12 Best Artificial Intelligence Stocks to Buy Now According to Wall Street Analysts
In this piece, we will take a look at the 12 best artificial intelligence stocks to buy now according to Wall Street analysts. If you want to skip our coverage of the latest developments in the artificial intelligence scene, then you can skip ahead to 5 Best Artificial Intelligence Stocks to Buy Now According to Wall Street Analysts.
As companies are reporting their financial results for the first quarter of 2024, artificial intelligence once again appears to be one of the leitmotifs of the current earnings season. While the data for the current earnings season is unavailable, FactSet estimated that out of 179 companies that had earnings calls between December 15 and March 15, the term AI was mentioned on average 13 times. The tally of 179 marked the second highest for the term "AI" in the transcripts over the course of the past ten years, and was just three shy of the current record of 181 set during Q2 2023.
Within that dataset, NVIDIA Corporation (NASDAQ:NVDA) led the pack, as it mentioned the term AI 114 times during the company’s latest earnings call. The chip maker, known for its GPUs, has seen a significant boost in its stock price on the back of strong demand for semiconductors that power various AI applications. Its shares are up by a cool 216% since May 2023, after CEO Jensen Huang shared that he foresaw a the need for a "trillion dollars of installed global data center infrastructure" to transform computing from "general purpose to accelerated."
Since then, NVIDIA's CEO, who is widely credited by the industry to have lead the development of GPU-accelerated computing applications such as medical imaging, reiterated his estimates of the AI industry. The latest on this front came in February 2024, when at the World Government Summit, Huang not only elaborated on his vision for accelerated computing but went on to stress that continued advancement of processors to fuel AI use cases will be energy efficient as well. According to him:
"So now, we're in the beginning of this new era. And what's going to happen is, there's about a trillion dollars worth of installed base of data centers around the world. And over the course four, five years, we'll have two trillion dollars worth of data centers that will be . .uh. . powering software around the world. And this architecture for accelerated computing is ideal for this next generation of software called generative AI. So that's really at the core of what is happening. While we're replacing the installed base, of, general purpose computing, remember that the performance of the architecture is going to be improving at the same time. So, you can't assume, just that you will buy more computers; you have to also assume that the computers are going to become faster.
And, therefore, the total amount that you need is not going to be as much. Otherwise the mathematics that we just assumed, that computers never get any faster, you might come to the conclusion, we need fourteen different planets, and three different galaxies, and you know, four more Suns, to, to fuel all this. But obviously, computer architecture continues to advance."
All this focus on NVIDIA and AI means that its upcoming earnings release will be closely watched by investors and analysts worldwide. Another firm that once again has become the center of attention after quarter earnings is the Facebook, Instagram, and WhatsApp parent Meta Platforms, Inc. (NASDAQ:META). Meta's stock had a strong run in February 2024 on the back of its fourth-quarter earnings report, which was accompanied by a surprise $0.5 quarterly dividend announcement. However, in April nearly all of Meta Platforms, Inc. (NASDAQ:META)’s gains were wiped out as investors looked past better-than-expected results and focused on the forward guidance that included Meta Platforms, Inc. (NASDAQ:META)'s plans to spend $40 billion this year, most of which will go towards its AI initiatives.
On the other hand, Microsoft Corporation (NASDAQ:MSFT) and Alphabet Inc. (NASDAQ:GOOG) have managed to keep investor pessimism at bay, at least for now. Both companies reported their earnings a day after Meta Platforms, Inc. (NASDAQ:META). Investors were pleased to see both Microsoft Corporation (NASDAQ:MSFT) and Alphabet Inc (NASDAQ:GOOGL) report robust growth in the Core segments, where artificial intelligence served as a major catalyst. Microsoft and Google's parent reported revenue and earnings above expectations and expressed optimism regarding maintaining the same momentum going forward.
For Microsoft and Alphabet, the earnings from their cloud business divisions provide a glimpse into the firms' AI performance in the first quarter. Microsoft's overall results saw it beat analyst revenue and EPS estimates of $60.8 billion and $2.82, respectively, by posting revenue of $61.9 billion and earnings of $2.94 per share. Microsoft's Intelligent Cloud segment's sales sat at $26.7 billion, while Azure, the cloud computing platform, grew by 31%. At the earnings call, CFO Amy Wood also briefly commented on AI revenue growth by sharing that "AI services contributed 7 points of growth as expected."
Alphabet Inc. (NASDAQ:GOOG)'s first quarter earnings also highlighted AI due to strong performance by the Google Cloud segment. The company's Cloud business, which offers AI product bundles like Google One, posted $9.57 billion in revenue and marked a 28% growth on the year. Alphabet CEO Sundar Pichai shared details for Google Cloud's AI Hypercomputer, as he outlined that "60% of funded Gen AI startups and nearly 90% of Gen AI unicorns are Google Cloud customers." The executive added that business and corporate interest in AI was proceeding smoothly, with firms such as Discover Financial Services (NYSE:DFS) "deploying Gen AI-driven tools to its nearly 10,000 call center agents to achieve faster resolution times for customers."
"And we shared that more than one million developers are now using our generative AI across tools, including AI Studio and Vertex AI. We spoke about how customers like Bristol-Myers Squibb and Etsy can quickly and easily build agents and connect them to their existing systems. For example, . Customers can also now ground their Gen AI with Google Search and their own data from their enterprise databases and applications."
So, as Wall Street adapts and adjusts to AI, we decided to take a look at which AI stocks analysts are in love with. A couple of notable names are Adobe Inc. (NASDAQ:ADBE), Alibaba Group Holding Limited (NYSE:BABA), and Uber Technologies, Inc. (NYSE:UBER).
Pixabay/Public Domain
Our Methodology
To make our list of the top analyst AI stock picks, we ranked the top 35 holdings of the Global X Artificial Intelligence & Technology ETF by their average analyst share price target upside and selected the top AI stocks. Moreover, for each of these stocks, we looked at how many hedge funds from our database held shares according to the last round of 13F filings. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this underlooked indicator.
12. Fortinet, Inc. (NASDAQ:FTNT)
Number of Q4 2023 Hedge Fund Shareholders: 42
Average Analyst Share Price Target: $75
Average Analyst Share Price Target Percentage Upside: 18%
Fortinet, Inc. (NASDAQ:FTNT) is an American cybersecurity company headquartered in Sunnyvale, California. Even though the company has beaten analyst EPS estimates in all four of its latest quarters, its shares are down by more than 10% over the past 12 months. The latest results also led Fortinet, Inc. (NASDAQ:FTNT)'s stock to decline due to lackluster revenue and billing performance.
At the end of the fourth quarter of 2023, 42 out of the 933 hedge funds part of Insider Monkey's database had a stake in Fortinet, Inc. (NASDAQ:FTNT). Terry Smith's Fundsmith LLP was the biggest shareholder among these funds, holding a $429 million position.
11. Micron Technology, Inc. (NASDAQ:MU)
Number of Q4 2023 Hedge Fund Shareholders: 92
Average Analyst Share Price Target: $135
Average Analyst Share Price Target Percentage Upside: 18%
Micron Technology, Inc. (NASDAQ:MU) is a semiconductor manufacturer that makes and sells memory chips that are used alongside GPUs and CPUs in AI computing. Recently, Micron Technology, Inc. (NASDAQ:MU) has received $6.1 billion from the government, as part of the Biden-Harris Administration's multi billion dollar package to bring advanced semiconductor manufacturing back inside the US, commonly known as CHIPS and Science Act.
There were a total of 92 funds in our database that held shares of Micron Technology, Inc. (NASDAQ:MU) at the end of 2023. Among these funds, Ken Griffin's Citadel Investment Group held the largest position, valued at over $604 million.
10. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Q4 2023 Hedge Fund Shareholders: 293
Average Analyst Share Price Target: $213
Average Analyst Share Price Target Percentage Upside: 18%
One of the world's largest eCommerce retailers, Amazon.com, Inc. (NASDAQ:AMZN), beat first-quarter estimates of $142.5 billion in revenue and EPS of 83 cents by reporting $143.3 billion and 98 cents, respectively. However, similarly to Meta, the the second-quarter revenue guidance midpoint of $146.5 billion fell short of the $150.1 billion expected by Wall Street.
According to Insider Monkey data, 293 hedge funds held shares of Amazon.com, Inc. (NASDAQ:AMZN) at the end of last year. Ken Fisher's Fisher Asset Management was the biggest stakeholder courtesy of its $6.3 billion position.
9. ServiceNow, Inc. (NYSE:NOW)
Number of Q4 2023 Hedge Fund Shareholders: 91
Average Analyst Share Price Target: $859
Average Analyst Share Price Target Percentage Upside: 19%
ServiceNow, Inc. (NYSE:NOW) is an enterprise software company that enables businesses to manage and analyze their data. The firm's CFO shared optimism about AI products in its latest earnings call, outlining that not only ServiceNow, Inc. (NYSE:NOW)'s AI products are among the fastest growing in its history, but top level executives were heavily interested in seeing how to apply the technology to their business.
There were 92 funds in our database bullish on ServiceNow, Inc. (NYSE:NOW) at the end of 2023. Among these funds, ServiceNow, Inc. (NYSE:NOW)'s largest investor is Ken Fisher's Fisher Asset Management through its $1 billion stake.
8. Meta Platforms, Inc. (NASDAQ:META)
Number of Q4 2023 Hedge Fund Shareholders: 242
Average Analyst Share Price Target: $517
Average Analyst Share Price Target Percentage Upside: 20%
Among other things, Meta Platforms, Inc. (NASDAQ:META)'s first-quarter earnings call highlighted the company's Llama 3 generative artificial intelligence model. Llama is one of the few products capable of holding its ground against the latest AI models, and Meta Platforms, Inc. (NASDAQ:META) CEO Mark Zuckerberg hyped up the model during the call. Zuckerberg claimed that "[t]he 400 plus billion parameter model that we're still training seems on track to be industry leading on several benchmarks," adding that he believed the decision to make Llama open source would only improve Meta's AI products.
At the end of 2023, 242 out of the 933 hedge funds tracked by Insider Monkey held a stake in Meta Platforms, Inc. (NASDAQ:META). Rajiv Jain's GQG Partners was the biggest shareholder as it owned $3.9 billion worth of shares.
7. Oracle Corporation (NYSE:ORCL)
Number of Q4 2023 Hedge Fund Shareholders: 100
Average Analyst Share Price Target: $140
Average Analyst Share Price Target Percentage Upside: 21%
Oracle Corporation (NYSE:ORCL) is a software company which enables businesses to manage their inventory, logistics, manufacturing, and other functions. The company has recently diversified its AI portfolio by introducing new capabilities for scheduling, queries, recommendations, and marketing.
Insider Monkey data shows 100 hedge funds holding shares of Oracle Corporation (NYSE:ORCL), including Jean-Marie Eveillard's First Eagle Investment Managementi, which reported a $1.9 billion stake.
6. Salesforce, Inc. (NYSE:CRM)
Number of Q4 2023 Hedge Fund Shareholders: 131
Average Analyst Share Price Target: $333
Average Analyst Share Price Target Percentage Upside: 21%
Salesforce, Inc. (NYSE:CRM) is a software company that enables businesses to manage their customer relationships. The shares are rated Buy on average, and the average share price target is $333.13. The stock is up by a comfortable 8.6% year to date, as it holds its gains following one of the biggest activist investor attacks in recent history.
A total of 131 hedge funds tracked by Insider Monkey owned shares of Salesforce, Inc. (NYSE:CRM) at the end of the last year. Among these funds, Ken Fisher's Fisher Asset Management was the biggest shareholder as it held $3.9 billion worth of shares.
Adobe Inc. (NASDAQ:ADBE), Salesforce, Inc. (NYSE:CRM), Alibaba Group Holding Limited (NYSE:BABA), and Uber Technologies, Inc. (NYSE:UBER) are some AI stocks with high analyst share price targets.
Click here to continue reading and see 5 Best Artificial Intelligence Stocks to Buy Now According to Wall Street Analysts.
Suggested Articles:
Disclosure: None. 12 Best Artificial Intelligence Stocks to Buy Now According to Wall Street Analysts is originally published on Insider Monkey.