A very adaptable tool, generative artificial intelligence has been used in various fields. As a result, it could develop into a general-purpose technology that can evolve into a machine capable of carrying out any task that a human can. Given that the generative AI market is growing at a compound annual growth rate of 34.20%, according to Research and Markets, it has sparked an arms race between companies and, most recently, between countries.

A week into office, President Donald Trump rolled back Biden-era artificial intelligence safety and security measures. The rollback is part of the new administration’s bid to speed and accelerate generative AI development as the US seeks to win the AI race against China.

To maintain global leadership in AI technology, “we must develop AI systems that are free from ideological bias or engineered social agendas,” Trump’s order says.

Trump’s Executive Order overturned President Joe Biden’s 2023 policy, which required AI developers to perform safety testing and report findings to the government prior to releasing systems that could endanger public health, national security, or the economy.

According to the Trump administration, the Biden policy “established unnecessarily burdensome requirements for companies developing and deploying AI that would stifle private sector innovation and threaten American technological leadership.”

Additionally, the Biden executive order demanded that deepfakes be watermarked, that government agencies establish AI testing standards that consider national security threats, and that federal law enforcement and intellectual property regulators change how copyrighted works are used in AI training. The previous administration “hampered the private sector’s ability to innovate in AI by imposing government control over AI development and deployment,” according to Trump’s executive order.

The removal of the safety and security measures is being portrayed as a floodgate, opening for AI development, which could hasten advancements in the still-emerging field but also present risks. Nevertheless, the Consumer Federation of America and Mozilla have written a letter urging the White House to maintain “key rules” for transparency and testing in artificial intelligence.

“Without guardrails like testing and transparency on an AI system before it’s used — guardrails so basic that any engineer should be ashamed to release a product without them — seniors, veterans, and consumers will have their benefits improperly altered and their health endangered,” they wrote. “We call on you to keep key rules about testing and transparency for safety- and rights-impacting AI in place.”

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

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9. Perfect Corp. (NYSE:PERF)

Number of Hedge Fund Holders: 9

Perfect Corp. (NYSE:PERF) is an artificial intelligence software as a Service Company that provides artificial intelligence (AI) and augmented reality (AR) powered solutions for the beauty, fashion, and skincare industries. The leading AI and fashion technology company announced on January 29th the launch of its groundbreaking AI Frizzy Hair Analyzer, which marked a significant advancement in personalized healthcare.

AI Frizzy Hair Analyzer is the latest addition to Perfect Corp.’s (NYSE:PERF) vast portfolio of AI tools, including Hair Texture Analysis, Hair Length Analysis, Hair Color Try-On, and Hairstyles Try-On. It is intended to provide previously unheard-of levels of personalization in the hair care sector by utilizing artificial intelligence to uncover the mysteries of frizz. With the help of this cutting-edge technology, brands can now provide genuinely personalized experiences that appeal to their target audience. Brands can provide individualized product recommendations and point customers toward the best options for their particular hair needs by offering precise and immediate hair frizz analysis.

8. Vontier Corporation (NYSE:VNT)

Number of Hedge Fund Holders: 24

Vontier Corporation (NYSE:VNT) provides mobility ecosystem solutions worldwide. It has made a name for itself as a leading global provider of critical technologies and solutions to connect, manage and scale the mobility ecosystem. On January 29th, the company announced the opening of a state-of-the-art Capability Center in Bengaluru, India.

The opening of the new center is part of Vontier Corporation’s (NYSE:VNT) effort to serve and accelerate the development of artificial intelligence technology initiatives. Additionally, the center underscores the company’s focus on India as a hotbed of talent in software development and AI innovation. The center is expected to play a pivotal role in enhancing the company’s efforts to come up with productivity and automation solutions that are highly needed in the connected mobility ecosystem.

7. NICE Ltd. (NASDAQ:NICE)

Number of Hedge Fund Holders: 24

NICE Ltd. (NASDAQ:NICE) is a technology company that provides global cloud platforms for AI-driven digital business solutions. It offers CXone, a native cloud open platform, and Enlightens, an AI engine for the customer engagement market. On January 29th, analysts at DA Davidson reiterated a Buy rating on the stock with a $225 price target. The bullish rating comes amid concerns that the stock is undervalued owing to its strong financial results and robust fundamentals.

Additionally, the analysts touted NICE Ltd.’s (NASDAQ:NICE) commitment to staying ahead of market trends and providing AI-driven digital business solutions. The company has invested in artificial intelligence platform innovation while expanding its Contact Center as a Service Business capabilities. It is developing its platform to provide more sophisticated solutions and broaden its scope beyond its primary CCaaS products. This expansion is anticipated to create new opportunities for client interaction and growth. The investments are already paying off, given that NICE third quarter revenues were up by 15% to $690 million, attributed to strong demand for the company’s AI tools.

6. SAP SE (NYSE:SAP)

Number of Hedge Fund Holders: 36

SAP SE (NYSE:SAP) and its subsidiaries provide applications, technology, and services worldwide. It offers SAP S/4HANA, which includes finance, risk, and project management software capabilities. On January 30th, analysts at JMP Securities reiterated a Buy rating on the stock while hiking the price target to $330 from $300. The upgrade came on the company delivering stellar financial results driven by strong demand for its artificial intelligence-powered solutions.

The price hike also comes days after CEO Christina Klein reiterated that DeepSeek AI technology has affirmed the tremendous opportunity for SAP SE (NYSE:SAP) and other enterprise software companies to provide AI-powered solutions. “When you are selling software as a service and looking at our strategy, it’s actually good news,” Klein said.

According to the executive, the fact that it is possible to come up with AI innovators at a fraction of the cost should eventually benefit enterprise software companies. The CEO also confirmed that they have been testing AI technology and are considering adding DeepSeek to SAP’s AI Hub. Additionally, the company is focused on its growth strategy through the RISE program and is on course to triple support revenue from €11 billion.

5. Okta, Inc. (NASDAQ:OKTA)

Number of Hedge Fund Holders: 47

Okta Inc. (NASDAQ:OKTA) is a technology company that offers Okta’s suite of products and services used to manage and secure identities, such as Single Sign-On, which enables users to access applications in the cloud or on-premises from various devices. The stock has started the year on a roll, rallying by more than 20% as investors take note of the tremendous opportunity up for grabs with the integration of AI-driven features across the company’s Customer Identity Cloud and Workplace Identity Cloud.

The integration of AI features was the catalyst behind the company inking a strategic partnership with the McLaren Formula 1 team on January 28th. While the strategic partnership expands Okta Inc.’s (NASDAQ:OKTA) client base, it also allows the McLaren racing team to leverage AI-powered AI-powered tools to improve its apps and platforms. In order to help McLaren Racing run more safely and effectively, Okta will help the team further simplify its digital infrastructure and enhance security features.

4. Snowflake Inc (NYSE:SNOW)

Number of Hedge Fund Holders: 71

Snowflake Inc (NYSE:SNOW) provides a cloud-based data platform for various organizations. Its platform offers Data Cloud, which enables customers to consolidate data into a single source of truth to drive meaningful business insights, build data-driven applications, and share data and data products. On January 30th, reports emerged indicating that the company plans to acquire startup Redpanda as it looks to strengthen its data analysis offerings amid the artificial intelligence revolution.

The deal comes as Snowflake Inc (NYSE:SNOW) has benefited from the artificial intelligence sector’s increased demand for cloud services over the previous two years. The company recently partnered with Anthropic, an AI company, to expand its cloud services. It’s also developing AI agents, programs that can carry out repetitive tasks on their own, as part of its AI offerings, much like other major technology companies like Microsoft Corporation and Salesforce.

Similarly, on January 28th, Snowflake Inc (NYSE:SNOW) confirmed signing a strategic partnership with Alloy.ai, a leading data integration and retail analytics solutions provider. The two companies are coming together to make it easier for customers to make business decisions and drive innovations. It will also allow consumer brands to connect to the alloy.ai marketplace of over 350 retailer data integrations.

3. Datadog, Inc. (NASDAQ:DDOG)

Number of Hedge Fund Holders: 71

Datadog, Inc. (NASDAQ:DDOG) is a software infrastructure company that operates an observability and security platform for cloud applications. On January 28th, analysts at Stifel downgraded the stock from a buy to a hold and cut the price target to $140 from $165. The downgrade comes amid expectations that the company will experience slower revenue growth and margin pressures in 2025. In contrast, the company has been serving solid sales growth numbers, with revenues climbing 26% yearly in the third quarter amid strong demand for AI-enhanced cybersecurity products.

Additionally, Datadog, Inc. (NASDAQ:DDOG) is well-positioned to continue experiencing strong demand for its AI-powered cloud monitoring and security solutions. Market.us, a market research firm, projects that through 2033, the use of AI in the observability space will grow at a compound annual rate of 22.5% to boost its growth. Datadog has been establishing itself in the cloud observability market by incorporating AI into its products.

2. ServiceNow, Inc. (NYSE:NOW)

Number of Hedge Fund Holders: 78

ServiceNow, Inc. (NYSE:NOW) is a technology company that provides end-to-end intelligent workflow automation platform solutions for digital businesses. It is one of the companies that have been baking generative artificial intelligence features into its products. Likewise, on January 30th, Rob Oliver of research firm Baird reiterated a Buy rating on the stock with a $1200 price target.

The buy rating came on the heels of ServiceNow, Inc. (NYSE:NOW), which issued a fiscal year sales outlook that fell short of expectations. The software application company expects subscription revenue of about $12.7 billion against the $12.9 billion analysts predicted. In defense of the lower-than-expected sales outlook, ServiceNow insists it is focused on adopting more generative artificial intelligence products rather than generating significant revenue from the tools in the short term.

According to ServiceNow, Inc. (NYSE:NOW), its generative AI tools will have more pay-as-you-go pricing starting in 2025. According to the company, this change will result in the foregoing of incremental new subscriptions up front in favor of accelerating adoption and gradually monetizing growing usage.

1. Oracle Corp (NYSE:ORCL)

Number of Hedge Fund Holders: 91

Oracle Corp (NYSE:ORCL) is a software infrastructure company that offers products and services that address enterprise information technology environments worldwide. Days after announcing a $500 billion Stargate project, the company has unveiled AI agents as it targets opportunities in the manufacturing sector.

On January 30th, Oracle Corp (NYSE:ORCL) confirmed that its new AI agents are designed to help supply chain workers across various jobs, from procurement to sustainability. The new AI tools should help ease the administrative burden by streamlining workflows and automating routine tasks. The unveiling of the latest AI agents seeks to bolster the company’s cloud infrastructure unit, the revenue of which was up by 52% to $2.4 billion.

As we acknowledge the growth potential of Oracle Corp (NYSE:ORCL), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ORCL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.

Disclosure: None. This article was originally published at Insider Monkey.