Umesh Sachdev, the CEO of Uniphore, recently appeared on CNBC on March 19 to talk about what he calls the ‘the third year of a ten-year AI buildout’. Sachdev shared his perspective on the GPU Technology Conference (GTC) conference during this conversation. GTC is a global AI-focused event held semi-annually that brings together developers, engineers, researchers, and IT professionals to explore advancements in AI, ML, computer graphics, and autonomous machines. Sachdev attended both Jensen Huang’s keynote and spoke on a panel afterward. He highlighted several announcements that caught his attention. These included the Vera Rubin chips and the next-generation Blackwell Ultra chips, which were expected advancements in computing power.

However, what stood out most to him was Huang’s discussion around Agentic AI and physical AI. He explained that AI agents are becoming smarter and beginning to reason. This development is significant for customers like insurance companies, banks, telecom companies, and manufacturing firms. Sachdev noted that AI agents are already assisting employees or replacing certain jobs within these companies, and are performing tasks faster and more efficiently. Similarly, physical AI robots are being implemented in manufacturing setups with guardrails, which showcases early applications of these technologies. He believes these advancements will lead to what he calls an age of abundance, which will ultimately improve free cash flow for many publicly traded companies and create a bright future for AI in the enterprise.

As AI continues transforming industries and the way businesses operate, we’re here with a list of the 10 most popular AI penny stocks to buy under $5.

Methodology

We sifted through financial media reports and stock screeners to compile a list of the top AI penny stocks that were trading under $5 as of March 24. We then selected the 10 AI 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 Q4 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

10 Most Popular AI Penny Stocks to Buy Under $5

10. Firefly Neuroscience Inc. (NASDAQ:AIFF)

Share Price as of March 24: $4.95 

Number of Hedge Fund Holders: 2

Firefly Neuroscience Inc. (NASDAQ:AIFF) uses AI to develop neuroscientific solutions, specifically through its Brain Network Analytics (BNA) software. This technology aims to improve diagnosis and treatment for patients with mental illnesses and neurological disorders, such as depression, dementia, and ADHD. It serves both pharmaceutical companies and medical practitioners.

The BNA platform uses EEG data to analyze brain activity. The company is developing a “brain age” biomarker using BNA, which will potentially enable early Alzheimer’s screening. The company is also using BNA to provide objective measures of drug efficacy and cognitive change in clinical trials and neuropsychiatric care.

A key initiative at Firefly Neuroscience Inc. (NASDAQ:AIFF) is the development of the world’s first foundation model of the human brain, built using BNA data. The company’s acceptance into the NVIDIA Connect program provides access to advanced AI development resources for this project. Studies have demonstrated BNA’s utility in assessing drug effects, like Novartis’ MIJ821, and its potential as a cognitive biomarker in Major Depressive Disorder (MDD) treatment.

9. POET Technologies Inc. (NASDAQ:POET)

Share Price as of March 24: $4.07 

Number of Hedge Fund Holders: 4

POET Technologies Inc. (NASDAQ:POET) uses advanced wafer-level semiconductor manufacturing and its proprietary POET Optical Interposer platform to develop integrated optoelectronic solutions. It focuses on AI-driven data processing and high-speed data transmission and provides photonic integrated components for data centers, telecommunications, and markets like automotive LIDAR and medical imaging.

The POET Optical Interposer technology is designed to power AI hardware and data centers, which offers cost savings, power efficiency, and high performance. The company is developing optical engines for 400G and 800G applications, which are crucial for pluggable transceivers used in AI. The company also has an agreement to develop optical engines for high-frequency trading (HFT), which will generate revenue this year.

POET Technologies Inc. (NASDAQ:POET) has received several industry awards for its AI hardware technology. The company has shipped samples of its POET Infinity transmit product line for 400G and 800G applications to 3 global technology customers. This will convert electrical signals to optical signals for high-speed data transmission in AI and data center networks. The demand for these is forecasted to be about 20 million units per year for the next 5 years. Production orders are expected in H2 2025.