xAI founder Elon Musk has raised billions in funding for his AI startup in the past few months. Recent comments from the eccentric billionaire suggest that he is planning to launch an AI-powered gaming studio through xAI that will rival the game studios that are owned by massive corporations. He made the remarks in a post on social networking platform X. The startup has ballooned in valuation over the past few years. The Grok developer recently raised $5 billion in new funding, bringing the valuation of the startup to $50 billion, according to a report by the Wall Street Journal.

Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.

Just like xAI, other AI startups are also turning heads in the venture capital world. For example, tech news platform TechCrunch reports that Pathway, an AI startup, just raised a $10 million Seed round to build live AI systems that, the company claims, think and learn in real-time as humans do. Per the report, the Pathway offering includes what it calls infrastructure components that power live AI systems, feeding on structured and unstructured data, meaning that enterprise AI platforms can make decisions on up-to-date knowledge. Customers so far include NATO and the French post office, the report adds.

Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.

For this article, we selected AI stocks by combing through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. 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).

Trending AI Stocks On Latest News and Ratings

9. Symbotic Inc. (NASDAQ:SYM)

Number of Hedge Fund Holders: 15 

Symbotic Inc. (NASDAQ:SYM) is an automation technology company that engages in developing technologies to improve operating efficiencies in modern warehouses. The AI business focuses on automating supply chain and warehouse operations. On November 27, Craig-Hallum analyst Greg Palm downgraded the stock to Hold from Buy with a price target of $25, down from $45, citing the company’s accounting mishap and associated credibility hit. While the advisory’s long-term view remains unchanged, it sees too much uncertainty to defend the stock at this point.

8. Zoom Communications Inc. (NASDAQ:ZM)

Number of Hedge Fund Holders: 39

Zoom Communications Inc. (NASDAQ:ZM) provides a unified communications platform in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. Following third-quarter earnings results, the firm announced it is rebranding as an AI-first platform. Eric Yuan, the CEO of the firm, elaborated on this recently in a blog post, highlighting that with this new brand direction, Zoom was highlighting tools such as its new AI Companion that was the heartbeat of the evolution. Per Yuan, over time, the capabilities of the Companion would translate into a fully customizable digital twin equipped with your institutional knowledge, freeing up a whole day’s worth of work.

7. Intel Corporation (NASDAQ:INTC)

Number of Hedge Fund Holders: 68  

Intel Corporation (NASDAQ:INTC) markets key technologies for smart devices. Pat Gelsinger, the CEO of the firm, recently visited the Memphis data center of AI startup xAI, praising xAI founder Elon Musk for building it in such a short space of time. In a post on social networking platform X, Gelsinger highlighted that the facility housed the Memphis Supercluster that uses Intel Xeon processors for its AI head node — the dedicated server that manages the entire 100,000-GPU-strong cluster.

6. Advanced Micro Devices, Inc. (NASDAQ:AMD)

Number of Hedge Fund Holders: 107

Advanced Micro Devices, Inc. (NASDAQ:AMD) operates as a semiconductor manufacturer. Latest reports suggest that the company recently published a BIOS and Workload Tuning Guide of straightforward settings recommendations for those running new EPYC Turin servers to optimize the performance of different workloads, like databases and Java to HPC and AI/ML software. The updates follow the release of the EPYC 9005 series processors last month. Per a report by hardware news platform Phoronix, the updates help those deploying new EPYC Turin servers for specific purposes to cater the platform for their targeted workloads.

5. Alphabet Inc. (NASDAQ:GOOG)

Number of Hedge Fund Holders: 160

Alphabet Inc. (NASDAQ:GOOG) is a California-based technology company that owns and runs the internet search engine Google. On November 29, the company announced that it would be bringing Gemini, the AI-powered digital assistant, to Android and iOS devices for Google Workspace users. The company also added that besides using the chatbot features as a standalone, Google Workspace users would also be able to directly leverage the on-device camera to use images as input.

4. NVIDIA Corporation (NASDAQ:NVDA) 

Number of Hedge Fund Holders: 193 

NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. Latest reports, published by tech news platform TechRadar, contend that the chipmaker will reveal the RTX 5090 cards at the CES 2025 show in January. Per the report, the AI-capable RTX 5090 cards would be a GPU targeted at professionals, rather than PC gamers, to justify a possible price hike. The RTX 5090 will reportedly feature a 22.2% increase in die size over the RTX 4090, which translates to better performance but a heftier price tag.

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

Number of Hedge Fund Holders: 235

Meta Platforms, Inc. (NASDAQ:META) engages in the development of products that enable people to connect and share with friends and family. Yann LeCun, the Chief AI Scientist at Meta, recently appeared on the WTF podcast. During his interview, LeCun said AI would play a key role in addressing the climate crisis. He described AI as a force multiplier for human intelligence, noting that AI had the potential to analyze intricate environmental patterns and deliver actionable insights. Per LeCun, traditional methods of addressing climate challenges often fell short due to the complexity of the systems involved. AI, however, offered the tools to identify trends, predict outcomes, and optimize resource management at an unprecedented scale, he contended.

2. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 279

Microsoft Corporation (NASDAQ:MSFT) is a Washington-based technology company. The tech giant recently partnered with professional services firm PwC for a research paper that explores how businesses can more successfully implement AI solutions. Per the recommendations from the study, companies should assess cloud infrastructures and consider how current cloud architecture meets future organizational needs. This is important because according to PwC, only a small number of businesses have so far benefited from integrating AI and cloud technology, allowing them to more readily unlock new value from data as they build new AI capabilities.

1. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 286  

Amazon.com, Inc. (NASDAQ:AMZN) operates as a technology conglomerate with core interests in the ecommerce business. On November 29, the company announced the availability of Prompt Optimization on Amazon Bedrock. The latest tool allows users to improve the performance of their Generative AI applications. In a blog post, the firm said that the new tool would optimize prompts for several use cases with a single API call or a click of a button on the Amazon Bedrock console. Amazon Bedrock supports Prompt Optimization for Anthropic’s Claude, Meta’s Llama, Mistral’s Large, and Amazon’s Titan Text Premier models.

While we acknowledge the potential of Amazon.com, Inc. (NASDAQ:AMZN) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Amazon.com, Inc. (NASDAQ:AMZN) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

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