We recently compiled a list of the 15 AI News You Should Not Miss. In this article, we are going to take a look at where Cadence Design Systems, Inc. (NASDAQ:CDNS) stands against the other AI stocks.
According to a new report by Bloomberg Intelligence (BI), the generative AI market is set for rapid growth, projected to reach $1.3 trillion within the next decade. The market is expected to expand at a CAGR of 42%, initially fueled by training infrastructure and gradually shifting to inference devices for large language models (LLMs), digital ads, specialized software, and services in the medium to long term. Rising demand for generative AI products could generate an additional $280 billion of new software revenue, driven by specialized assistants, new infrastructure products, and copilots that accelerate coding.
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“The world is poised to see an explosion of growth in the generative AI sector over the next ten years that promises to fundamentally change the way the technology sector operates. The technology is set to become an increasingly essential part of IT spending, ad spending, and cybersecurity as it develops”.
-Mandeep Singh, Senior Technology Analyst at Bloomberg Intelligence
The AI world continues to buzz with recent advancements and breakthroughs. On October 29, Linkedin Corporate Communications announced the launch of their first-ever AI agent called Hiring Assistant, developed to take on a recruiter’s most repetitive tasks so that developers can steer their focus on the most impactful work. The company has also rolled out a new coaching feature in LinkedIn Learning to help learners practice human skills through interactive scenarios using text or voice.
In other news, Securiti, the pioneer in data security, privacy, governance, and compliance, announced on Tuesday that it has integrated Nvidia’s NIM microservices into its Securiti Gencore AI solution, empowering users in industries to easily and quickly build safe, enterprise-grade generative AI systems, copilots and AI agents by utilizing proprietary enterprise data safely in diverse data systems and apps.
Medicine is another area where AI is driving significant breakthroughs. On Tuesday, October 29, Biotech firm Iambic Therapeutics revealed that it has made a breakthrough artificial intelligence model. The model can radically reduce the time and money needed to develop new drugs. Its new AI drug discovery model is called Enchant, with a white paper published revealing how Enchant demonstrates a high degree of accuracy when predicting how well the human body would absorb certain drugs.
Asia is also making strides to take the lead in the AI race. The Korea Advanced Institute of Science & Technology (KAIST) has unveiled a new Artificial Intelligence method to speed quantum calculations. Professor Yong-Hoon Kim’s team from the School of Electrical Engineering has achieved a world-first; succeeding in accelerating calculations for electronic structure in quantum mechanics using a convolutional neural network (CNN) model.
Our Methodology
For this article, we selected AI stocks by combing 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).
An office of software engineers and designers collaborating on a digital project.
Cadence Design Systems, Inc. (NASDAQ:CDNS)
Number of Hedge Fund Holders: 64
Cadence Design Systems, Inc. (NASDAQ:CDNS) is an American multinational technology and computational software company that delivers hardware, software, and IP for electronic design. The leading EDA and Intelligent System Design provider supplies both software and specialized computer servers to leading AI-chip designers.
On Tuesday, October 29, Reuters reported that Cadence Design Systems, Inc. (NASDAQ:CDNS) had raised the midpoint of its annual profit forecast on Monday. The company is betting on the surge in generative AI to boost demand for its software, which is used in designing the chips powering those systems. It raised the midpoint of its adjusted annual profit forecast to $5.90 per share, up from the previous $5.87 per share for 2024. The company’s software helps automate parts of the chip design process, enabling precise transistor layouts to develop the fastest and most powerful semiconductors. Its September quarter has already seen a 20% rise in revenue to $1.22 billion, marking its strongest growth in over a year and a half. The company is also poised to benefit from a new generation of its Palladium supercomputer, reported to go on sale in the third quarter with sales mounting in the next.
Overall CDNS ranks 10th among the AI stocks investors should not miss. While we acknowledge the potential of CDNS as an investment, our conviction lies in the belief that some 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 CDNS 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.