In this article, we discuss the 10 best AI stocks for 2022.
Artificial intelligence is the backbone of a myriad of innovations in today’s world such as self-driving cars, high-tech computing, enterprise solutions, and robotics to name a few. AI is also set to play a key role in blockchain technology which forms the basis of the cryptocurrency industry. In addition, AI also played a key role in fighting the spread of COVID-19 from contact tracing to robots and drone deployment to responding to urgent needs in hospitals as well as performing deliveries of food, medications, and equipment.
According to a report published in October by the nonprofit public policy organization Brookings Institution, 44 countries have joined the AI bandwagon by drafting their own national AI strategic plans, including India, China, Uganda, Latvia, and the United States. A new defense bill, the National Defense Authorization Act for Fiscal Year 2021, allocated $6.4 billion in government funds for AI programs in 2021.
Some of the biggest artificial intelligence companies in the world are NVIDIA Corporation (NASDAQ:NVDA), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:FB). Other companies profit from the AI market by selling hardware and AI-related services. According to a recent market report published by Fortune Business Insights, the artificial intelligence market is set to grow at a CAGR of 33.6% to reach $360.36 billion by 2028.
Our Methodology
These companies are operating in the artificial intelligence market. We carefully selected AI stocks that, based on their solid fundamentals and growth catalysts, could be a good investment option in 2022. These AI companies offer hardware, software, and AI-focused services.
The hedge fund sentiment around each stock was calculated using the data of 867 hedge funds tracked by Insider Monkey.
Best AI Stocks for 2022
10. C3.ai, Inc. (NYSE:AI)
Number of Hedge Fund Holders: 24
C3.ai, Inc. (NYSE:AI) is an enterprise AI software provider. The California-based tech company offers AI platforms and CRM solutions to businesses and governments internationally. C3.ai, Inc.’s (NYSE:AI) AI software-as-a-service is used in a variety of industries, including defense, utilities, aerospace, and oil and gas.
One of the recent contracts granted to C3.ai, Inc. (NYSE:AI) is the new $500 million Department of Defense agreement to use the company’s products for military operations modeling and simulation for the next five years.
The company’s revenue in the second quarter of fiscal 2022 came in at $58.3 million, up 41% year over year, and beat revenue estimates by $1.3 1 million. Moreover, C3.ai, Inc. (NYSE:AI) expanded its industry diversification and is now serving 14 industries in Q2 2022, up from 7 industries a year ago, including healthcare, agriculture, life sciences, financial services, and manufacturing.
At the end of the third quarter of 2021, 24 hedge funds in the database of Insider Monkey held stakes worth $199 million in C3.ai, Inc. (NYSE:AI), compared to 29 in the preceding quarter worth $258 million. Needham analyst Jack Andrews maintained a Buy rating on C3.ai, Inc. (NYSE:AI) with a price target of $103 on the shares on December 10.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Tiger Global Management LLC is a leading shareholder in C3.ai, Inc. (NYSE:AI) with 1 million shares worth more than $46 million.
One of the most popular AI picks for hedge funds and investors include C3.ai, Inc. (NYSE:AI) along with Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:FB).
9. SentinelOne, Inc. (NYSE:S)
Number of Hedge Fund Holders: 35
SentinelOne, Inc. (NYSE:S) offers an enterprise AI cybersecurity platform to a variety of enterprises in the fields of finance, healthcare, automotive, services, and transportation. Among the company’s biggest clients are Electronic Arts Inc. (EA), Sysco Corporation (SYY), and Autodesk, Inc. (ADSK).
SentinelOne, Inc. (NYSE:S) had increased its customer base by 75% year on year to over 6,000 as of the third quarter of fiscal 2022. Moreover, the artificial intelligence cybersecurity firm based in California has delivered its services in Europe and is currently expanding its R&D center in the Czech Republic.
After the company reported solid third earnings on December 9, Deutsche Bank analyst Patrick Colville maintained his Buy rating on SentinelOne, Inc. (NYSE:S), adding that the quarter suggests “capturing investment in the buoyant endpoint market.”
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Third Point is a leading shareholder in SentinelOne, Inc. (NYSE:S) with 26.7 million shares worth more than $1.4 billion.
In its Q3 2021 investor letter, Third Point Management mentioned SentinelOne, Inc. (NYSE:S) and discussed its stance on the firm. Here’s what the fund said:
“Our top winners on a percentage basis in Q3 were our two largest positions; (which includes) SentinelOne, up 26%, as public market investors rewarded both companies’ disruptive business models and high-growth trajectories. We expect SentinelOne to grow rapidly and continue to gain market share over the next decade as flexible work patterns, cloud adoption, and IoT create more security vulnerabilities. This market is still dominated by legacy vendors whose solutions pale when compared to SentinelOne’s autonomous, machine-learning based security, which is taking share and helping the company grow annual recurring revenue by more than 100% yearover-year.”
8. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 35
Data analytics firm Palantir Technologies Inc. (NYSE:PLTR) integrates AI/ML in its enterprise platform. The company’s primary business is to provide secure data analytics software and management to the government and other businesses. On the other hand, Palantir Technologies Inc. (NYSE:PLTR) also lays the groundwork for AI and machine learning in space exploration. Apollo’s Edge-AI technology includes PLTR’s Meta-Constellation software, which enables the production of expanding satellite constellations and the deployment of artificial intelligence into space.
Palantir Technologies Inc. (NYSE:PLTR) also announced a partnership with Dewpoint Therapeutics, a Massachusetts-based biotech company, in December to use Palantir’s Foundry platform for drug discovery.
In Q3 2021, Palantir Technologies Inc. (NYSE:PLTR) grew its revenue by 36% year over year to $392 million. The Colorado-based software company also added 34 net new customers during the period.
More hedge funds expressed their bullish sentiment on Palantir Technologies Inc. (NYSE:PLTR) in Q3 2021. The latest data shows that 35 hedge funds in the Insider Monkey database were long Palantir Technologies Inc. (NYSE:PLTR) at the end of the September quarter with stakes worth $1.63 billion.
In addition to Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), Amazon.com, Inc. (NASDAQ:AMZN), and Meta Platforms, Inc. (NASDAQ:FB), Palantir Technologies Inc. (NYSE:PLTR) is one of the AI stocks analysts are watching for 2022.
7. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 41
Another hot AI stock for 2022 according to analysts is cloud and software firm International Business Machines Corporation (NYSE:IBM). Of the 867 elite funds tracked by Insider Monkey, 56 were long International Business Machines Corporation (NYSE:IBM) at the end of September. Arrowstreet Capital is the leading stakeholder of the company.
The New York-based company provides software applications and analytics data platforms for businesses. International Business Machines Corporation (NYSE:IBM) announced the completion of its four-month project with HSBC Holdings plc (NYSE:HSBC) to test end-to-end transactions involving central bank digital currencies, eBonds, and foreign exchange in mid-December.
Shares of International Business Machines Corporation (NYSE:IBM) increased 8% in November following the spinoff from its managed infrastructure services business Kyndryl. The separation of Kyndryl from IBM, according to IBM CEO Arvind Krishna, is one of the company’s strategies to focus on hybrid cloud and AI.
On December 7, Credit Suisse analyst Sami Badri assumed an Outperform rating on International Business Machines Corporation (NYSE:IBM) and maintained a $164.29 price target on the stock.
6. DocuSign, Inc. (NASDAQ:DOCU)
Number of Hedge Fund Holders: 51
One of the AI stocks investors are watching is e-signature service provider DocuSign, Inc. (NASDAQ:DOCU). The San Francisco-based application developer is the largest e-signature company with more than 1 billion users and over 1.1 million paying customers worldwide.
DocuSign, Inc. (NASDAQ:DOCU) automates workflows across legal clauses and agreements using artificial intelligence. The AI firm also offers AI-powered contract lifecycle management.
The company saw a 42% year-over-year increase in revenue to $545.5 million in the third quarter of fiscal 2022. At the end of the September quarter, 51 hedge funds out of 867 tracked by Insider Monkey had positions in DocuSign, Inc. (NASDAQ:DOCU) valued at $4.24 billion.
In the Q2 2021 investor letter of Carillon Tower Advisers, the fund mentioned DocuSign, Inc. (NASDAQ:DOCU) and discussed its stance on the firm. Here is what the fund said:
“DocuSign provides electronic signature solutions. The firm reported an excellent quarter and investors have appreciated the strong growth combined with the excellent margins the company has posted. DocuSign has a long runway of growth ahead and we believe that it remains in a favorable position to continue gaining market share from traditional manual and paper-based signature solutions.”
5. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 83
Graphics chip giant NVIDIA Corporation (NASDAQ:NVDA) is one of the best AI stocks for 2022. NVIDIA GPU deep learning, an enterprise AI product from the California-based company, is widely used for training deep neural networks.
NVIDIA Corporation (NASDAQ:NVDA) shares have risen 35% over the last six months as the chipmaker continues to dominate the GPU market. The company is among the biggest suppliers of semiconductors to data centers globally. The company grew its year-over-year revenue in the third quarter of 2021, reporting total revenue of $7.10 billion.
On December 3, Citi analyst Atif Malik maintained a Buy rating on NVIDIA Corporation (NASDAQ:NVDA) with a price target of $350. In addition, 83 elite funds had a stake in NVIDIA Corporation (NASDAQ:NVDA) worth over $10 billion at the end of the September quarter.
Among the hedge funds being tracked by Insider Monkey, GQG Partners is a leading shareholder in the California-based GPU maker with 15 million shares worth more than $3.14 billion.
Here is what Harding Loevner has to say about NVIDIA Corporation in its Q3 2021 investor letter:
“The proliferation of devices using chips, whether EVs, “things” in lol, or embedded systems more generally, results in the generation of oceans of data potentially needing to be stored, processed, and analyzed. NVIDIA, the leading chip designer well-known for its graphic processing units and its complementary CUDA software ecosystem, is at the forefront of the effort to provide the analytical platform needed to unlock the full potential of such specialist processors.”
4. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 195
Alphabet Inc. (NASDAQ:GOOGL), the largest AI company in the world, provides online advertising services internationally. The California-based tech giant operates Google Cloud and Google Services such as YouTube, Google Play, Chrome, and Android.
Alphabet Inc. (NASDAQ:GOOGL) develops a wide range of AI products and services, including its self-driving car company, Waymo. It’s behind DeepMind, and Google Duplex, an AI voice interface. In early November, Alphabet Inc. (NASDAQ:GOOGL) announced the launch of Isomorphic Labs, an AI-powered drug discovery firm spun out of DeepMind.
On November 2, a Morgan Stanley analyst maintained an Overweight rating on Alphabet Inc. (NASDAQ:GOOGL) with a price target of $3,200. Overall, 195 funds of the 867 elite funds tracked by Insider Monkey reported owning stakes in Alphabet Inc. (NASDAQ:GOOGL) at the end of September 2021, up from 190 in the preceding quarter. The total value of these stakes is $28.6 billion.
Here is what Saturna Capital Amana Funds has to say about Alphabet Inc. in its Q3 2021 investor letter:
“Alphabet was a new addition to the Fund this year, as we believed it important to have exposure to the top online media and advertising company in the world. Some have raised concerns surrounding Alphabet’s exposure to political interference, but we take comfort from the belief that were the company to be broken up, it would quite likely be worth even more than as a single entity.”
3. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 242
Amazon.com, Inc. (NASDAQ:AMZN) uses artificial intelligence to steer its businesses ranging from e-commerce to video streaming, Alexa, and cloud computing.
Cowen analyst John Blackledge believes robust growth at Amazon Web Services and AMZN’s advertising business will propel operating margin expansion. In addition, Blackledge expects the company’s sales growth to accelerate starting in the second quarter of 2022. On December 13, Blackledge maintained an Outperform rating on Amazon.com, Inc. (NASDAQ:AMZN) and increased his price target for the stock to $4,500 from $4,300.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Amazon.com, Inc. (NASDAQ:AMZN) with 1.93 million shares worth more than $6.34 billion. Overall, 242 funds of the 867 hedge funds tracked by Insider Monkey reported owning stakes in Amazon.com, Inc. (NASDAQ:AMZN) at the end of the third quarter of 2021.
Here is what Davis Opportunity Fund has to say about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2021 investor letter:
“E-commerce, online search, and advertising, social media and software are another component of the portfolio that have proven, attractive businesses. The online portion of the Fund is currently dominated by such market leaders as Amazon.com. We are attracted to these names based on the size and rapid expansion of their market opportunities globally, their ability to generate and grow new revenue sources through constant innovation, ample operating leverage as they continue to scale, and capable, focused, highly competitive leadership teams. If purchased at sensible prices, these types of businesses in our experience can contribute meaningfully to long-term results.”
2. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders: 248
Internet giant Meta Platforms, Inc. (NASDAQ:FB), formerly known as Facebook, Inc., develops social media applications, in-home devices, and VR headsets. The California-based tech giant utilizes AI in blocking misinformation and other harmful content on its family of apps. Additionally, AI tools developed by Meta Platforms, Inc. (NASDAQ:FB) play a major role in improving the customer shopping experience on Facebook, Instagram, and WhatsApp.
Meta Platforms, Inc. (NASDAQ:FB) is also gaining favor with investors as it aggressively expands its presence in the metaverse, a shared virtual world environment.
Overall, 248 funds of the 867 elite funds tracked by Insider Monkey reported owning stakes in Meta Platforms, Inc. (NASDAQ:FB) at the end of September 2021. The total value of these stakes is $38.5 billion.
Here is what Canterbury Tollgate has to say about Meta Platforms, Inc. in its Q3 2021 investor letter:
“To say traditional media is anti-Facebook would not be an overstatement. An already intense and multi-year critique of (or attack on) Facebook has ratcheted up in recent weeks. Facebook’s research efforts have been reported on, if often derided, for nearly a decade. Going back to 2014, Slate.com called their research practices “unethical” when FB tried to study the impact social posts had on users. Now those efforts have been turned against them for the kill shot.
My job is to observe, assess, and allocate. Not to commentate on all the whims and wishes of the media narrative. However, in the case of Facebook, I cannot avoid going into some detail re: the onslaught against them, which I find to be most unwarranted and insincere.
Last month the Wall Street Journal ran a five-piece series titled “The Facebook Files” which allegedly shows how toxic Instagram is for teens. The foundation of their argument was a single slide from an internal presentation claiming, based on FB’s own research, that of teens who had a negative self-image, one-third said Instagram “made them feel worse.” iii Somehow the implication here is that this is not an inescapable aspect of either the human psyche and/or society-at-large, but that it is of Facebook’s doing…” (Click here to see the full text)
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 250
Software giant Microsoft Corporation (NASDAQ:MSFT) is one of the best AI stocks for 2022, as the Washington-based company continues to grow its AI and cloud computing platform, Azure.
Morgan Stanley analyst Keith Weiss is bullish on Microsoft Corporation (NASDAQ:MSFT), trusting that the company’s strong database data platform solutions will be a major source of upside in 2022. On December 14, Weiss gave an Overweight rating on Microsoft Corporation (NASDAQ:MSFT) and set a price target of $364 for the stock.
Among the hedge funds being tracked by Insider Monkey, Washington-based firm Fisher Asset Management is a leading stakeholder in Microsoft Corporation (NASDAQ:MSFT) holding 25 million shares worth more than $7.2 billion.
At the end of the third quarter of 2021, 250 hedge funds in the database of Insider Monkey held stakes worth $65.8 billion in Microsoft Corporation (NASDAQ:MSFT), up from 238 in the preceding quarter worth $62.4 billion.
Here is what Baron Opportunity Fund has to say about Microsoft Corporation in its Q3 2021 investor letter:
“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft’s results continued to be strong across the board, with total revenue beating Street estimates by 4.5%, an acceleration in Commercial Cloud revenue to 31% constant-currency growth, a four-point improvement in Commercial Cloud gross margins (to 70% from 66%), and GAAP earnings up 42%. We believe the company is positioned to deliver 13% to 15% organic growth over the next three years, underpinned by TAM expansion across its disruptive cloud product portfolio, as more companies look to transform and digitize their businesses, as well as strong operating leverage as its cloud products gain scale.”
You can also take a peek at the Top 10 Stock Picks of Mario Gabelli and 10 Stocks On Investors’ Radar After Posting Their Financial Results.
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Disclosure. None. 10 Best AI Stocks for 2022 is originally published on Insider Monkey.
