13 Best Stocks To Invest In According to AI

Published on September 10, 2023 at 10:28 am by Ureeda Asim in Hedge Funds, News

In this article, we discuss 13 best stocks to invest in, according to AI. If you want to skip our detailed discussion on how valuable AI can prove to be in the financial and stock trading industry, head directly to 5 Best Stocks To Invest In According to AI.

The abundance of posts claiming that ChatGPT, an AI-powered chatbot, has beaten the stock market highlights the significant variation in its responses based on input. It’s important to appreciate and leverage the diverse possibilities AI offers. For instance, when Bloomberg asked ChatGPT to create an ETF to outperform the US stock market, it simply reiterated the standard disclaimer that past performance doesn’t guarantee future results and that beating the market due to its high volatility is improbable.

However, experts have managed to coax ChatGPT into providing lists of stocks by posing as expert stock advisors. Investors have explored using AI to gain an edge in the market, with some researchers claiming high success rates for short-term predictions using machine learning models based on trading data. A group of stocks chosen by ChatGPT has shown significantly better performance than some of the most popular investment funds in the UK.

Finder.com, a financial comparison site, tasked ChatGPT with constructing a stock portfolio aimed at surpassing some of the United Kingdom’s most favored funds, including Fundsmith, Vanguard LifeStrategy 100% Equity A Acc, Vanguard LifeStrategy 80% Equity A Acc, and Vanguard FTSE Glb All Cp Idx £ Acc, among others. Over an eight-week period, the ChatGPT-generated portfolio of 38 stocks gained 4.9% during the initial 11 weeks since its creation on March 6, 2023, while ten leading investment funds in the UK experienced an average loss of 0.8%, according to CNN. This performance notably outpaced the performance of the top 10 most popular UK funds, which experienced a decline of 0.12% over the same period. For the purposes of this article, we have chosen 12 stocks from ChatGPT’s portfolio that garnered the highest interest from hedge fund investors.

AI’s influence on stock markets has become substantial, leading to comparisons with the surges witnessed in cryptocurrency and the dot-com era. Companies increasingly use buzzwords like “generative AI,” “large language models,” and “artificial intelligence” during earnings calls and meetings, resulting in a substantial 85% increase in the use of the term “artificial intelligence” during such events. This heightened focus on AI often drives up stock prices when companies announce plans to integrate AI into their operations, even among non-tech firms like Wendy’s, which experienced stock price gains after revealing AI-driven cost-cutting plans.

Although traditional investment funds have been using AI for years, ChatGPT makes this technology accessible to the general public, potentially influencing retail investors’ decisions. A survey by Finder.com found that 8% of UK adults had already used ChatGPT for financial advice, and 19% were considering doing so.

However, 35% of respondents indicated that they would not consider using the chatbot for financial decisions. Douglas Boneparth, a certified financial planner and the president and founder of Bone Fide Wealth, explains to CNBC Make It that ChatGPT is certainly not a tool that can help you outperform the stock market in any way. While AI can process vast amounts of data and make some accurate stock picks, its long-term performance remains uncertain. Additionally, the limitations of AI, such as outdated knowledge and an inability to understand individual preferences, make it unsuitable for replacing human financial advisors.

Despite its potential, experts advise caution and recommend conducting individual research or consulting a qualified financial adviser when making investment decisions, as it may be too early to fully trust AI with financial matters. Instead, ChatGPT and similar AI tools can be valuable for looking up financial terms and gathering data during research. For emotionally-driven financial decisions or those involving personal preferences, human financial advisors are better equipped to provide tailored guidance and empathetic support, areas where AI currently falls short. Nonetheless, the democratization of AI is seen as a disruptive force in the financial industry.

The current market performance and the hype created by AI technology can be a motivator for investors to consider the best investments according to AI. Ergo, investors looking to diversify their portfolios by investing in these stocks can check our list, which includes Microsoft Corporation (NASDAQ:MSFT), Meta Platforms Inc. (NASDAQ:META), and Alphabet Inc. (NASDAQ:GOOG).

Our Methodology

We selected the best stocks to invest in according to AI based consensus picks from credible sources. We have calculated the performance of each stock from the day its source was published, to date. We also assessed the hedge fund sentiment from Insider Monkey’s database of 910 elite hedge funds tracked as of the end of the second quarter of 2023. The list is arranged in ascending order of the number of hedge fund investors in each firm.

Photo by lucas law on Unsplash

Best Stocks To Invest In According to AI

13. Parsons Corporation (NYSE:PSN)

Number of Hedge Fund Holders: 15

Share price performance from August 17 to September 7: 2.81%

Parsons Corporation (NYSE:PSN) delivers integrated solutions and services within the defense, intelligence, and critical infrastructure sectors across North America, the Middle East, and worldwide. The company operates through two divisions: Federal Solutions and Critical Infrastructure. On August 02, Parsons Corporation (NYSE:PSN) reported a Q2 GAAP EPS of $0.38, beating Wall Street estimates by $0.10. The revenue of $1.36 billion increased 34% year-on-year, surpassing market estimates by $230 million.

The share price for Parsons Corporation (NYSE:PSN) has increased by 2.81% since August 17, hinting that this can be a good investment option this year. According to Insider Monkey’s second quarter database, 15 hedge funds were bullish on Parsons Corporation (NYSE:PSN), compared to 12 in the previous quarter. Ken Griffin’s Citadel Investment Group is the top stakeholder of the firm, with 565,006 shares, valued at approximately $27.2 million.

Like Microsoft Corporation (NASDAQ:MSFT), Meta Platforms Inc. (NASDAQ:META), and Alphabet Inc. (NASDAQ:GOOG), Parsons Corporation (NYSE:PSN) is one of the best AI stocks to monitor.

12. ChampionX Corporation (NASDAQ:CHX)

Number of Hedge Fund Holders: 24

Share price performance from August 17 to September 7: 7.02%

ChampionX Corporation (NASDAQ:CHX) offers chemical solutions and specialized equipment and technologies to global oil and gas firms. The company is organized into four divisions: Production Chemical Technologies, Production & Automation Technologies, Drilling Technologies, and Reservoir Chemical Technologies. On July 24, ChampionX Corporation (NASDAQ:CHX) reported a Q2 non-GAAP EPS of $0.49, beating Wall Street estimated by $0.05. The revenue of $926.6 million decreased by 0.6%, missing market estimates by $54.91 million.

AI has picked this stock as one of the best stocks to invest in, according to a source published on August 17. Since then to date, the stock has seen an increase of almost 7% in its value.

According to Insider Monkey’s second quarter database, 24 hedge funds were bullish on ChampionX Corporation (NASDAQ:CHX), one down from the last quarter. Jeffrey Gates’ Gates Capital Management is the top stakeholder of the firm, with 4.17 million shares, valued at approximately $129 million.

Alger Small Cap Focus Fund made the following comment about ChampionX Corporation (NASDAQ:CHX) in its Q4 2022 investor letter:

“ChampionX Corporation (NASDAQ:CHX) provides equipment and services that assist in the drilling. completion and production phases of well drilling. The company also provides production and reservoir chemicals, along with highly engineered equipment and technologies, such as artificial lift and drill bit inserts, for the oil and gas industry. Notably, ChampionX has a global footprint and favorable product mix, where its chemicals and artificial lift businesses are tied to the production phase of the life of a well. We believe this produces lower earnings variability and potentially stronger operating results. Shares outperformed during the quarter as the company reported strong fiscal third quarter results and gave better-than-expected fourth quarter guidance. Moreover, the company expanded its capital return program by committing to return 60% of its free cash flow (FCF) to shareholders through opportunistic buybacks. Management also raised its share buyback authorization program from $250m to $750m over next 2 to 3 years. We believe the company is well positioned to deliver strong revenue growth, driven by their production focused Performance Chemicals business, which may lead to margin improvement and FCF generation.”

11. Chart Industries (NYSE:GTLS)

Number of Hedge Fund Holders: 37

Share price performance from August 2 to September 7: 4.84%

Chart Industries (NYSE:GTLS) produces and markets specialized cryogenic equipment for both the industrial gas and clean energy sectors, serving customers in the United States and around the world. The company is structured into four distinct divisions: Cryo Tank Solutions, Heat Transfer Systems, Specialty Products, and Repair, Service & Leasing. On February 24, Chart Industries (NYSE:GTLS) reported a Q4 non-GAAP EPS of $1.67, missing Wall Street estimates by $0.03. The revenue of $441.4 million increased 16.5% year-over-year, missing market estimates by $49.48 million.

As of August 02, Chart Industries (NYSE:GTLS) has seen a 4.84% increase in stock price. According to Insider Monkey’s second quarter database, 37 hedge funds were bullish on Chart Industries (NYSE:GTLS), as compared to 43 in the prior quarter. Franklin Parlamis’s Aequim Alternative Investments is the top stakeholder of the firm, with 740,000 shares, valued at approximately $48.2 million.

Aristotle Atlantic Large Cap Growth Strategy made the following comment about Chart Industries, Inc. (NYSE:GTLS) in its Q1 2023 investor letter:

“Chart Industries, Inc. (NYSE:GTLS) is a leading independent global manufacturer of highly engineered equipment servicing multiple applications in the Energy and Industrial Gas markets. Its unique product portfolio is used in every phase of the liquid gas supply chain, including upfront engineering, service and repair. Being at the forefront of the clean energy transition, Chart is a leading provider of technology, equipment and services related to liquefied natural gas, hydrogen, biogas and CO2 Capture amongst other applications. Chart’s customers are mainly large, multinational producers and distributors of hydrocarbon and industrial gases. The company generates about half its sales in North America.

We see Chart Industries as a leading manufacturer of highly engineered cryogenic solutions that are used for the production and storage of industrial gases. With the exposure to energy end markets including liquified natural gas (LNG), compressed natural gas (CNG) and hydrogen, the company has the technology to ship gas from oversupplied markets to markets that do not have access to enough energy resources. Hydrogen is gaining traction as a renewable fuel due to the focus on climate change. The recent acquisition of Howden is complementary to Chart’s existing product and service offerings.

10. Waste Management (NYSE:WM)

Number of Hedge Fund Holders: 39

Share price performance from August 17 to September 7: -1.59%

Waste Management (NYSE:WM) and its subsidiary companies specialize in delivering environmental solutions to customers in the residential, commercial, industrial, and municipal sectors across the United States and Canada. On August 21, Waste Management (NYSE:WM) declared a quarterly dividend of $0.70 per share, in line with previous. The dividend will be distributed on September 22, to shareholders of record on September 08.

As of August 17, Waste Management (NYSE:WM) has seen a decline of 1.59% in stock performance, indicating that AI stock picks might not always be the best ones to invest in. According to Insider Monkey’s second quarter database, 39 hedge funds were bullish on Waste Management (NYSE:WM), as compared to 43 in the prior quarter. Michael Larson’s Bill & Melinda Gates Foundation Trust is the top stakeholder of the firm, with 35.2 million shares, valued at approximately $6.11 billion.

9. Trex Company Inc. (NYSE:TREX)

Number of Hedge Fund Holders: 43

Share price performance from August 17 to September 7: 2.70%

Trex Company Inc. (NYSE:TREX) produces and markets composite decking, railing, and outdoor living items and accessories designed for both residential and commercial markets within the United States. The company is divided into two segments: Trex Residential and Trex Commercial. On July 31, Trex Company Inc. (NYSE:TREX) reported a Q2 GAAP EPS of $0.71, beating market estimates by $0.17. The revenue of $357 million dropped 7.6% year-over-year, surpassing market estimates by $38.11 million.

As of August 17, the share price performance of Waste Management (NYSE:WM) has seen a rise of 2.70%, hinting at the probability of this stock being a good investment option. According to Insider Monkey’s second quarter database, 43 hedge funds were bullish on Trex Company Inc. (NYSE:TREX), as compared to 30 in the prior quarter. Steve Cohen’s Point72 Asset Management is the top stakeholder of the firm, with 1.34 million shares, valued at approximately $88 million.

Conestoga Smid Strategy made the following comment about Trex Company, Inc. (NYSE:TREX) in its second quarter 2023 investor letter:

“Trex Company, Inc. (NYSE:TREX): TREX is a market share leader in the manufacturing and distribution of composite decking that is sold in the residential market. TREX reported solid results in 1Q23 with better margins and with guidance for 2Q23 that was higher than street expectations. The stock rallied during the quarter given the solid results, a normalization of inventory in the channel, and the recent introduction of several exciting new products.”

8. CME Group Inc. (NASDAQ:CME)

Number of Hedge Fund Holders: 55

Share price performance from August 17 to September 7: -0.18%

Based in Chicago, CME Group Inc. (NASDAQ:CME) manages financial derivatives exchanges such as the Chicago Mercantile Exchange, Chicago Board of Trade, New York Mercantile Exchange, and The Commodity Exchange. Additionally, the company holds a 27% ownership stake in S&P Dow Jones Indices. On July 26, CME Group Inc. (NASDAQ:CME) reported a Q2 non-GAAP EPS of $2.30, beating Wall Street estimates by $0.11. The revenue of $1.36 billion increased 9.9% year-over-year, surpassing market estimates by $20 million.

As of August 17, the share price performance of CME Group Inc. (NASDAQ:CME) has seen a drop of 0.18%. This drop is not significant enough to label the stock as a poor investment choice, and the almost 10% revenue growth year-over-year backs that assessment. According to Insider Monkey’s second quarter database, 55 hedge funds were bullish on CME Group Inc. (NASDAQ:CME), same as the last quarter. Guardian Capital’s GuardCap Asset Management is the top stakeholder of the firm, with 4.24 million shares, valued at approximately $785 million.

VGI Partners made the following comment about CME Group Inc. (NASDAQ:CME) in its second quarter 2023 investor letter:

“CME Group Inc. (NASDAQ:CME) operates futures and derivatives exchanges, including the Chicago Mercantile Exchange, the New York Mercantile Exchange, the Chicago Board of Trade, and the Dow Jones Index Services. On top of this, CME also owns other key assets related to foreign exchange trading & infrastructure and a strategic shareholding in Standard & Poor’s (S&P) Index business.

The key driver of trading activity for CME is in its interest rate derivatives products, where it has an effective monopoly in the exchange trading of interest rate derivatives in the United States, through its benchmark products across the entirety of the interest rate curve. Demand for interest rate derivatives is driven by volatility in interest rate markets, whose effect is compounded by the number of bonds held by those looking to manage interest rate risk and, by extension, market liquidity. The below chart of average daily volumes of interest rate derivatives and US Federal debt held by the public illustrates the extremely strong relationship between the size of the US Treasury market and volumes growth, although there are deviations around this primarily around Fed intervention (for example, at the start of the pandemic, volumes were suppressed by an enormous amount of Quantitative Easing (QE) and effectively zero interest rates which reduced the demand for hedging products). We expect the growth in the size of the US Treasury market, particularly in relation to privately held US treasuries as the Fed undergoes a balance sheet unwind, to remain a powerful underpinning of CME’s interest rate derivatives business…” (Click here to read the full text)

7. Exxon Mobil Corporation (NYSE:XOM)

Number of Hedge Fund Holders: 71

Share price performance from August 17 to September 7: 5.64%

Exxon Mobil Corporation (NYSE:XOM) is involved in the exploration and extraction of crude oil and natural gas, both domestically in the United States and on a global scale. The company’s operations are categorized into four segments: Upstream, Energy Products, Chemical Products, and Specialty Products. On July 28, Exxon Mobil Corporation (NYSE:XOM) reported a Q2 non-GAAP EPS of $1.94 missing b Wall Street estimates by $0.08. The revenue of $82.91 billion decreased 28.3% year-over-year, missing market estimates by $7.41 million.

As of August 17, the share price performance of Exxon Mobil Corporation (NYSE:XOM) has seen a rise of 5.64%, indicating that this might be a good stock to invest in within the current stock market landscape. According to Insider Monkey’s second quarter database, 71 hedge funds were bullish on Exxon Mobil Corporation (NYSE:XOM), two less than the previous quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the top stakeholder of the firm, with 13.33 million shares, worth approximately $1.43 billion.

6. Micron Technology, Inc. (NASDAQ:MU)

Number of Hedge Fund Holders: 86

Share price performance from August 2 to September 7: 3.29%

Micron Technology, Inc. (NASDAQ:MU) is a global company specializing in the design, creation, production, and sale of memory and storage solutions. The company is structured into four segments: Compute and Networking Business Unit, Mobile Business Unit, Embedded Business Unit, and Storage Business Unit, each catering to distinct markets and needs. On June 28, Micron Technology, Inc. (NASDAQ:MU) reported a Q3 non-GAAP EPS of -$1.43, beating Wall Street estimates of $0.14. The revenue of $3.75 billion dropped by a whopping 56.6% year-over-year, surpassing market estimates by $70 million.

As of August 2, the share price performance of Micron Technology, Inc. (NASDAQ:MU) has seen a hike of 3.29%, indicating that this might be a good stock to invest in within the current stock market landscape. According to Insider Monkey’s second quarter database, 86 hedge funds were bullish on Micron Technology, Inc. (NASDAQ:MU), as compared to 73 in the previous quarter. Ken Griffin’s Citadel Investment Group is the top stakeholder of the firm, with 6.73 million shares, worth approximately $424.6 million.

In addition to Microsoft Corporation (NASDAQ:MSFT), Meta Platforms Inc. (NASDAQ:META), and Alphabet Inc. (NASDAQ:GOOG), Micron Technology, Inc. (NASDAQ:MU) is one of the top AI stocks to watch.

Here is what Claret Asset Management has to say about Micron Technology, Inc. (NASDAQ:MU) in its Q3 2022 investor letter:

“Inflation is still higher than interest rates… not an incentive to save for most people. Either inflation must come down or interest rates have to go up further. Or both. And probably both. Now that they are taking the punch bowl away and the party is over, what happens next? For whatever reason, the stock market seems to always precede the economic reality: Micron reached a high of $98.45 on January 5th, 2022 and is trading at $50.00 today.”

Click to continue reading and see 5 Best Stocks To Invest In According to AI.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on May 1, 2024 at by Inan Dogan, PhD

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A New Dawn is Coming to U.S. Stocks

Published on May 2, 2024 at by Insider Monkey Staff

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…

Should I put my money in Artificial Intelligence?

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Click to continue reading…

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