyboard, focusing on the code development part of the company.
Varonis Systems, Inc. (NASDAQ:VRNS)
Average Upside Potential: 35.3%
Number of Hedge Fund Holders: 38
Varonis Systems, Inc. (NASDAQ:VRNS) offers software products and services that continuously discover and classify critical data, remediate exposures, and detect advanced threats with AI-powered technology. The successful integration of GenAI into the company’s product suite can be a significant growth driver. With companies increasingly seeking AI-powered security solutions, Varonis Systems, Inc. (NASDAQ:VRNS)’s GenAI offering can differentiate itself in the market, resulting in increased customer acquisition and higher-value contracts.
Also, the increased adoption of MDDR services can offer a steady stream of recurring revenue and deepen customer relationships, resulting in faster ARR growth and improvement in customer retention rates. Varonis Systems, Inc. (NASDAQ:VRNS)’s strong position in data security, together with the higher prioritization of cybersecurity investments by organizations, continues to create a positive market environment. Overall, the growth in the AI industry will also support Varonis Systems, Inc. (NASDAQ:VRNS)’s growth prospects considering higher reliance on data, increasing demand for automation and intelligent analytics, and requirement for advanced threat detection. With more companies adopting AI, it is expected that they will manage and generate increasingly complex and large data sets. Therefore, the need for strong data governance, security, and compliance solutions is projected to grow, offering an enhanced market for Varonis Systems, Inc. (NASDAQ:VRNS)’s products.
Overall VRNS ranks 7th on our list of the AI stocks that will skyrocket. While we acknowledge the potential of VRNS as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than VRNS 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 is originally published at Insider Monkey.