On December 4, Jay Jacobs, US Head of Thematics and Active Equity ETFs at BlackRock appeared on CNBC and discussed the significant growth potential for ETFs as we approach 2025, particularly in the context of the accelerating AI infrastructure phase. He noted that while AI adoption is still in its early stages, substantial investments, amounting to around $250 billion annually from major tech companies, are being made to enhance data centers and develop advanced chips. This investment is crucial for making AI more integrated into everyday life and business applications.

Jacobs emphasized that the opportunity in AI extends beyond just mega-cap tech stocks; it encompasses a broader value chain that includes semiconductor and software companies. He mentioned specific ETFs like ARTY (an index-based artificial intelligence fund) and BAI (an actively managed fund) that aim to capture this growth. Additionally, he highlighted the increasing importance of cybersecurity as data becomes more valuable, suggesting that companies will invest more in protecting their data assets. This trend is reflected in ETFs such as IHAK, which focuses on cybersecurity firms benefiting from this heightened demand.

Dave Nadig, an ETF expert and Financial Futurist, added insights on how AI will shape ETF investing by pointing to the infrastructure needs that arise from increased energy consumption driven by AI technologies and electric vehicles. He noted that companies involved in power generation and utilities are becoming increasingly relevant as they adapt to rising electricity demands. Both experts agreed on the critical role of physical infrastructure in supporting technological advancements, emphasizing that real-world resources like energy and materials are essential for the ongoing development of AI technologies.

Dan Ives, Global Head of Technology Research at Wedbush Securities, also believes the tech market is set for significant growth driven by advancements in AI. He expects AI software companies to play a key role in this expansion, as he mentioned in a CNBC interview on November 25. We discussed this in our article about the 12 Best Artificial Intelligence Stocks To Invest In Under $10, here’s an excerpt from it:

“…Ives believes that the consumption model in enterprise AI, driven by advancements from major chipmakers, will lead to underestimated growth rates of 15% to 20% for these software companies.

Ives also addressed the impact of bond yields and currency strength on the tech trade, noting that while these factors could present headwinds, they are already factored into market guidance. He expressed confidence in a strong demand perspective that could propel the NASDAQ to 20,000 in the next two years, with aspirations for it to reach 25,000 thereafter…”

With that context, we’re here with a list of the 10 best AI stocks to buy according to Reddit.

Methodology

We first sifted through Reddit threads to compile a list of the top AI stocks. We then selected the 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

10 Best AI Stocks to Buy According to Reddit

10. POET Technologies Inc. (NASDAQ:POET)

Number of Hedge Fund Holders: 5

POET Technologies Inc. (NASDAQ:POET) is at the forefront of developing advanced optical solutions designed for AI applications. Central to its innovation is the POET Optical Interposer, a technology that integrates electronic and photonic components, and facilitates high-speed data transfer, reduces energy consumption, and enhances computational capabilities.

The company is experiencing significant growth through strategic partnerships. In the third quarter of 2024, it achieved a design win with Foxconn Interconnect Technology, which focuses on the development of 800G and 1.6T optical engines. Additionally, Luxshare Tech, a technology supplier, has incorporated the company’s optical engines into its product offerings. To further solidify its market position, POET Technologies Inc. (NASDAQ:POET) entered into partnerships with Mentech Technology and Mitsubishi Electric, aimed at creating state-of-the-art 800G and 3.2T optical solutions. These partnerships primarily target AI and data center networks.

Recognized for its contributions to AI infrastructure, POET Technologies Inc. (NASDAQ:POET) has received several industry awards. These developments establish the company as a pivotal player in the ongoing AI revolution, positioning it to meet the growing needs of the technology landscape.

9. BigBear.ai Holdings Inc. (NYSE:BBAI)

Number of Hedge Fund Holders: 7

BigBear.ai Holdings Inc. (NYSE:BBAI) specializes in AI-driven decision intelligence solutions that are aimed at enhancing operations in areas such as national security, supply chain management, and digital identity. By employing cutting-edge technologies like machine learning and predictive analytics, it empowers organizations to make well-informed decisions in complex environments.

The firm is making strides at the US Navy’s Mission Autonomy Proving Ground (MAPG) exercises, where it is demonstrating its ConductorOS platform. This platform is engineered to orchestrate a variety of AI models, data streams, and sensors from multiple sources. BigBear.ai Holdings Inc. (NYSE:BBAI) leverages ConductorOS to showcase AI’s ability to unify diverse technologies. It ensures seamless interaction between different AI models and sensors, coming from any vendor, while deploying them at the network edge for real-time tasks like predicting enemy ship movements.

By actively participating in MAPG, BigBear.ai Holdings Inc. (NYSE:BBAI) is positioning itself as a pivotal contributor to the advancement of AI technologies within the Navy and the broader defense sector. Its emphasis on AI-based solutions is anticipated to significantly enhance maritime domain awareness, and improve decision-making processes.