13 Best Machine Learning Stocks To Invest In
In this article, we discuss the 13 best machine learning stocks to invest in. To skip the detailed analysis of the machine learning industry, go directly to the 5 Best Machine Learning Stocks To Invest In.
The concepts of machine learning (ML) and artificial intelligence (AI) are often used interchangeably. However, that is not the case as machine learning is a subset of AI that focuses on teaching computers to learn from data, make predictions, and automate tasks without explicit programming. On the other hand, artificial intelligence includes a broader range of techniques that aim to create systems capable of human-like intelligence, such as autonomous vehicles and robots. According to a report by Precedence Research, the global AI market was valued at $454 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 19% between 2023 and 2032, reaching $2.575 trillion by the end of the forecasted period. Precedence Research estimated machine learning's market value at $38.11 billion in 2022 and expects it to reach $771.38 billion by 2032, growing at a CAGR of 35.09% over the projected period, between 2023 and 2032.
Companies Leveraging Machine Learning
While there are a handful of companies that are actively working on developing products toward the advancement of machine learning, there are many companies that depend on machine learning technology to run their operations. For example, Netflix, Inc. (NASDAQ:NFLX) leverages machine learning to influence content creation decisions and personalize the user interface. Moreover, the company’s recommendation system uses ML to analyze user behavior and provide personalized content suggestions. Netflix, Inc.’s (NASDAQ:NFLX) ability to deliver tailored content experiences to its subscribers drives user retention and platform growth. The company made the following comments in one of its articles:
“At Netflix, the Machine Learning Platform (MLP) team has been investing in research to push the boundaries of ML Performance over the years. Our state-of-the-art ML performance infrastructure serves as a strong foundation to leverage the latest research in Deep Learning, Reinforcement Learning, Data Infrastructure, GPU Memory Management, Graph Neural Networks, and more recently Large Language Models. We are building an increasingly active engagement with Academia and have a quickly growing graduate ML Internship program that brings us both new talent & the latest research, providing a bridge between university labs and fast-growing industry applications.”
The financial services institution, JPMorgan Chase & Co. (NYSE:JPM) has been using AI/ML for over a decade. In the company’s 2023 annual letter to shareholders, its chairman and CEO, Jamie Dimon said that the company now has over 2,000 AI/ML experts and data scientists. Dimon considers AI an “extraordinary” technology and believes that it is “as transformational as some of the major technological inventions of the past several hundred years” such as electricity and the internet. He said:
“We have been actively using predictive AI and ML for years — and now have over 400 use cases in production in areas such as marketing, fraud and risk — and they are increasingly driving real business value across our businesses and functions. We're also exploring the potential that generative AI (GenAI) can unlock across a range of domains, most notably in software engineering, customer service and operations, as well as in general employee productivity. In the future, we envision GenAI helping us reimagine entire business workflows. We will continue to experiment with these AI and ML capabilities and implement solutions in a safe, responsible way.
While we are investing more money in our AI capabilities, many of these projects pay for themselves. Over time, we anticipate that our use of AI has the potential to augment virtually every job, as well as impact our workforce composition. It may reduce certain job categories or roles, but it may create others as well. As we have in the past, we will aggressively retrain and redeploy our talent to make sure we are taking care of our employees if they are affected by this trend.”
He further added that the organization understands the importance of AI and for that reason, it has created a new position, chief data and analytics officer.
Competing With Nvidia in the AI Space
NVIDIA Corporation (NASDAQ:NVDA) took the markets by storm and was the top-performing Magnificent 7 stock in 2023, gaining nearly 240%. The surge was attributed to limited competition in the AI accelerator market. However, other companies have been making strides to take over NVIDIA Corporation’s (NASDAQ:NVDA) dominance such as Meta Platforms, Inc. (NASDAQ:META) and Intel Corporation (NASDAQ:INTC). On April 9, Intel Corporation (NASDAQ:INTC) unveiled its new AI chip, Gaudi 3. According to the company, the chip is “purpose-built for high-performance, high-efficiency GenAI compute”. Intel Corporation (NASDAQ:INTC) claims that compared to NVIDIA Corporation’s (NASDAQ:NVDA) H100, Gaudi 3 is much more power-efficient and faster.
On April 10, Meta Platforms, Inc. (NASDAQ:META) introduced its new Meta Training and Inference Accelerator (MTIA), an upgrade to MTIA v1 that was introduced last year. The chip has been designed for Meta Platforms, Inc.’s (NASDAQ:META) in-house AI workloads, and to decrease its dependency on NVIDIA Corporation’s (NASDAQ:NVDA) chips. The new MTIA version more than doubled the compute and memory bandwidth while maintaining a focus on efficiently serving recommendation models. According to the company, MTIA is part of its long-term plan to build a strong and efficient infrastructure for handling its AI tasks.
With the above information in mind, some of the best machine learning stocks include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:META).
A researcher studying a machine learning model of a metastatic pancreatic ductal adenocarcinoma.
Our Methodology
We sifted through internet rankings of AI stocks and ML stocks, including our own, in addition to the holdings of Global X Artificial Intelligence & Technology ETF (AIQ), iShares Robotics and Artificial Intelligence Multisector ETF (IRBO), and Global X Robotics & Artificial Intelligence ETF (BOTZ) to come up with 25 potential ML stocks. We then looked into each company's products and services to further refine our list to include AI companies that are actively working toward the development and advancement of machine learning. We narrowed down our selection to 13 stocks that were the most widely held by institutional investors and ranked them in ascending order of the number of hedge funds that have stakes in them, as of Q4 of 2023.
The hedge fund data was taken from Insider Monkey’s database of 933 elite hedge funds. 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 often-ignored indicator.
13 Best Machine Learning Stocks To Invest In
13. Baidu, Inc. (NASDAQ:BIDU)
Number of Hedge Fund Holders: 48
Baidu, Inc. (NASDAQ:BIDU) is engaged in machine learning through its research division, Baidu Research, and products, including Baidu Machine Learning (BML) and a deep-learning framework, PaddlePaddle. Baidu Machine Learning is an ML platform for AI developers and businesses through which they can manage tasks such as data preprocessing, model training and evaluation, and deployments.
In the fourth quarter of 2023, 48 hedge funds had stakes in Baidu, Inc. (NASDAQ:BIDU), with total positions worth $1.715 billion. With nearly 2.2 million shares worth $260.436 million, Alkeon Capital Management is the biggest shareholder in the company, as of Q4 2023.
Baidu, Inc. (NASDAQ:BIDU) is one of the best machine-learning stocks to invest in. Other such stocks include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:META).
Ariel Investments stated the following regarding Baidu, Inc. (NASDAQ:BIDU) in its fourth quarter 2023 investor letter:
“By comparison, China’s internet search and online community leader, Baidu, Inc. (NASDAQ:BIDU) traded lower alongside Chinese equities as intensifying problems in China weighed on investor sentiment during the period. The company continues to invest heavily in Artificial Intelligence (AI) and recently launched its generative AI, Ernie Bot, aimed at rivaling Open AI’s ChatGPT. While monetization of the new technology is largely dependent on regulatory review, we think Baidu should continue to experience margin improvement with the ongoing implementation of efficiency and profitability initiatives. While some investors remain on the sidelines due to uncertainty surrounding China’s economic growth, government regulations, and the political rhetoric towards Taiwan, we remain enthusiastic about Baidu’s longer-term opportunity for revenue growth and margin expansion across internet search, cloud, autonomous driving, artificial intelligence and online video.”
12. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 50
International Business Machines Corporation (NYSE:IBM) is heavily involved with machine learning through its research division, IBM Research, IBM Watson Machine Learning, IBM SPSS Modeler, and more. IBM Watson Machine Learning allows developers and data scientists to build, train, and deploy machine learning models. It takes the 12th spot on our list of best machine learning stocks to invest in.
On April 8, International Business Machines Corporation (NYSE:IBM) announced that it plans to expand locally-based cloud infrastructure in Canada by building a new Cloud Multizone Region in Quebec.
In the fourth quarter of 2023, 50 hedge funds held positions in International Business Machines Corporation (NYSE:IBM) worth $1.91 billion. Citadel Investment Group has increased its stake in the company by 155% to 1.46 million shares worth $238.547 million and is the most significant shareholder, as of the fourth quarter of 2023.
Diamond Hill Capital stated the following regarding International Business Machines Corporation (NYSE:IBM) in its fourth quarter 2023 investor letter:
“Other bottom contributors included our short positions in Garmin and International Business Machines Corporation (NYSE:IBM), as well as our long position in Chevron. IBM’s software and consulting businesses were solid in the quarter, helping drive revenue growth. But the company faces numerous fundamental headwinds in both these businesses, and we expect it will struggle to meet cash-flow guidance.”
11. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 62
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a cybersecurity company that utilizes machine learning to enhance its offering of cybersecurity. CrowdStrike Falcon serves as an advanced shield for endpoints. It harnesses the strength of cloud-based artificial intelligence to deliver instant protection and visibility throughout an enterprise. Its features include next-gen antivirus, USB device control, host firewall management, and threat intelligence.
In the fourth quarter of 2023, 62 hedge funds held positions in CrowdStrike Holdings, Inc. (NASDAQ:CRWD) and their stakes amounted to $2.6 billion. As of December 31, 2023, Two Sigma Advisors is the most dominant shareholder in the company and has a position worth $370 million.
On March 25, CrowdStrike Holdings, Inc. (NASDAQ:CRWD) announced that it formed a strategic partnership with HCL Technologies Limited to use the company’s AI-native CrowdStrike Falcon XDR platform in HCLTech’s managed detection and response (MDR) solutions.
TimesSquare Capital Management stated the following regarding CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its fourth quarter 2023 investor letter:
“Across the Information Technology universe, we seek companies possessing differentiated capabilities, products, and services. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) provides cloud-delivered protection across endpoints and cloud workloads. Their stock rallied 53% on the heels of solid fiscal third quarter results, with net new annualized recurring revenues accelerating sequentially.”
10. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 86
Intel Corporation (NASDAQ:INTC) is a California-based company that develops and designs products like processors, libraries, and related tools, and more for machine learning, including Intel Extension for scikit-learn (Python module for ML) and Intel Optimization for XGBoost. XGBoost or eXtreme Gradient Boosting is a highly efficient and powerful machine learning algorithm that is used for supervised learning tasks on structured data. As of April 8, the market capitalization of Intel Corporation (NASDAQ:INTC) is $162.102 billion.
In Q4 of 2023, hedge fund sentiment was positive toward Intel Corporation (NASDAQ:INTC) as hedge funds holding stakes in the stock were 86 in the quarter, with positions worth $4.327 billion. This is compared to 70 funds with positions worth $2.136 billion in the preceding quarter. William B. Gray’s Orbis Investment Management is the most prominent shareholder in the company as of Q4 of 2023. In the quarter, the firm increased its stake by 22% to 15.947 million shares worth $801.35 million, representing 5.03% of the investment portfolio.
Ariel Investments stated the following regarding Intel Corporation (NASDAQ:INTC) in its fourth quarter 2023 investor letter:
“New holding, Intel Corporation (NASDAQ:INTC), one of the world’s largest semiconductor chip manufacturers by revenue, outperformed in the quarter. Intel is benefitting from the near-term rebound in semiconductor demand driven by the cyclical recovery of personal computers (PCs) and central processing units (CPUs). Shares also traded higher following the company’s Artificial Intelligence (AI) Everywhere launch event. Intel introduced its capabilities across cloud, edge and client hardware and showcased it can benefit from an enterprise upgrade cycle as both cloud-based and traditional enterprises look to incorporate AI features into core technology platforms. In our view, the market is also overlooking the progress Intel has made towards regaining its manufacturing technology advantage and believe the foundry business will continue to experience strong momentum as it grows its customer base and revenue.”
9. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders: 86
Snowflake Inc. (NYSE:SNOW) is a Montana-based company that designs and offers products and solutions that support and use machine learning like Snowflake’s Data Cloud, Snowpark ML, Snowflake Cortex, and others. Snowpark ML provides developers and data scientists with the ability to build, train, and deploy machine learning models directly within Snowflake Inc.’s (NYSE:SNOW) cloud-based data warehousing platform using programming languages like Scala and Java.
Over the past three months, 24 Wall Street analysts have recommended to Buy Snowflake Inc. (NYSE:SNOW). The average price target of $211.26 represents an upside of 36.42% from the present levels, as of April 8.
Snowflake Inc. (NYSE:SNOW) was part of 86 hedge funds’ portfolios in the fourth quarter of 2023 with a total stake value of $7.01 billion. This is compared to 71 funds with stakes valued at $4.628 billion in the prior quarter. Altimeter Capital Management is the biggest shareholder in the company and has a position worth $2.47 billion, as of Q4 of 2023. Snowflake Inc. (NYSE:SNOW) ranks 9th on our list of best machine learning stocks.
8. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 92
Micron Technology, Inc. (NASDAQ:MU) is a designer, developer, and provider of different types of products for machine learning that make generative AI, AI in business, and hybrid AI possible. The company’s high-bandwidth memory, double data rate memory (including HBM3E and DDR5), and NVMe SSDs (including Micron 9400 NVMe SSD and Micron 6500 ION NVMe SSD) offer the best memory and storage solutions to handle AI workloads and enable clients to make use of AI in many ways, including real-time natural language processing, personal assistants, AI artwork, and more.
On April 5, Citi analyst Christopher Danely reiterated a Buy rating on Micron Technology, Inc. (NASDAQ:MU) with a $150 price target. The firm reiterated that the company is its top pick.
Micron Technology, Inc. (NASDAQ:MU) was part of 92 hedge funds’ portfolios in Q4 of 2023 with a total stake value of $6.06 billion. Citadel Investment Group is the top investor in the company and has a position worth nearly $604.047 million, as of Q4 of 2023.
7. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 100
Oracle Corporation (NYSE:ORCL) designs and develops products, solutions, and services that are integrated with machine learning, including Oracle Database, Oracle Autonomous Database, and more. The Oracle Autonomous Database is a cloud-based database service by the company that handles tasks such as setting up, fine-tuning, and adjusting resources on its own. Its self-driving, self-scaling, and self-repairing features keep the downtime and the need for manual intervention to a minimum. It is our 7th best machine learning stock to invest in.
In the fourth quarter of 2023, 100 hedge funds had stakes in Oracle Corporation (NYSE:ORCL), with total positions worth $6.403 billion. This is compared to 88 funds and the stake amounted to $4.699 billion in the third quarter. As of December 31, 2023, First Eagle Investment Management is the most prominent shareholder in the company with a stake worth $1.95 billion.
On April 4, Oracle Corporation (NYSE:ORCL) announced that it entered into a partnership with Palantir Technologies Inc. (NYSE:PLTR) to offer secure cloud and AI solutions to its clients. Under the partnership, the company’s distributed cloud and AI infrastructure, along with Palantir’s AI and decision acceleration platforms will help clients “maximize the value of their data”.
Madison Investments stated the following regarding Oracle Corporation (NYSE:ORCL) in its fourth quarter 2023 investor letter:
“Oracle Corporation (NYSE:ORCL) reported a disappointing second quarter due to supply constraints. Cloud revenue was below expectations as Oracle made planning decisions to accommodate some large-scale Oracle Cloud Infrastructure (OCI) clients that take longer to bring online. We continue to believe that Oracle has a unique position in Generative AI workloads and continue to like its position and strategy.”
6. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 120
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a semiconductor company that designs and develops hardware and software for machine learning systems, including Radeon graphics cards, AIE-ML AI engine, AMD ROCm software, and others. The AIE-ML AI engine is an element of Versal Adaptive Compute Acceleration Platform (ACAP) architecture and is designed to enhance the performance of machine learning inference applications and advanced signal processing workloads.
In the fourth quarter of 2023, hedge fund sentiment was positive toward Advanced Micro Devices, Inc. (NASDAQ:AMD), which is why it is the 6th best machine learning stock to invest in. In the quarter, 120 hedge funds had investments in the company and their stakes amounted to $15.165 billion. This is compared to 110 funds in the third quarter, with positions worth $9.156 billion. As of the fourth quarter of 2023, Fisher Asset Management is the most significant shareholder in the company and has a position worth $4.177 billion.
On March 19, Advanced Micro Devices, Inc. (NASDAQ:AMD) announced that it partnered with
Sony Group Corporation’s (NYSE:SONY) Sony Semiconductor Solutions to deliver a LiDAR solution for Sony Semiconductor Solutions’ automotive LiDAR reference design. The integration of AMD adaptive computing technology into the SSS LiDAR system will enhance and improve the next-generation autonomous driving solutions.
Advanced Micro Devices, Inc. (NASDAQ:AMD) has recently caught the attention of institutional investors and is one of the best machine learning stocks along with Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:META).
Meridian Funds stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its fourth quarter 2023 investor letter:
“Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global semiconductor chip maker specializing in central processing units (CPUs), which are considered the core component of most computing devices, and graphics processing units (GPUs), which accelerate operations running on CPUs. We invested in 2018 when it was a mid-cap value stock plagued by many years of underperformance due to lagging technology and lost market hi share versus competitors Intel and Nvidia. Our research identified that changes and investments made by current management under CEO Lisa Su had, over several years, finally resulted in compelling technology that positioned AMD as a stronger competitor to Nvidia and that its latest products were superior to Intel’s. We invested on the the belief that AMD’s valuation at that that time did not reflect the potential for its technology leadership to generate significant market share gains and improved profits. This thesis has been playing out for several years. During the quarter, AMD unveiled more details about its upcoming GPU products for the AI market. The stock reacted positively to expectations that AMD’s GPU servers will be a viable alternative to Nvidia. Although we pared back our exposure to AMD into strength as part of our risk-management practice, we maintained a position in the stock. We believe AMD will continue to gain share in large and growing markets and is reasonably valued relative to the potential for significantly higher earnings.”
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Disclosure. None. 13 Best Machine Learning Stocks To Invest In is originally published on Insider Monkey.