10 Fastest Growing AI Stocks To Buy

In this article, we discuss the 10 fastest-growing AI stocks to buy.

Artificial intelligence (AI) stocks started to take the market by storm at the start of this year and this AI boom keeps gaining momentum. Wedbush analyst Dan Ives believes that tech stocks are going to keep gaining till the end of the year, mainly due to the AI boom. In an investor note, he said:

“The massive $800 billion AI opportunity is now on the doorstep for the tech sector for the next decade and real monetization of AI is happening much sooner than expected with Nvidia’s recent guidance and our channel checks giving further confidence in our AI bullish sector call that kicked off in January.”

BlackRock, Inc. (NYSE:BLK), an investment management company, recently posted a mid-year outlook which states that the market provides ample investment opportunities, especially in the AI segment. The firm believes that the aging/retiring population is creating a labor shortage, which is one of the reasons for inflation in the US. Moreover, global supply chain issues are among the driving forces of increasing production costs. The firm adds that these constraints can be offset with the help of AI. However, the firm also believes that the potential effects of the industry are yet to be completely assessed and there are still some risks involved. The report says:

“We think markets are still assessing the potential effects as AI applications could disrupt entire industries. It goes beyond sectors. Increasing digitalization also brings greater cybersecurity risks across the board.”

Investors are also highly bullish on AI start-ups. In 2021, investments in artificial intelligence start-ups reached a record high of $113.3 billion. In 2023, over 25% of the total investments in US startups have gone toward AI. Two of them include Alphabet Inc. (NASDAQ:GOOG) backed Anthropic and CoreWeave.

Forbes also provided an outlook on the AI industry and believes that the segment’s market size will reach $407 billion by 2027. On top of that, AI will account for a 21% net increase in the US GDP by 2030. Forbes also believes that AI will have a significant effect on the autonomous vehicles industry as 1 in 10 vehicles will be self-driving by 2030.

Several analysts and investors are considering the recent tech/AI rally an AI bubble. However, companies using AI are more optimistic than ever. At its Q2 2023 earnings call, President & Chief Executive Officer of Cadence Design Systems, Inc. (NASDAQ:CDNS), Anirudh Devgan, said:

“With its unparalleled promise, Generative AI is beginning to make a significant impact globally. Our dedicated focus on AI over the past several years, combined with our computational software expertise and invaluable data that lies at the core of AI, is uniquely positions us to deliver to this tremendous potential of this transformational technology.”

During this AI/tech bullish run, some AI stocks have experienced phenomenal stock price gains and the tech heavy NASDAQ-100 gained around to 43% year-to-date on August 29. Some of the fastest-growing AI stocks include Meta Platforms, Inc. (NASDAQ:META), NVIDIA Corporation (NASDAQ:NVDA), and Adobe Inc. (NASDAQ:ADBE).

Photo by Maximalfocus on Unsplash

Our Methodology

For this article we selected AI stocks that have registered the highest gains over the past 12 months. These companies have significant products and services related to AI or are dependent on AI for their operations. The list is ranked in ascending order of the number of hedge fund investors in each stock. The hedge fund sentiment around each stock was taken from Insider Monkey’s database of 910 elite hedge funds. We did not choose penny or small-cap stocks due to their high volatility. For AI penny stocks, you can check out the 10 Best AI Penny Stocks to Buy Now.

Fastest Growing AI Stocks To Buy

10. Symbotic Inc. (NASDAQ:SYM)

1-year stock price growth as of August 29: 220.28%

Number of Hedge Fund Holders: 8

Symbotic Inc. (NASDAQ:SYM) is an American company that provides automated warehouse systems using AI to its customers in the US and Canada. Retail giants such as Target Corporation (NYSE:TGT) and Walmart Inc. (NYSE:WMT) use the company’s services.

Symbotic Inc. (NASDAQ:SYM) and Japanese telecommunication services company, SoftBank Group Corp. (OTCPK:SFBQF) initiated a joint venture in July with a total investment of $100 million for a new warehouse-as-a-service business. The JV is called GreenBox Systems LLC and Symbotic Inc. (NASDAQ:SYM) will own around 35% of it.

In the second quarter, 8 hedge funds had a stake worth $24.711 million in Symbotic Inc. (NASDAQ:SYM), which takes the company to the 10th spot on our list of fastest-growing AI stocks. In the previous quarter, 5 hedge funds had a stake worth merely $2.2 million in the company.

9. SAP SE (NYSE:SAP)

1-year stock price growth as of August 29: 65.70%

Number of Hedge Fund Holders: 16

SAP SE (NYSE:SAP) is a German enterprise software and cloud computing company. In the last three months, it has been covered by 4 Wall Street analysts with 2 Buy and 2 Hold ratings. Their average price target is $147.25, compared to the stock price of $138.34 on August 28 market close.

SAP SE (NYSE:SAP) stock was owned by 16 hedge funds in the second quarter of 2023, compared to 14 in the previous quarter. Windacre Partnership was the company’s most prominent stakeholder in Q2 with 1.86 million SAP SE (NYSE:SAP) shares worth $254.836 million.

Ave Maria made the following comment about SAP SE (NYSE:SAP) in its Q1 2023 investor letter:

“SAP SE (NYSE:SAP) provides enterprise application software products worldwide. SAP is successfully transitioning from a perpetual license model to a SAAS model, which we believe will lead to an increase in TAM (total addressable market), higher margins, and lower capital intensity.”

8. C3.ai, Inc. (NYSE:AI)

1-year stock price growth as of August 29: 67.19%

Number of Hedge Fund Holders: 23

C3.ai, Inc. (NYSE:AI) is an American technology company primarily focusing on enterprise AI. It was founded in 2009 and is headquartered in California. C3.ai, Inc. (NYSE:AI) was owned by 23 hedge funds in the second quarter of 2023 with a combined stake value of $116.455 million, making it the 8th fastest-growing AI stock on our list. Philippe Laffont’s Coatue Management owned over 1.47 million shares of the company worth $53.713 million and was the most significant hedge fund holder of C3.ai, Inc. (NYSE:AI) for the second quarter in a row.

Despite being one of the most shorted stocks at the moment, C3.ai, Inc. (NYSE:AI) has experienced decent stock price growth in the last year and is one of the fastest-growing AI stocks.

7. Palantir Technologies Inc. (NYSE:PLTR)

1-year stock price growth as of August 29: 97.69%

Number of Hedge Fund Holders: 39

Palantir Technologies Inc. (NYSE:PLTR) is an American software company focusing on big data analytics. The company provides AI-powered services to defense, government, and private organizations. Palantir Technologies Inc. (NYSE:PLTR) was founded in 2003 and is headquartered in Denver, Colorado. The company’s stock went up 141% year to date and 97.7% in the last 12 months at the August 29 market close.

Hedge funds showed quite a lot of interest in Palantir Technologies Inc. (NYSE:PLTR) in the second quarter. D E Shaw increased its stake in the company by 151% to 29.65 million shares worth over $454.51 million and was the most prominent stakeholder. ARK Investment Management initiated a position in Palantir Technologies Inc. (NYSE:PLTR) in Q2 with 6.84 million shares worth $104.903 million. On top of that, Two Sigma Advisors increased its holdings in the company by over 1400% to nearly 6.177 million shares worth $94.69 million, making it the third largest stakeholder of the company.

6. Broadcom Inc. (NASDAQ:AVGO)

1-year stock price growth as of August 29: 75.74%

Number of Hedge Fund Holders: 72

Broadcom Inc. (NASDAQ:AVGO) is a California-based semiconductor and computer software company. It has integrated AI in its set-top boxes and broadband communications devices. Broadcom Inc. (NASDAQ:AVGO) also unveiled its new chip for wiring together supercomputers for AI in April.

Broadcom Inc. (NASDAQ:AVGO) announced its plans to acquire VMware, Inc. (NYSE:VMW) for $61 billion in April 2022. The merger was cleared by the UK’s anti-trust regulator on August 21. It is now awaiting clearance from China and Japan’s antitrust authorities. Broadcom Inc. (NASDAQ:AVGO) expects the deal to close on October 30.

Here is what Aristotle Atlantic Partners has to say about Broadcom Inc. (NASDAQ:AVGO) in its Q2 2023 investor letter:

“Broadcom contributed to outperformance, as the company is seen as a key beneficiary of the investment in generative Artificial Intelligence (AI) and Large Language Models (LLM). The company’s Application-Specific Integrated Circuit (ASIC) chips are being custom-built for customers to use in their data centers for accelerated computing. Broadcom’s networking chipsets are also expected to see increased levels of demand, as customers increase investments to enable the high-speed data transfer required by advanced AI training and inference. The company also announced a new multi-year supplier relationship with Apple, the company’s largest customer.”

5. Oracle Corporation (NYSE:ORCL)

1-year stock price growth as of August 29: 62.73%

Number of Hedge Fund Holders: 84

Oracle Corporation (NYSE:ORCL) is an American computer hardware, software, and cloud computing company headquartered in Texas. The company already has AI products in its portfolio. Nevertheless, it is still making investments in the generative AI segment. Oracle Corporation (NYSE:ORCL) announced the introduction of generative artificial intelligence features into its human resources software, Oracle Fusion Cloud HCM, on July 28.

On August 29, UBS analyst Karl Keirstead upgraded Oracle Corporation (NYSE:ORCL) from Neutral to Buy on the basis of the analyst’s belief that the company’s Oracle Cloud Infrastructure is being used increasingly by AI start-ups. The analyst also raised his price target to $140 from $120.

Oracle Corporation (NYSE:ORCL) is one of the most advanced AI companies in the market.

Madison Investments made the following comment about Oracle Corporation (NYSE:ORCL) in its second quarter 2023 investor letter:

“Oracle Corporation (NYSE:ORCL) reported a solid fiscal fourth quarter and provided guidance for the first quarter that continued to support solid growth for the company. Revenues grew 17% and were primarily driven by Cloud Services (up 29%) with Oracle’s cloud infrastructure (OCI) business growing 89% in the quarter. Oracle has messaged that this business has price-performance advantages as compared to the other infrastructure companies (Amazon, Microsoft, Google) and appears to be winning business as a result. On the earnings call, management made the case that OCI will play a significant role in the Generative AI workloads which bodes well for continued growth.”

4. Adobe Inc. (NASDAQ:ADBE)

1-year stock price growth as of August 29: 44.13%

Number of Hedge Fund Holders: 109

Adobe Inc. (NASDAQ:ADBE) is a California-based computer software company. The company has recently made strides in generative AI for creatives with Adobe Firefly. The company is looking to patent a system that is expected to introduce AI to the diversity, equity, and inclusion framework of organizations.

In the second quarter, Adobe Inc. (NASDAQ:ADBE)’s hedge fund holders increased to 109 from 99 in the previous quarter. Citadel Investment Group owned over 1.34 million of the company shares worth $657.605 million, making it the largest stakeholder in Adobe Inc. (NASDAQ:ADBE).

On August 17, Bank of America analyst Brad Sills upgraded Adobe Inc. (NASDAQ:ADBE)’s stock to Buy from Neutral and raised his price target to $630 from $575. The analyst believes that the company will experience incremental growth in 2024 due to AI.

Polen Capital made the following comment about Adobe Inc. (NASDAQ:ADBE) in its second quarter 2023 investor letter:

“While Adobe Inc. (NASDAQ:ADBE)’s growth has moderated from high teens to low teens during the past couple of years, Adobe continues to deliver solid growth, and management raised its full-year guidance during the most recent quarter. The company also introduced some AI product enhancements, which seem to have helped shift the narrative from “AI is going to be bad for Adobe” to “AI is going to be good.” Finally, the company continues to work towards the Figma acquisition.

It’s still uncertain whether antitrust regulators will allow this acquisition to close. That said, the stock seems to have been recovering from the initial reaction that the pricey acquisition indicated something more troubling about Adobe’s growth and competitive position. Solid ongoing fundaments have helped dispel that notion. We think it would be a big positive if the acquisition closes, but we remain confident in Adobe’s business even if it doesn’t.”

3. Salesforce, Inc. (NYSE:CRM)

1-year stock price growth as of August 29: 32%

Number of Hedge Fund Holders: 122

Salesforce, Inc. (NYSE:CRM) provides customer relationship management (CRM) software and application services to its clients. The company’s Salesforce Einstein helps organizations’ processes and data to utilize machine learning and advanced deep learning concepts. Salesforce, Inc. (NYSE:CRM) was founded in 1999 and is headquartered in California.

Salesforce, Inc. (NYSE:CRM) reported its Q2 FY 2024 earnings on August 30. The company posted a non-GAAP EPS of $2.12, exceeding the Wall Street expectations by 24 cents. Its revenue was up 11.4% year-over-year to $8.6 billion. For the third quarter Salesforce, Inc. (NYSE:CRM) expects a revenue of $8.70 billion to $8.72 billion and raised its full year revenue guidance to the range of $34.7 billion to $34.8 billion.

In the second quarter, Salesforce, Inc. (NYSE:CRM) stock was owned by 122 hedge funds.

The Ithaka Group said the following about Salesforce, Inc. (NYSE:CRM) in its first-quarter 2023 investor letter:

“Salesforce, Inc. (NYSE:CRM) is the largest pure-play cloud software company, holding a leading market share in customer relationship management applications and a top-five market share position in the company’s other clouds (Marketing, Service, Platform, Analytics, Integration, and Commerce). The company’s software subscription term-license model differs from the traditional perpetual-license software model in two respects: (1) the software is hosted on centralized servers and delivered over the internet, as opposed to traditional enterprise software that is loaded directly onto customers’ hard drives or servers; and (2) the revenue model is subscription-based, typically charging monthly fees per user as opposed to charging one-time licensing fees. The stock’s strong relative performance followed a strong F4Q23 earnings release that easily beat Street expectations on the top- and bottom-lines. In addition to the beat, management announced a number of initiatives that activist investors have been clamoring for, specifically a halt to large M&A transactions and a focus on operating profitability.”

2. NVIDIA Corporation (NASDAQ:NVDA)

1-year stock price growth as of August 29: 215.39%

Number of Hedge Fund Holders: 175

NVIDIA Corporation (NASDAQ:NVDA) has had an amazing year so far as its stock has gone up by 215.39% in the last twelve months and 240.79% year-to-date (YTD) as of the August 29 market close. 

Hedge funds were also quite bullish on NVIDIA Corporation (NASDAQ:NVDA)’s stock in the second quarter. According to the Insider Monkey database, 175 hedge funds held a stake in the company in the second quarter, compared to 132 in Q1. The total hedge fund investments increased from $12.3 billion in the first quarter to nearly $26 billion in Q2.

Rajiv Jain’s GQG Partners increased its stake in NVIDIA Corporation (NASDAQ:NVDA) by 70% to 13.938 million shares worth $5.896 billion and was the most significant stakeholder in the second quarter. NVIDIA Corporation (NASDAQ:NVDA)’s third largest hedge fund holder in Q2 was D E Shaw which increased its stake in the company by 232% to 4.3 million shares worth $1.82 billion.

Mairs & Power made the following comment about NVIDIA Corporation (NASDAQ:NVDA) in its second quarter 2023 investor letter:

“Regarding stock selection in the first half, NVIDIA Corporation (NASDAQ:NVDA) was a massive outperformer, up 189.54%. Amazon and Microsoft were also positive contributors, up 55.19% and 42.66%, respectively. All three stocks benefited from a renewed interest in growth stocks by investors in the first half of the year. Nvidia is the leading provider of processors used for artificial intelligence (AI) computation for both learning and inferencing, and its stock rallied significantly on a massive earnings report in the first quarter as cloud data center companies invested heavily in AI.”

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

1-year stock price growth as of August 29: 89.61%

Number of Hedge Fund Holders: 225

Meta Platforms, Inc. (NASDAQ:META) started this year with a stock price of nearly $125 and its stock price has been rallying ever since. The company’s stock closed at $297.99 on August 29, registering an almost 139% YTD increase. Among the US Big Five, Meta Platforms, Inc. (NASDAQ:META) has registered the highest YTD gain.

In the second quarter, Meta Platforms, Inc. (NASDAQ:META) stock was owned by 225 hedge funds with a stake worth $30.92 billion, up from 220 hedge funds with a stake worth $25.09 billion in the previous quarter. Tiger Global Management LLC increased its stake in the company by 15% and became Meta Platforms, Inc. (NASDAQ:META)’s largest stakeholder in Q2.

Meta Platforms, Inc. (NASDAQ:META)’s new addition to its AI portfolio was announced on August 24. The company is launching a large language model (LLM) called Code Llama. The LLM is Meta Platforms, Inc. (NASDAQ:META)’s new model for coding and is free for research and commercial use.

Giverny Capital Asset Management made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its second quarter 2023 investor letter:

“I have believed for a while that we’re better served with a lower weight to the tech giants – we own Alphabet (8.1% of our model portfolio at the end of June) and Meta Platforms, Inc. (NASDAQ:META) (5.2%) for a 13.3% exposure, or about half the Index’s weight in the giants. And while Alphabet’s 36% return for the first half and Meta’s 138% return were gratefully received, I’m pleased to report that if we strip out that contribution to our overall return, the other 23 stocks we own, constituting 85% of our portfolio (with cash making up the balance), were up 10.2% on a weighted basis.

GCAM owns two of the seven tech mega caps in Alphabet and Meta, and they enjoyed similar rises. As mentioned, Alphabet A&C shares rose 36% while Meta rose 138%. Together, they added 2.38 percentage points to the overall Index return, meaning these seven tech giants cumulatively generated 12.4 percentage points of return, or roughly three-quarters of the Index’s return.

Alphabet and Meta combined sport a $2.25 trillion market cap and between them should generate roughly $120 billion of pretax profit this year. That’s a multiple of 19 times pretax profit, a substantial discount to Microsoft and Apple, and an even larger discount to Amazon, Nvidia and Tesla.”

You can also look at the 10 Best Value Penny Stocks To Buy and the 15 Highest Paying Countries for Economists.

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Disclosure. None. 10 Fastest Growing AI Stocks To Buy is originally published on Insider Monkey.