In this article, we discuss the 10 fastest-growing AI stocks to buy. To skip the detailed analysis of the AI segment, go directly to the 5 Fastest Growing AI Stocks To Buy.
Artificial intelligence (AI) stocks started to take the market by storm at the start of this year and this AI boom remains heating up. Wedbush analyst Dan Ives believes that tech stocks are going to keep gaining till the end of the year, mainly due to the AI boom. In an investor note, he said:
“The massive $800 billion AI opportunity is now on the doorstep for the tech sector for the next decade and real monetization of AI is happening much sooner than expected with Nvidia’s recent guidance and our channel checks giving further confidence in our AI bullish sector call that kicked off in January.”
BlackRock, Inc. (NYSE:BLK), an investment management company, recently posted a mid-year outlook which states that the market provides ample investment opportunities, especially in the AI segment. The firm believes that the aging/retiring population is creating a labor shortage, which is one of the reasons for inflation in the US. Moreover, global supply chain issues are among the driving forces of increasing production costs. The firm adds that these constraints can be offset with the help of AI. However, the firm also believes that the potential effects of the industry are yet to be completely assessed and there are still some risks involved. The report says:
“We think markets are still assessing the potential effects as AI applications could disrupt entire industries. It goes beyond sectors. Increasing digitalization also brings greater cybersecurity risks across the board.”
Investors are also highly bullish on AI start-ups. In 2021, investments in artificial intelligence start-ups reached a record high of $113.3 billion. In 2023, over 25% of the total investments in US startups have gone toward AI. Two of them include Alphabet Inc. (NASDAQ:GOOG) backed Anthropic and CoreWeave.
Anthropic raised $450 million in May and received additional funding of $100 million from the Korean SK Telecom in August. It has raised $1.6 billion over seven rounds. Anthropic is an AI startup founded by former members of OpenAI. The company introduced its AI chatbot named “Claude” in July 2023. CoreWeave raised $421 million in May and $2.3 billion of debt in August. The start-up provides data center graphic processing units (GPU) and cloud infrastructure. It has raised $2.9 billion in funding.
Forbes also provided an outlook on the AI industry and believes that the segment’s market size will reach $407 billion by 2027. On top of that, AI will account for a 21% net increase in the US GDP by 2030. Forbes also believes that AI will have a significant effect on the autonomous vehicles industry as 1 in 10 vehicles will be self-driving by 2030.
Several analysts and investors are considering the recent tech/AI rally an AI bubble. However, companies using AI are more optimistic than ever. At its Q2 2023 earnings call, President & Chief Executive Officer of Cadence Design Systems, Inc. (NASDAQ:CDNS), Anirudh Devgan, said:
“With its unparalleled promise, Generative AI is beginning to make a significant impact globally. Our dedicated focus on AI over the past several years, combined with our computational software expertise and invaluable data that lies at the core of AI, is uniquely positions us to deliver to this tremendous potential of this transformational technology.”
During this AI/tech bullish run, some AI stocks have experienced phenomenal stock price gains and the tech heavy NASDAQ-100 gained around to 43% year-to-date on August 29. Some of the fastest-growing AI stocks include Meta Platforms, Inc. (NASDAQ:META), NVIDIA Corporation (NASDAQ:NVDA), and Adobe Inc. (NASDAQ:ADBE).
Photo by Maximalfocus on Unsplash
Our Methodology
For this article we selected AI stocks that have registered the highest gains over the past 12 months. These companies have significant products and services related to AI or are dependent on AI for their operations. The list is ranked in ascending order of the number of hedge fund investors in each stock. The hedge fund sentiment around each stock was taken from Insider Monkey’s database of 910 elite hedge funds. We did not choose penny or small-cap stocks due to their high volatility. For AI penny stocks, you can check out the 10 Best AI Penny Stocks to Buy Now.
Fastest Growing AI Stocks To Buy
10. Symbotic Inc. (NASDAQ:SYM)
1-year stock price growth as of August 29: 220.28%
Number of Hedge Fund Holders: 8
Symbotic Inc. (NASDAQ:SYM) is an American company that provides automated warehouse systems using AI to its customers in the US and Canada. Retail giants such as Target Corporation (NYSE:TGT) and Walmart Inc. (NYSE:WMT) use the company’s services.
Symbotic Inc. (NASDAQ:SYM) and Japanese telecommunication services company, SoftBank Group Corp. (OTCPK:SFBQF) initiated a joint venture in July with a total investment of $100 million for a new warehouse-as-a-service business. The JV is called GreenBox Systems LLC and Symbotic Inc. (NASDAQ:SYM) will own around 35% of it.
In the second quarter, 8 hedge funds had a stake worth $24.711 million in Symbotic Inc. (NASDAQ:SYM), which takes the company to the 10th spot on our list of fastest-growing AI stocks. In the previous quarter, 5 hedge funds had a stake worth merely $2.2 million in the company.
9. SAP SE (NYSE:SAP)
1-year stock price growth as of August 29: 65.70%
Number of Hedge Fund Holders: 16
SAP SE (NYSE:SAP) is a German enterprise software and cloud computing company. In the last three months, it has been covered by 4 Wall Street analysts with 2 Buy and 2 Hold ratings. Their average price target is $147.25, compared to the stock price of $138.34 on August 28 market close.
SAP SE (NYSE:SAP) stock was owned by 16 hedge funds in the second quarter of 2023, compared to 14 in the previous quarter. Windacre Partnership was the company’s most prominent stakeholder in Q2 with 1.86 million SAP SE (NYSE:SAP) shares worth $254.836 million.
Ave Maria made the following comment about SAP SE (NYSE:SAP) in its Q1 2023 investor letter:
“SAP SE (NYSE:SAP) provides enterprise application software products worldwide. SAP is successfully transitioning from a perpetual license model to a SAAS model, which we believe will lead to an increase in TAM (total addressable market), higher margins, and lower capital intensity.”
8. C3.ai, Inc. (NYSE:AI)
1-year stock price growth as of August 29: 67.19%
Number of Hedge Fund Holders: 23
C3.ai, Inc. (NYSE:AI) is an American technology company primarily focusing on enterprise AI. It was founded in 2009 and is headquartered in California. C3.ai, Inc. (NYSE:AI) was owned by 23 hedge funds in the second quarter of 2023 with a combined stake value of $116.455 million, making it the 8th fastest-growing AI stock on our list. Philippe Laffont’s Coatue Management owned over 1.47 million shares of the company worth $53.713 million and was the most significant hedge fund holder of C3.ai, Inc. (NYSE:AI) for the second quarter in a row.
Despite being one of the most shorted stocks at the moment, C3.ai, Inc. (NYSE:AI) has experienced decent stock price growth in the last year and is one of the fastest-growing AI stocks.
7. Palantir Technologies Inc. (NYSE:PLTR)
1-year stock price growth as of August 29: 97.69%
Number of Hedge Fund Holders: 39
Palantir Technologies Inc. (NYSE:PLTR) is an American software company focusing on big data analytics. The company provides AI-powered services to defense, government, and private organizations. Palantir Technologies Inc. (NYSE:PLTR) was founded in 2003 and is headquartered in Denver, Colorado. The company’s stock went up 141% year to date and 97.7% in the last 12 months at the August 29 market close.
Hedge funds showed quite a lot of interest in Palantir Technologies Inc. (NYSE:PLTR) in the second quarter. D E Shaw increased its stake in the company by 151% to 29.65 million shares worth over $454.51 million and was the most prominent stakeholder. ARK Investment Management initiated a position in Palantir Technologies Inc. (NYSE:PLTR) in Q2 with 6.84 million shares worth $104.903 million. On top of that, Two Sigma Advisors increased its holdings in the company by over 1400% to nearly 6.177 million shares worth $94.69 million, making it the third largest stakeholder of the company.
6. Broadcom Inc. (NASDAQ:AVGO)
1-year stock price growth as of August 29: 75.74%
Number of Hedge Fund Holders: 72
Broadcom Inc. (NASDAQ:AVGO) is a California-based semiconductor and computer software company. It has integrated AI in its set-top boxes and broadband communications devices. Broadcom Inc. (NASDAQ:AVGO) also unveiled its new chip for wiring together supercomputers for AI in April.
Broadcom Inc. (NASDAQ:AVGO) announced its plans to acquire VMware, Inc. (NYSE:VMW) for $61 billion in April 2022. The merger was cleared by the UK’s anti-trust regulator on August 21. It is now awaiting clearance from China and Japan’s antitrust authorities. Broadcom Inc. (NASDAQ:AVGO) expects the deal to close on October 30.
Here is what Aristotle Atlantic Partners has to say about Broadcom Inc. (NASDAQ:AVGO) in its Q2 2023 investor letter:
“Broadcom contributed to outperformance, as the company is seen as a key beneficiary of the investment in generative Artificial Intelligence (AI) and Large Language Models (LLM). The company’s Application-Specific Integrated Circuit (ASIC) chips are being custom-built for customers to use in their data centers for accelerated computing. Broadcom’s networking chipsets are also expected to see increased levels of demand, as customers increase investments to enable the high-speed data transfer required by advanced AI training and inference. The company also announced a new multi-year supplier relationship with Apple, the company’s largest customer.”
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Disclosure. None. 10 Fastest Growing AI Stocks To Buy is originally published on Insider Monkey.