Best AI Stocks to Invest in for Investing and Trading

Written on 23 September 2024.

The boom of artificial intelligence (AI) brings not only benefits to humanity, but also earnings to investors. The importance of AI in the market is hard to underestimate, since AI was the main driver of growth in all global markets in 2024 and will surely play an important role in 2025. Many investors and funds have earned more than 100% per annum by buying shares of companies in the AI sector.

The artificial intelligence (AI) stocks in this article are selected based on 3 key parameters:

Latest news.
Analyst ratings.
Popular among hedge funds.

20. Arista Networks, Inc. (NYSE: ANET)

Number of hedge fund holders: 65

Market cap: $121.5 billion

Arista Networks, Inc. (NYSE:ANET) develops, markets, and sells data-driven, client-to-cloud networking solutions for data centers, campuses, and routing environments. Recent reports indicate that the company has been selected by tech giant Meta to provide networking solutions for a massive AI model training cluster that will run on more than 100,000 GPUs. Meta intends to use NVIDIA H100 GPUs for the cluster, which includes chips worth $2 billion. It will train a large language model called Llama 4. Investment consultancy Evercore ISI claims the deal will provide a $250 million revenue opportunity for Arista Networks.

Arista Networks, Inc. (NYSE:ANET) has the potential to disrupt some of NVIDIA’s networking business. Jefferies analyst George Notter recently raised his price target on the stock to $380 from $340 and maintained a Buy rating, noting that the company has previously said it has won four of five major Cloud for AI/backend networking trials, and a fifth customer, possibly Microsoft, could try Arista, supporting claims that the firm could replace some of the InfiniBand usage in an account.

19. C3.ai, Inc. (NYSE: AI)

Number of hedge fund holders: 18

Market cap: $3 billion

C3.ai, Inc. (NYSE:AI) operates as an enterprise artificial intelligence software company in North America, Europe, the Middle East, Africa, Asia Pacific, and internationally. The stock has fallen sharply over the past couple of weeks after the company missed analysts’ expectations for its fiscal second quarter guidance, although it beat market expectations for revenue and earnings per share for the fiscal first quarter. The firm said it expected fiscal second-quarter sales to be between $88.6 million and $93.6 million, with the midpoint of $91.1 million below the estimate of $91.3 million. The company maintained its full-year sales guidance, as it expects revenue to be between $370 million and $395 million, with the midpoint of $382.5 million below the estimate of $383.9 million.

C3.ai, Inc. (NYSE:AI) is viewed with optimism on Wall Street. Wedbush recently cut its price target on the stock from $40 to $30 and maintained an “outperform” rating, highlighting the firm’s first-quarter results that beat its top and bottom lines, largely overlooked by the ASC 606 adjustment, where revenue previously labeled as software will now be labeled as services under new guidance, which will impact the company’s subscription and services growth going forward.

18. Advanced Micro Devices, Inc. (NASDAQ:AMD)

Number of hedge fund holders: 108

Market cap: $254 billion

Advanced Micro Devices, Inc. (NASDAQ:AMD) operates as a semiconductor manufacturer. The chipmaker recently retained a Buy rating from Citi Research after analyst Carrie Liu noted that the company's notebook shipments in August rose 15% month-over-month. In a note to investors, the analyst emphasized that the 15% month-over-month increase was more a reflection of weak demand seen in July than a significant strengthening of the market, reiterating that notebook demand in the third quarter of calendar year 2024 is expected to show quarterly growth of 4%, below the 5% average.

Advanced Micro Devices, Inc. (NASDAQ:AMD) has invested heavily to capture a larger share of the server chip market over the past few years, which is currently dominated by rival Nvidia. The latter's chips are highly prized by cloud companies, but the high costs associated with them have forced many vendors to supplement their data centers with the latter's chips.

17. Dell Technologies Inc. (NYSE:DELL)

Number of hedge fund holders: 88

Market cap: $82.3 billion

Dell Technologies Inc. (NYSE:DELL) designs, develops, manufactures, markets, sells, and supports a variety of complex and integrated solutions, products, and services. The company was recently named among a basket of AI stocks that investment consultancy Wedbush expects to benefit as the U.S. central bank mulls interest rate cuts. Wedbush analysts recently highlighted a number of AI-related information technology stocks as a chance to rise as the Federal Reserve is expected to step in and begin cutting interest rates this week.

Wedbush analysts led by Daniel Ives named Dell Technologies Inc. (NYSE:DELL) as one of the beneficiaries of the new trends, noting that the stage is set for tech stocks to rally through the end of the year and into 2025 as the Fed and Powell began a rate-cutting cycle, the soft landing trend in macroeconomic fundamentals continued, and AI spending remained a generational spending cycle that was just beginning to grip the tech sector.

16. Intel Corporation (NASDAQ: INTC)

Number of hedge fund holders: 75

Market cap: $97.5 billion

Intel Corp. (NASDAQ:INTC) sells key technologies for intelligent devices. The company recently announced a series of moves aimed at allaying investor concerns about its finances and technological prowess in the AI space. The company said it had struck a deal with tech giant Amazon to manufacture AI chips as part of a multi-year, multi-billion dollar structure, starting with a custom AI chip using its 18A foundry process. As part of the deal, Intel will also build custom Xeon 6 chips using Intel’s Node 3 for Amazon Web Services.

Intel Corporation (NASDAQ:INTC) CEO Pat Gelsinger commented on the deal, noting that the expansion of the long-standing relationship with AWS reflects the strength of the chipmaker’s process technology, which provides differentiated solutions for customer workloads. The CEO added that AWS’s chip design and manufacturing capabilities, combined with its comprehensive and broadly deployed cloud, AI, and machine learning services, will unleash innovation across the shared ecosystem and support the growth of both businesses, as well as a robust internal AI supply chain.

15.QUALCOMM Incorporated (NASDAQ:QCOM)

Number of hedge fund holders: 78

Market cap: $186.3 billion

QUALCOMM Incorporated (NASDAQ:QCOM) develops and markets foundational technologies for the wireless industry. The company recently provided preliminary guidance for the first quarter of 2025, projecting revenue growth of 5%, below market expectations for 9% growth. That outlook has spooked investors, but Wall Street analysts have sought to allay those concerns. For example, Bank of America analyst Tal Liani noted that a recovery in the premium smartphone market, as well as AI-powered PCs and better terms in upcoming licensing negotiations, should help the chipmaker in the coming months.

Recent reports indicate that QUALCOMM Incorporated (NASDAQ:QCOM) is exploring the possibility of buying Intel’s chip design business in an attempt to improve its AI product lineup. One of the mobile chip maker’s preferred investments is design in Intel’s client PC business. Analysts predict that Intel’s server business does not align with QCOM’s long-term strategic goals. AI-enabled PC shipments are expected to increase in the coming months, with Microsoft and Apple dominating the market.

14. Applied Materials, Inc. (NASDAQ:AMAT)

Number of hedge fund holders: 77

Market cap: $159.7 billion

Applied Materials, Inc. (NASDAQ:AMAT) provides equipment, services, and software for the semiconductor industry. The firm recently reported third-quarter fiscal 2024 results that beat market estimates, though its fourth-quarter outlook was largely in line with analysts’ expectations. The California-based company reported earnings per share of $2.12, compared with the consensus estimate of $2.02. It reported revenue of more than $6.7 billion for the quarter, beating the $6.67 billion estimate. Net revenue from its semiconductor systems segment was more than $4.9 billion, up $248 million from a year earlier.

Applied Materials, Inc. (NASDAQ:AMAT) CEO Gary Dickerson said on an earnings call that his firm is positioned for strong performance in 2024, with record revenue in the fiscal third quarter and earnings near the high end of the guidance range. The CEO added that the race for leadership in AI is fueling demand for a unique and connected portfolio of products and services, positioning Applied as a company that will outperform our markets over the long term.

13. Celestica Inc. (NYSE:CLS)

Number of hedge fund holders: 38

Market cap: $5.8 billion

Celestica Inc. (NYSE:CLS) offers a range of manufacturing and related supply chain services. The company manufactures and markets AI data center connectivity products, including 400G and 800G switches and storage solutions. During the company’s second-quarter earnings call, Rob Mayonis, CEO of Celestica Inc. (NYSE:CLS), noted that there is strong demand for the company’s Hardware Platform solutions, which include storage, compute, and networking products. This healthy demand, which is likely to increase in the coming months as hyperscalers invest in AI data centers, helped the company record more than 50% growth in connectivity revenue in the second quarter.

Stifel recently upgraded Celestica Inc. (NYSE:CLS) to Buy from Hold. In a note to investors, the consulting firm’s analysts noted that the firm could achieve its FY25 EPS estimate of $4, despite an expected decline in server sales due to a technology transition at a leading customer. The analysts added that the expected decline would be more than offset by growth in the firm’s communications segment, with an expected investment cycle in 800-G switches. In the note, Stifel emphasized that concerns about the selloff were primarily driven by concerns about a slowdown in AI investments by hyperscale customers following earnings reports from key vendors.

12. Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM)

Number of hedge fund holders: 156

Market cap: $793.9 billion

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures and sells integrated circuits and semiconductors. JPMorgan recently noted that strong August sales data released by the chipmaker suggests that TSM will beat its third-quarter guidance. In a note to investors, the consultancy maintained an Overweight rating on the stock with a target price of NT$1,200. JPMorgan analysts led by Gokul Hariharan emphasized that the company’s September revenue is likely to be flat or up slightly from the previous month, helped by rising demand for iPhone processors and continued strong demand for N3/N5. Earlier this week, TSM released its August sales data, reporting a 33% year-over-year increase in sales.

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)'s third-quarter revenue could be slightly above the high end of its forecast range, driven by strong demand for N3 (3nm technology), continued demand for N5 from AI accelerators, and other high-performance computing (HPC) products, analysts expect. The fourth quarter will also see healthy growth of 10% quarter-on-quarter, driven by continued demand for iPhone processors and new Android SoC releases from Qualcomm and Mediatek, helping to drive further growth in N3.

11. Micron Technology (NASDAQ: MU)

Number of hedge fund holders: 120

Market cap: $102.2 billion

Micron Technology (NASDAQ:MU) manufactures and sells memory and data storage devices. Shares have fallen in recent days amid slowing memory growth. Morgan Stanley recently cut its price target on Micron to $100 from $140 and maintained an Equal Weight rating on the stock. In a note to investors, the advisory agency acknowledged that memory average selling price (ASP) growth in the fourth and first quarters of 2025 is increasingly in question and noted that Micron will continue to underperform unless there are signs of a reversal. Despite the concerns, however, the advisory agency still believes that Micron’s overall fundamental trajectory is strong enough to maintain its Equal Weight rating.

Micron Technology (NASDAQ:MU) recently announced a new solid-state drive that delivers twice the performance of its previous model. The new drive will give gamers, students, and creatives a speed boost when loading and using resource-intensive applications, according to the company. The new SSD has a capacity of up to 2 terabytes and read and write speeds of 7,100 and 6,000 megabytes per second, respectively.

10. Arm Holdings plc (NASDAQ: ARM)

Number of hedge fund holders: 38

Market cap: $147 billion

Arm Holdings plc (NASDAQ:ARM) designs, develops, and licenses central processing unit (CPU) products and related technologies to semiconductor companies and original equipment manufacturers. Raymond James recently initiated coverage on the U.K.-based company with an Outperform rating and a $160 price target. The investment consultancy analysts noted that Arm, as a dominant supplier of power-efficient processor/subsystem IP, is well-positioned to benefit from the rapid growth of generative AI in the cloud and at the edge. The analysts expect the growth of content on mobile devices, along with higher penetration of Arm architecture in the automotive, data center, and PC markets, to drive robust double-digit growth over the next several years.

Edge AI was a key catalyst for Arm Holdings plc (NASDAQ:ARM) and ARMv9, which offered roughly 2x the previous-generation royalty and had a long runway, according to analysts at Raymond James. There’s a good chance Arm will eventually offer AI accelerator IP for data centers, which could significantly expand its addressable market, the analysts added. Competition from RISC-V, an open-source instruction set architecture, was intensifying but unlikely to threaten Arm’s dominance, the analysts said.

9. Palantir Technologies Inc. (NYSE:PLTR)

Number of hedge fund holders: 44

Market cap: $793.9 billion

Palantir Technologies Inc. (NYSE:PLTR) creates and deploys software platforms for the intelligence community to aid in counterterrorism investigations and operations. The company recently announced that it has secured a new multi-year, multi-million dollar contract for the artificial intelligence platform it sells to help improve healthcare through transformative technologies. The contract with Nebraska Medicine will help it build on a year-long partnership that has seen Nebraska implement more than a dozen AIP applications, improving patient throughput and expanding claims.

Palantir Technologies Inc. (NYSE:PLTR) CEO Peter Thiel recently filed to sell up to $1 billion in Palantir shares, according to media reports. Thiel made the disclosure last month through an investment vehicle called Rivendell 7 LLC. Thiel last sold Palantir shares just before May, when he sold 13 million shares for a total price of more than $273 million.

8. Broadcom Inc. (NASDAQ: AVGO)

Number of hedge fund holders: 130

Market cap: $801.5 billion

Broadcom Inc. (NASDAQ:AVGO) provides software solutions for semiconductor infrastructure. The company recently reported its fiscal third-quarter earnings, and Wall Street analysts were quick to offer their views on the report. Benchmark noted in a note to investors that Broadcom’s earnings report was seen as something of a savior for the AI momentum trade after a week of rock-bottom performance for NVIDIA and most AI-related names. However, the note emphasized that Broadcom only posted a weak July quarter and provided guidance that fell slightly short of consensus estimates.

Broadcom Inc. (NASDAQ:AVGO) posted a solid earnings report with no major weaknesses, according to Benchmark, and its AI business lacked the clear upward momentum Wall Street was looking for. Still, the consulting firm recommended investors take advantage of short-term share price volatility as Broadcom remains a key player in the adoption of AI in the industry. Benchmark has a Buy rating and a $210 price target on the stock.

7. Vistra Corp. (NYSE: VST)

Number of hedge fund holders: 92

Market cap: $38.7 billion

Vistra Corp. (NYSE:VST) operates as an integrated electric retail and power generation company. Shares have risen in recent days after investment advisory firm Jefferies named the firm a top pick in the utilities sector and reiterated a Buy rating on the stock. Jefferies analyst Julien Dumoulin-Smith noted that Vistra had many ways to win after years of acquisitions, rationalizations, and lessons learned about risk that positioned it well for today’s power markets. The analyst added that the timely acquisition of Energy Harbor’s nuclear portfolio in 2023 gave the company a coveted nuclear portfolio.

Vistra Corp.'s (NYSE:VST) nuclear portfolio has provided a traditional set of opportunities to locate a data center at one of its nuclear plants, according to an analyst. The investor note emphasized that Vistra's efficient gas fleet could benefit from higher volume, even if a significant increase in natural gas volumes has not been the biggest growth angle.

6. Super Micro Computer, Inc. (NASDAQ:SMCI)

Number of hedge fund holders: 47

Market cap: $26.4 billion

Super Micro Computer, Inc. (NASDAQ:SMCI) designs and manufactures high-performance servers and storage solutions based on a modular and open architecture. Mizuho analyst Vijay Rakesh recently initiated coverage of the stock with a neutral rating and a $450 price target. In a note to investors, the analyst highlighted that the AI server market is growing 54% annually, but increased competition is hurting margins and stocks with diverse portfolios will benefit more, especially if margins shrink further as server architectures slowly migrate away from liquid cooling in favor of cheaper air-cooled servers and as GPU shipments increase.

The analyst also added that Super Micro Computer, Inc. (NASDAQ:SMCI) was facing stiff competition from Dell in the AI server market. Rakesh noted that while AI was a long-term driver, diversification into PC/storage created synergies and value in the long term for Dell, even though SMCI was leading the market with 70-80% share due to limited GPU supply, it was now losing share and Dell was quickly gaining share using its connections as a server leader.

5. Alphabet Inc. (NASDAQ:GOOG)

Number of hedge fund holders: 165

Market cap: $2 trillion 43 billion

Alphabet Inc. (NASDAQ:GOOG) is a California-based tech company that owns and operates the Google search engine. Recent reports suggest that the company will be reworking plans to build a data center in Chile after Chilean government officials raised concerns about the project’s environmental impact. The $200 million data center was approved in 2020 but has since faced stiff resistance from environmental activists who claim it will impact a dry aquifer in the country’s capital. The U.S. tech giant has informed environmental regulators that it will use air-cooling technology at the project’s original site to alleviate concerns about the data center’s environmental impact.

Alphabet Inc. (NASDAQ:GOOG) Cloud CEO Thomas Kurian recently said that 60% to 70% of AI startups use AI hardware clusters built by his company to train their AI models. Kurian made these comments during the Goldman Sachs Technology Conference. Kurian said his company monetizes computing instances based on consumption and has created a token-based pricing platform for this purpose.

4. Meta Platforms, Inc. (NASDAQ:META)

Number of hedge fund holders: 219

Market cap: $1 trillion 440 billion

Meta Platforms, Inc. (NASDAQ:META) develops products that enable people to connect and share with friends and family across mobile devices, personal computers, virtual reality headsets, and wearables around the world. Investment advisors DA Davidson recently initiated coverage of the stock with a Buy rating and included it among the top picks in the mega-cap space. In a note to investors, the consulting firm’s analysts highlighted that Meta has positioned itself to be the open-source leader for the next two major technology platforms — AI Foundation Compute and Spatial Compute.

The analysts added that Meta Platforms, Inc. (NASDAQ:META) is in pole position on the open-source side of the AI world, while other tech giants like Alphabet, Apple, Amazon, and Microsoft are crowding into the closed-source side of the AI platform garden. The research firm said that unlike previous tech innovations, the aforementioned future platforms can only be won by mega-caps, and praised Meta’s choice to open-source the AI computing elements.

3. Amazon-com, Inc. (NASDAQ: AMZN)

Number of hedge fund holders: 308

Market cap: $2 trillion 17 billion

Amazon.com, Inc. (NASDAQ:AMZN) operates as a technology conglomerate with core interests in e-commerce. As the company integrates AI capabilities into the cloud, the software side of the business is painting a compelling growth story. The firm’s web services section has an operating margin of over 34%, much higher than the 5% operating margin of the e-commerce side. The company is looking to expand the AWS segment in the coming months with its extensive partner ecosystem and AI capabilities. On the e-commerce side, the firm is focused on growing the international segment.

Amazon.com, Inc. (NASDAQ:AMZN) could be one of the biggest beneficiaries of a new U.S. government order to increase tariffs on low-value goods imported into the country from abroad. Chinese e-commerce giants have had a competitive advantage over Amazon in recent years due to lower taxes and tariffs on low-value goods. Deutsche Bank recently said in a note to investors that U.S. President Biden intends to take executive action pending Congressional passage of a bill addressing the de minimis trade clause.

2. Apple Inc. (NASDAQ: AAPL)

Number of hedge fund holders: 184

Market cap: $3 trillion 455 billion

Apple Inc. (NASDAQ:AAPL) is a consumer electronics company. The company recently launched its latest iPhone models with AI features, seeking to capitalize on the growing interest in AI in the smartphone business. However, with pre-orders for the new phones down from last year and Chinese firms offering new models at a discount due to weak demand, it appears that Apple Intelligence, the suite of AI features pre-installed on the new iPhones, has not been enough to revive slowing demand for Apple phones. Apple Intelligence will be available on the new devices in English later this year, with support for other languages coming next year.

Demand for Apple Inc.'s (NASDAQ:AAPL) new phones in China has slowed amid increased competition in the country, the world's largest smartphone market. Apple is competing with Chinese firms like Huawei for supremacy in the phone market. Last week, Huawei unveiled the Z-shaped Mate XT foldable phone just hours after Apple launched the iPhone 16 models. Shipments of the former rose 41% year-over-year in the second quarter of 2024, while shipments of the latter fell about two percentage points in the same period.

1. NVIDIA Corporation (NASDAQ: NVDA)

Number of hedge fund holders: 179

Market cap: $2 trillion 850 billion

NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing, and networking solutions. Recent reports show that Sakana AI, an NVIDIA-backed AI startup, has raised more than $210 million in a Series A funding round. The startup had been aiming to raise $100 million in funding. The latest funding round values the startup at more than $1.5 billion, just a year after it first launched. The NVIDIA-backed firm rose to prominence after developing a way to automate the integration of multiple underlying models, including large language models, or LLMs, and finding a way to use LLMs to train LLMs more efficiently.

NVIDIA (NASDAQ:NVDA) may be allowed to export advanced AI chips to Saudi Arabia as the Middle Eastern government looks to train powerful AI models using the chips. The U.S. government may consider relaxing export regulations for the chips, which have been put in place over the past few years in an attempt to limit the transfer of sensitive technology to Chinese and Russian entities.

While we recognize NVIDIA Corporation's (NASDAQ:NVDA) potential as an investment, we believe that some AI stocks have more potential to generate higher returns and do so in a shorter time frame. If you're looking for AI stocks that have more potential than NVIDIA but are trading at less than 5 times earnings, check out our report on the cheapest AI stocks .