John Lovelock, Chief of Research for Global IT Forecasting at Gartner, joined CNBC’s Worldwide Exchange to discuss the major catalyst for IT spending in 2025: Generative AI. He states that companies are now moving from cost-saving optimizations and any upgrading they have been focused on for the past eighteen months, with growth back on their agenda. For 2025, “they are shifting back to growth”, he says, emphasizing the need for GenAI to boost revenue expansion.

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Lovelock further elaborates that most of the growth in GenAI spending this year and next year is in the tech sector. All the big-tech companies are building the AI infrastructure needed for GenAI, whereas software companies are spending to incorporate GenAI in their products and services. The biggest area of growth next year, however, is data centers, projected to grow over 15%. When asked if this is a slowdown from the previous year’s 35% growth, he remarked that the denominator is getting “awfully big”.

Enterprises, banks, governments, retailers, and everyone else are building up or buying AI-optimized servers. However, the biggest purchasers are still the hyperscalers. The massive amount of money they are going to be spending will surpass all of the money Big Tech companies have previously spent on CPU servers from 2000 to 2026. While the net increase continues, the sheer spending of the hyperscalers is keeping the growth rate down, Lovelock notes.

New estimates from Morgan Stanley reinstate the same, with four of the Big Tech companies expected to invest about $300 billion in capital expenditures next year, and 2026 is expected to be even bigger. The bank notes that much of the CapEx is focused on hyperscalers. These hyperscalers, with their extensive cloud networks, are in a significant multi-year investment cycle driven by the pursuit of opportunities in generative AI and large language models.

“These high and rising CapEx numbers again speak to the importance of continued disclosure about new/incremental adoption, engagement, and revenue opportunities each of the four companies are seeing and investing in”.

-Bank’s analysts said.

The Latest Developments in AI

In recent AI news, we’ve seen prominent announcements from companies unveiling breakthroughs in large language models, AI hardware, and partnerships that aim to incorporate AI more deeply into core business functions. On November 5, CNBC reported that Perplexity AI, the artificial intelligence startup, is in the final stages of raising $500 million in funding at a $9 billion valuation. The company has been gaining significant investor attention due to the generative AI boom.

In other news, You.com and TollBit’s have created a partnership for the first-of-its-kind AI agent. “Election Agent” will be able to access accurate, authoritative results and race calls from Decision Desk HQ — the election data provider that was the first to call the presidential elections of 2016 and 2020. Americans will be able to access the same election results, race calls, and data that are provided by major news organizations but through an accessible AI chat interface.

“There’s a big unsolved need in the AI industry: scalably connecting AI companies directly with authoritative data sources. With the first presidential election in the AI era, concerns about misinformation are at the forefront. Much of today’s data isn’t readily accessible. Through our platform, Decision Desk HQ made its real-time election APIs available to AI companies at scale. This partnership with You.com, which has set the standard for grounded, accurate AI responses, demonstrates that AI can deliver real-time information responsibly when connected to authoritative sources. That’s ultimately what builds trust in AI – giving it direct access to ground truth data”.

– Toshit Panigrahi, co-founder CEO of TollBit.

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10. Xiao-I Corporation (NASDAQ:AIXI)

Xiao-I Corporation (NASDAQ:AIXI) is a Chinese cognitive artificial intelligence enterprise providing software services. The company offers a diverse range of business solutions and services in artificial intelligence.

On November 5^th, Xiao-I Corporation (NASDAQ:AIXI) provided an update on its Variable Interest Entity (VIE)’s patent infringement lawsuit against Apple. The lawsuit claims that Apple has infringed on the VIE’s intellectual property related to artificial intelligence technology. The second hearing session of the Shanghai High People’s Court was held on November 1, with both parties present. This session marks the latest progress in the ongoing dispute. Xiao-I remains confident in its case, which involves AI technology intellectual property claims. At the same time, the company also acknowledges that the outcome of the lawsuit is uncertain and there is no guarantee of financial compensation.

9. Astera Labs, Inc. (NASDAQ:ALAB)

Number of Hedge Fund Holders: 19

Astera Labs, Inc. (NASDAQ:ALAB) is engaged in the design, manufacture, and selling of semiconductor-based connectivity solutions for cloud and AI infrastructure. Its chip-based connectivity products boost the efficiency of AI.

On November 5, Evercore ISI raised the firm’s price target on Astera Labs, Inc. (NASDAQ:ALAB) to $110 from $80 and kept an “Outperform” rating on the shares. The rating update follows Astera Lab’s strong “beat and raise quarter”, with quarterly revenue of $113.1 million which beat analyst estimates of $97.4 million. Key drivers for the positive outlook include Astera Lab’s Aries retimers used in GPU and ASIC applications, increased adoption of its Taurus 400G products, as well as anticipated revenue growth from its Scorpio switches.

8. Palantir Technologies Inc. (NYSE:PLTR)

Number of Hedge Fund Holders: 44

Palantir Technologies Inc. (NYSE:PLTR) is a public American company that specializes in software platforms for big data analytics. Its Artificial Intelligence Platform, AIP, has transformed its business, which is used to test, debug code, and evaluate AI-related scenarios.

On November 5^th, Morgan Stanley analysts removed their “Underweight” rating and price target on Palantir Technologies Inc. (NYSE:PLTR) to a “Not Rated” position. The firm states that they have removed the rating and price target to re-evaluate their thesis, rating, and price target on the stock. At the same time, it is optimistic about the company’s AI positioning. Earlier, maturing government growth lagging commercial traction, and limited free cash flow revision potential had led to a negative view of Palantir. Since this is no longer the case, they have removed their Underweight rating.

‘The trend lines extending into this quarter prove stronger than expected, highlight the company’s AI positioning, and rare profile”.

-Morgan Stanley analysts.

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

Number of Hedge Fund Holders: 65

Arista Networks, Inc. (NYSE:ANET) is an American computer networking company engaged in the development, marketing, and sale of cloud networking solutions. The company’s products are especially relevant for hyperscalers as it offers networking solutions tailored for AI platforms.

On November 5^th, Bank of America reiterated Arista Networks as a “Buy”. The firm states that it sees share gains ahead for the networking equipment company.

“We raise our Arista PO to $455 from $380, still based on a 42.5x forward P/E multiple on the back of Meta and Microsoft’s strong CapEx commentary, reflecting the company’s growing opportunity in AI Ethernet networking buildouts.”

-Bank of America analyst

6. Oracle Corporation (NYSE:ORCL)

Number of Hedge Fund Holders: 93

Oracle Corporation (NYSE:ORCL) is an American multinational computer technology company offering products and services that address enterprise information technology environments globally. It is building hundreds of new data centers (cloud regions) to meet the growing demand for its AI and cloud services.

On November 5, Bernstein analyst Mark Moerdler maintained a “Buy” rating on Oracle Corporation (NYSE:ORCL) with a price target of $202.00. Moerdler’s rating comes from the company’s unique position in the cloud market, particularly its Generation 2 Oracle Cloud Infrastructure (OCI). Unlike traditional hyperscale cloud providers, OCI offers a distinct architectural design offering Oracle a competitive advantage in specific Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) segments. The analyst’s in-depth research into OCI’s technological and business potential has boosted his confidence in its growth prospects. He believes that OCI’s unique features position Oracle for significant expansion.

5. Broadcom Inc. (NASDAQ:AVGO)

Number of Hedge Fund Holders: 130

Broadcom Inc. (NASDAQ:AVGO) is an American technology company engaged in the design, development, and supply of semiconductor and infrastructure software solutions. It is one of the leading players designing chips for companies that are building AI data centers.

On November 5, Broadcom Inc. (NASDAQ:AVGO) announced new updates to its VMware Cloud Foundation (VCF), the company’s flagship enterprise-class private cloud platform that helps organizations with their digital transformation efforts. The VCF is not only simple to deploy, but also easy to consume, and comes with lower cost and risk. The company will be revealing an expanded set of VMware Cloud Foundation (VCF) Advanced Services innovations, ecosystem partnerships, and modernization programs at the VMware Explore 2024 event in Barcelona, thereby helping businesses accelerate generative AI application development, cybersecurity initiatives, and sovereign cloud adoption.

“Broadcom is enabling the private cloud everywhere with VMware Cloud Foundation. Through a private cloud platform and portfolio of Advanced Services that are ubiquitous, flexible, and secure, we are unlocking the promise of AI in the enterprise, delivering new levels of organizational resilience, and supporting the privacy and digital sovereignty demands of customers around the world.”

– Krish Prasad, senior vice president and general manager, VCF Division at Broadcom.

4. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 179

NVIDIA Corporation (NASDAQ:NVDA) engineers the most advanced chips, systems, and software for the AI factories of the future. As artificial intelligence and generative AI gain traction, the company has become a favorite in the AI space.

On November 4, NVIDIA Corporation (NASDAQ:NVDA) announced the launch of a new NVIDIA AI Blueprint for video search and summarization, enabling developers in practically any industry to build visual AI agents that analyze video and image content by leveraging NVIDIA computer vision and generative AI technologies. The agents will be able to answer user questions, generate summaries, and also enable alerts for specific scenarios. It is going to be a part of NVIDIA Metropolis, a set of developer tools for building vision AI applications. The new NVIDIA blueprint allows visual computing developers to build and deploy generative AI-powered assistants through a full suite of optimized software with the help of NVIDIA’s partner ecosystem. Moreover, these visual agents can be customized with natural language prompts, making it easy to develop virtual assistants across industries.

3. Apple Inc. (NASDAQ:AAPL)

Number of Hedge Fund Holders: 184

Apple Inc. (NASDAQ:AAPL) is a technology company that designs, manufactures, and markets smartphones, tablets, PCs, wearables, and accessories worldwide. Apple is an important AI stock, incorporating artificial intelligence in many of its popular features, such as Siri, and Face ID. It has also recently launched Apple Intelligence, the company’s personal intelligence system.

Apple Inc. (NASDAQ:AAPL) will be releasing iOS 18.2, including improvements to Apple Intelligence, on the week of December 2nd. In this regard, 9to5Mac reported that beta 2 for iOS 18.2 has just been released, and a significant change is related to ChatGPT. A new feature in iOS 18.2, the ChatGPT feature, is integrated system-wide across iPhone, iPad, and iMac devices and will be enhancing Apple’s writing tools. Even though Apple’s partnership with OpenAI did not announce any financial compensation, it is now quite evident that the relationship is mutually beneficial.

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

Number of Hedge Fund Holders: 219

Meta Platforms, Inc. (NASDAQ:META) is a social technology company that builds applications and technologies to help people connect, find communities, as well as grow businesses. The company is a key Artificial Intelligence player, focusing on advancing AI and developing related tools. Meta AI, the company’s virtual assistant, has more than 500 million active users only a year after its launch.

On November 4, Meta Platforms, Inc. (NASDAQ:META) revealed that it is making Llama, a family of autoregressive large language models released by Meta, available to U.S. government agencies. This includes those that are working on defense and national security applications, and private sector partners supporting their work. They stated that they are partnering with companies including Accenture Federal Services, Amazon Web Services, Anduril, Booz Allen, Databricks, Deloitte, IBM, Leidos, Lockheed Martin, Microsoft, Oracle, Palantir, Scale AI, and Snowflake to bring Llama to government agencies.  According to Meta, these responsible and ethical uses of open source models such as Llama will support the prosperity and security of the US, as well as help establish U.S. open source standards in the global race for AI leadership.

“This quarter, we released Llama 3.2, including the leading small models that run on-device and open source multi-modal models. We’re working with enterprises to make it easier to use, and now we’re also working with the public sector to adopt Llama across the US government.”

-Mark Zuckerberg in Meta’s Q3 earnings report.

1. Amazon.com Inc (NASDAQ:AMZN)

Number of Hedge Fund Holders: 308

Amazon.com Inc (NASDAQ:AMZN) is an American multinational company engaged in e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence.

On November 4^th, Amazon.com Inc (NASDAQ:AMZN) announced that it has launched a new generative AI-powered feature on Amazon Prime Video, a streaming video service by Amazon. Known as “X-Ray Recaps”, this AI feature allows users to view “brief” and “easy to digest” summaries of entire TV show seasons, single episodes, or even pieces in the episode down to the exact minute the user has watched it. By providing users with brief text summaries of important moments, cliffhangers, and character-driven plot points, users will be able to conveniently catch up on what they’ve missed. X-Ray Recaps is powered by Amazon Bedrock, a service from Amazon Web Services that helps businesses create and grow generative AI applications with foundational models.

“Prime Video product and technology teams work relentlessly behind the scenes to enhance customers’ viewing experience, and with the creation of X-Ray Recaps, we’re directly addressing a common problem customers face when streaming content: forgetting where they left off. With this context-aware functionality, Prime Video will deliver summaries of memorable moments and important plot points so our customers can quickly jump back into what they were watching or rediscover why they fell in love with a series in the first place.”

– Adam Gray, vice president of product at Prime Video.

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