In this article, we will examine Wall Street picked these 13 AI stocks for 2024. To see a summary of these stocks, read our article Wall Street Picked These 5 AI Stocks for 2024.
Artificial Intelligence continues to rule the markets and remains the primary factor driving tech stocks to new heights. After causing the stock market to rise in 2023, artificial intelligence remains at the forefront of the media, investors, and even the government. This comes as companies continue assuring investors and the markets at large that they are well-positioned to capture the growth around the revolutionary technology.
Likewise, Wall Street continues to pick AI stocks, given the vast potential for applications of technology in healthcare, finance, and entertainment, among other facets of the economy. Institutional investors and venture capitalists are increasingly investing in emerging AI startups as they look to take advantage of the new frenzy that promises significant returns on investments.
While venture investment slowed down in 2023 amid the high-interest rate environment and concerns about recession, that was not the case for the AI sector. Generative AI and AI-related startups attracted close to$50 billionin investments, affirming the growing interest in the technology and its applications.
OpenAI, Anthropic, and Inflection were some startups that attracted the most significant share of venture capital investments. For instance, Microsoft invested close to $13 billion in OpenAI as it sought to gain a front seat in the startup's AI innovations.
Anthropic is one of the startups that raised close to $2 billion from investors led by Google as it sought a valuation of close to $30 billion. More than 70 rounds of $100 million funding went into startups creating AI-powered models, providing infrastructure, and applying the technology to various applications.
Source: unsplash
Our Methodology
Artificial Intelligence is a powerful and lasting investment trend for the future. In this article, we will present 13 AI stocks that Wall Street analyst firms like Wedbush, Goldman Sachs, and Jefferies are excited about. These stocks are praised by financial experts for their AI achievements and potential. For each stock discussed, we've included information on hedge fund sentiment and organized them based on the number of hedge funds holding them in Q4 2023, illustrating their popularity and significance. 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.
Wall Street Picked These AI Stocks for 2024
13. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Holders: 77
YTD Performance as of March 7, 2024: -4.4%
California-based Palo Alto Networks, Inc. (NASDAQ:PANW) provides products and solutions for the cybersecurity industry. Palo Alto Networks, Inc. (NASDAQ:PANW) has more than doubled in value over the past 12 months as the company is seen as one of the top artificial intelligence players, given its array of cybersecurity offerings.
Wedbush analyst Dan Ives is on record terming Palo Alto Networks, Inc. (NASDAQ:PANW) the “Messi” of AI insisting the market is yet to recognize its full potential.
"And while we recognize this stock is in the penalty box, Palo Alto is a core name in the cybersecurity sector to play the emerging cloud and AI trends we see on the horizon,” Ives at Wedbush writes.
Despite lowering his Palo Alto Networks, Inc. (NASDAQ:PANW) price target from $425 to $375, Wedbush analyst Dan Ives maintained his outperform rating.
According to Insider Monkey's database, 77 hedge funds held a stake in Palo Alto Networks, Inc. (NASDAQ:PANW) 's stock in the fourth quarter. With 464,942 company shares worth $137.102 million, Alex Sacerdote'sWhale Rock Capital Managementwas the most significant investor in Palo Alto Networks, Inc. (NASDAQ:PANW).
Here is what TimesSquare Capital Management said about Palo Alto Networks, Inc. (NASDAQ:PANW) in itsQ3 2023 investor letter:
“Across the Information Technology universe, we seek companies possessing differentiated capabilities, products, and services.Palo Alto Networks, Inc.(NASDAQ:PANW) supplies network and cloud-based security solutions to enterprises, service providers, and government entities. The latest quarter was mixed with the company falling shy versus the Street on billings, in line for revenues, and outpacing earnings. Palo Alto’s updated guidance was materially ahead of lowered Street expectations. Nevertheless, its shares pulled back by -8%.”
12. Intuitive Surgical, Inc. (NASDAQ:ISRG)
Number of Hedge Fund Holders: 82
YTD Performance as of March 7, 2024: +16%
Intuitive Surgical, Inc. (NASDAQ:ISRG)is a robotics company that aims to revolutionize the healthcare sector by using artificial intelligence-powered surgical medical assistants. Intuitive Surgical, Inc. (NASDAQ:ISRG) gained 19% in 2023 as investors noted the company leveraging hardware and artificial intelligence to improve patient care.
According to BTIG analystRyan Zimmerman Intuitive Surgical, Inc. (NASDAQ:ISRG) is a pioneer in robotic assisted minimally invasive surgery that should benefit from artificial intelligence
“There continue to be headwinds entering FY23, but we think ISRG is poised to continue to see improving market dynamics coupled with the potential for the launch of a next-generation system. We would be buyers on today’s weakness,” said Zimmerman, justifying his bullishness.
Of the 933 hedge funds profiled by Insider Monkey during the fourth quarter of 2023, 82 had investments in the robotics company. Intuitive Surgical, Inc. (NASDAQ:ISRG)'s largest shareholder is Ken Fisher's Fisher Asset Management, owning 4.5 million shares worth $1.52 billion.
In itsfourth quarter 2023 investor letter, Baron Health Care Fund stated the following regarding Intuitive Surgical, Inc. (NASDAQ:ISRG):
“Additional tailwinds to performance came from robotic surgical system pioneerIntuitive Surgical, Inc.(NASDAQ:ISRG). We believe Intuitive Surgical will continue to innovate and launch new products that enhance surgical outcomes, and we think the company has a long runway for growth.
Intuitive Surgical, Inc. sells the da Vinci surgical robotic system for minimally invasive surgical procedures. The stock rose on investor speculation that the company could launch a new robotic system in 2024. We believe Intuitive Surgical will continue to innovate and launch new products that enhance surgical outcomes, and we think the company has a long runway for growth.”
11. Snowflake Inc (NYSE:SNOW)
Number of Hedge Fund Holders: 86
YTD Performance as of March 7, 2024: -11.6%
Snowflake Inc. (NYSE:SNOW) is a cloud computing company that offers Data Cloud that enables customers to consolidate data into a single source. Its analytical business model stands to be one of the biggest beneficiaries of any advancement in AI.
According to RBC Capital analyst Mathew Hedberg Snowflake Inc. (NYSE:SNOW) is one of the best AI stocks because the company has a comprehensive data strategy.
“We believe a comprehensive data strategy is a precursor to a gen AI strategy. As such, we believe Snowflake is well positioned given the large amount of customer data on their platform and new gen AI offerings that should help drive incremental workload utilization. That said, we expect the more material impact on results is likely to come in 2025 and beyond as the new products go into general availability,” said Hedberg in a report.
As of December 2023, 86 of the 933 hedge funds covered by Insider Monkey's research were Snowflake Inc. (NYSE:SNOW)'s investors. Brad Gerstner's Altimeter Capital Managementwas the largest investor through its $2.47 billion stake.
Here is what ClearBridge Multi Cap Growth Strategy said about Snowflake Inc. (NYSE:SNOW) in itsQ2 2023 investor letter:
“While the ClearBridge Multi Cap Growth Strategy has limited mega cap exposure, which has been a recent headwind to relative performance, we own several companies that stand to benefit from the explosive growth in generative AI. These holdings play key roles in building out the necessary infrastructure and helping customers leverage capabilities enabled by this emerging technology.
Snowflake Inc.(NYSE:SNOW), a cloud-based data platform company, is positioned well to help enterprises better leverage their own data to get the most out of AI models. Though it is still early days in terms of adoption, Snowflake saw workloads for data science, machine learning, and AI use cases grow more than 90% year-over-year in its most recent quarter.”
10. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 100
YTD Performance as of March 7, 2024: +7.7%
Oracle Corporation (NYSE:ORCL) is a software infrastructure company from Austin, Texas. It offers IT products and services worldwide. Oracle Corporation (NYSE:ORCL) gained 30% last year and became a top AI stock. Enterprises use its generative AI for productivity and efficiency.
Analysts have already taken note of Oracle Corporation (NYSE:ORCL) recent update of its OCI Generative AI Service to better compete against AWS Microsoft and Google . According to the analysts the updates makes it attuned to needs of enterprises therefore benefit from the AI frenzy.
“Oracle can offer enterprises a more streamlined approach to lowering the expense and resource or time commitment to pre-train, fine-tune, and continuously trainlarge language models(LLMs) on an enterprise’s knowledge or data, which has proven to be an obstacle in many of today’s enterprise environments, with the exception of some call center and customer experience support applications,” said Ron Westfall, research director at The Futurum Group.
Oracle Corporation (NYSE:ORCL) has already signed more than $4 billion in contracts to sell its AI training capacity in the Generation 2 cloud as of the end of the September quarter, more than doubling the amount signed the previous year. Oracle Corporation (NYSE:ORCL) anticipates a 29% to 31% increase in cloud revenue in the December quarter.
By the end of last year's fourth quarter, 100 out of the 933 hedge funds covered by Insider Monkey's research were Oracle Corporation (NYSE:ORCL) shareholders. Out of these, the largest stakeholder was Jean-Marie Eveillard'sFirst Eagle Investment Management, courtesy of its $1.95 billion investment.
Madison Investments,an investment management company, expects AI to drive growth for Oracle Corporation (NYSE:ORCL). Here is what the firmstatedabout Oracle Corporation (NYSE:ORCL):
"Oracle Corporation (NYSE:ORCL) provides products and services that address enterprise information technology (IT) environments. The company's products and services include enterprise applications and infrastructure offerings delivered worldwide through various flexible and interoperable IT deployment models. The company operates in three segments: cloud and license business, hardware, and services.
Oracle's cloud infrastructure product, OCI 2.0, continues to demonstrate strong revenue growth over several quarters. Additionally, we see the rapid growth of artificial intelligence (AI) computing needs as a differentiated growth driver for Oracle. We believe that Oracle will continue to drive positive outcomes for the Cerner business through a better margin structure and topline sales synergies."
9. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 105
YTD Performance as of March 7, 2024: +45%
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)is another chip giant that has entered the artificial intelligence era on a solid note. Management has been exploring ways to capture AI semiconductor demand by developing chips for data center devices and other Internet of Things systems.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has emerged as one of the top AI play propelling Taiwan’s benchmark index to record highs. According to Xin-Yao Ng, an investment director for Asian equities at abrdn the stock has emerged as an alternative to Nvidia which has been the center of attention on AI plays.
"Taiwan’s been driven by tech, especially the AI theme. Nvidia has been a catalyst adding on to the sentiment, after Jensen Huang visited Taiwan, boosting investors’ appetite for AI value chain plays and Nvidia suppliers.” Xin Yao NG said.
Insider Monkey's December quarter of 2023 survey covering 933 hedge funds revealed that 105 were the firm's shareholders. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)'s biggest hedge fund investor was Fisher Asset Managementsince it held a $3.23 billion stake.
8. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 105
YTD Performance as of March 7, 2024: -7.8%
Adobe Inc. (NASDAQ:ADBE) is a software company that helps people and teams create, publish and promote content. It also offers cloud-based document services. Adobe Inc. (NASDAQ:ADBE) is a top AI stock for adding generative AI to its products, like Acrobat PDT. It is one of the 13 AI stocks that Wall Street picked for 2024.
Bernstein analyst Mark Moerdler is enthusiastic about Adobe Inc. (NASDAQ:ADBE)’s presentations on its evolving AI software portfolio. “Adobe is using AI differently from most of their competitors—it is used to improve the creative process and decrease the time required for repetitive steps rather than to just create a quick image,” he writes in a research note.
“Furthermore, Adobe is bringing to market image, video, audio and 3-D Generative AI, and the depth and breadth of functionality is unique and will drive growth for years to come.”
Adobe Inc. (NASDAQ:ADBE) has set out to completely transform the digital document experience by making information in long documents easier to find. The company has also integrated an AI assistant into Reader and Acrobat to utilize generative AI. Increased focus on AI catalyzed the stock, causing it to gain 65% in 2023 and remain a firm favorite on Wall Street.
As of the end of September 2023, 105 of the 933 hedge funds covered by Insider Monkey's research held Adobe Inc. (NASDAQ:ADBE). Ken Fisher'sFisher Asset Managementwas the largest investor with its $2.72 billion stake.
7. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 120
YTD Performance as of March 7, 2024: +52%
Advanced Micro Devices, Inc. (NASDAQ:AMD) is an AI semiconductor company that makes products for data centers, gaming, and embedded segments. Its AMD Vitis AI platform M1300 and Ryzen 8040 laptop process are optimized for AI applications.
According to analysts at Barclays, Advanced Micro Devices, Inc. (NASDAQ:AMD) is well positioned to sell far more artificial intelligence chips than expected. Analyst Tom O’Malley reiterated a 'Buy' rating on the stock and raised his target for the price to $235 from $200.
As of December 2023, 120 out of the 933 hedge funds covered by Insider Monkey's research were Advanced Micro Devices, Inc. (NASDAQ:AMD) investors. Ken Fisher's Fisher Asset Managementwas the largest investor through its $4.18 billion stake.
This is how White Falcon Capital Management expressed its views on Advanced Micro Devices, Inc. (NASDAQ:AMD) in itsfourth quarter 2023 investor letter:
“It is important to note that the returns depicted above actually originated in the market turmoil of 2022 and were only realized in 2023. We assess that about 75% of the returns in 2023 were derived from just 35% of the portfolio. Notably, the technology companies we acquired in 2022 –Advanced Micro Devices, Inc.(NASDAQ:AMD), Amazon, Docebo, NU, Rover – performed exceptionally well. In hindsight, the decision to allocate to technology stocks appears straightforward; but it actually demanded courage and conviction to buy and add to these stocks during the fear and uncertainty of the 2022 bear market.
The top 5 positions in the portfolio were: Precious Metals royalty basket, Nu Holdings, AMD Amazon.com and Converge Technology Services. AMD has worked out great for us but we must admit that it has gotten expensive. AI was not part of our original investment thesis and AMD is a great reminder of how one can get ‘lucky’ investing in quality businesses run by competent management teams (ditto for Amazon).”
6. Salesforce Inc (NYSE:CRM)
Number of Hedge Fund Holders: 131
YTD Performance as of March 7, 2024: +20.7%
Salesforce, Inc. (NYSE:CRM) was one of the top artificial intelligence stocks in 2023 as it rallied 95%.
The rally has continued to gather steam in 2024 on Salesforce, Inc. (NYSE:CRM) expanding its AI offerings by introducing a bot that helps users spot their work charts.
Morgan Stanley’s Keith Weiss wrote in a note: “Low investor expectations versus potential top-line upside drivers in price increases, product bundling and data cloud adoption, frame an attractive risk-reward for Salesforce”.
In December 2023, 131 of the 933 hedge funds covered by Insider Monkey's research were the Salesforce, Inc. (NYSE:CRM)'s stakeholders. The biggest Salesforce, Inc. (NYSE:CRM) shareholder out of these is Ken Fisher's Fisher Asset Managementdue to its $3.93 billion stake.
Here is what Polen Focus Growth Strategy stated about Salesforce, Inc. (NYSE:CRM) in itsfourth quarter 2023 investor letter:
“In the fourth quarter, the top relative and absolute contributors to the Portfolio’s performance were Netflix, ServiceNow, andSalesforce, Inc.(NYSE:CRM).
Salesforce has continued to grow its revenues at what we see as a healthy rate despite market concerns about the impact of the weaker macroeconomy on its business and penetration rates in its core CRM offering. Even its most mature and largest offerings, Sales Cloud and Service Cloud, are still growing revenue at double-digit rates. In addition, management realized that their cost structure, especially in salespeople, had gotten too bloated. Over the past year and a half, the company has run a much more streamlined expense structure that has led to strong operating margin expansion and earnings growth. Importantly, we do not feel Salesforce has cut into its innovation or sales muscle through these cost cuts but has eliminated unnecessary excess fat from the organization.”
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Disclosure: None. Wall Street Picked These 13 AI Stocks for 2024is originally published on Insider Monkey.
