Artificial intelligence is at the heart of the fourth industrial revolution, given its impact on various aspects of human life. From enhancing personal assistants, healthcare services, delivery and transportation, the technology has given rise to the new era of digitization. The technology has since found its way deep into the sea, to map and monitor pipelines carrying fuel and cables for power and communication.
While there have been concerns that huge stretches of these critical connectors lay unprotected deep in the sea, things are slowly changing. Just as drones have had a significant impact in transforming the way modern warfare is conducted, artificial intelligence is about to transform how the deep sea is monitored.
Seabed defense and warfare are already being transformed by AI-powered underwater systems. The military and governments are deploying drones and anti-mine robots in conjunction with surface ships, underwater sensors, and satellites. AI is increasingly used in these navigation, mapping, and underwater defense systems to evaluate and combine data from various sources.
North.io is a company leveraging AI to create systems that protect undersea technology and infrastructure. The company’s ultimate goal is to ensure transparency in the sea by monitoring thousands of miles of cable and other installations in real-time.
“In the future, unmanned maritime systems in the air and underwater are going to be active. AI will help us develop the systems that will enable us to identify and combat suspicious behavior underwater,” said Lt. Col. Rene Heise, a staff officer in the Critical Undersea Infrastructure Coordination Cell.
Nevertheless, the kind of accurate, real-time map of the ocean and objects that would be necessary for total undersea autonomy still faces several challenges. For example, today’s mine-clearing underwater vehicles usually only recognize familiar objects. Therefore, a threatening object may not be identified if it is not in the AI’s catalog.
The mapping and monitoring of the deep sea using AI underscores the role AI is likely to play in the future and the impact it is likely to have. Likewise, its free use underlines and affirms the growing calls for fewer regulations that spur innovation and development in the nascent sector.
The push comes as US tech giants call out Europe’s artificial intelligence industry, reiterating it is being held back by excessive regulation. Executives of two US tech giants have already raised concerns about the block’s strict approach to AI and machine learning.
“I think there is now broad consensus that European regulation around technology has its issues, and sometimes it’s too fragmented, like GDPR [General Data Protection Regulation], sometimes it goes too far, like the AI Act,” Chris Yiu, Meta’s director of public policy, told an audience of tech founders and investors at Techarena. In an effort to soften some aspects of the AI Act, big tech companies, in general, have been increasing their lobbying efforts and using more rhetoric against the EU’s approach to tech regulation.
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 in Q4 2024.
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).
A group of analysts studying data on a large monitor.
10. Gauzy Ltd. (NASDAQ:GAUZ)
Number of Hedge Fund Holders: 7
Gauzy Ltd. (NASDAQ:GAUZ) is an integrated light and vision control company that develops, manufactures, and supplies liquid crystal controllers and films. The company also utilizes artificial intelligence to develop and implement advanced driver assistance systems. On February 20, the company confirmed the inking of a strategic collaboration with MABA Industrial.
The strategic collaboration paves the way for Gauzy Ltd. (NASDAQ:GAUZ) to expand its footprint into South Korea as it seeks to accelerate the adoption of its AI-powered smart vision camera monitoring system for commercial vehicles. Gauzy is to leverage MABA Industrial’s expertise in mobility and established relationships with Hyundai and other OEMs to capture a substantial market share in the country’s commercial vehicle market with the AI-powered solution.
“We are thrilled to have MABA Industrial as one of our partners and bolster our presence in South Korea,” stated Eyal Peso, CEO of Gauzy. “Our expansion in APAC affords us a number of strategic benefits, including the opportunity to generate a sizable and steady new source of revenue for our growing Safety Tech division. “
9. Open Text Corporation (NASDAQ:OTEX)
Number of Hedge Fund Holders: 14
Open Text Corporation (NASDAQ:OTEX) is a technology company that offers information management products and services that help businesses manage, protect and integrate data and content. Additionally, the company utilizes artificial intelligence to develop intelligent content management solutions. The company launched the OpenText Core Threat Detection and Response system on February 21.
Available on Microsoft Azure, the AI-powered cybersecurity solution is designed to address external and internal threats. OpenText Core Threat Detection and Response stands out by leveraging AI algorithms to enhance threat detection and accuracy. It also comes with features that are adaptive to an organization’s unique environment. The new AI-powered solution should strengthen Open Text Corporation’s (NASDAQ:OTEX) prospects in the global Extended Detection and Response (XDR) market, valued at $1.7 billion in 2023, according to estimates from Research and Markets.
Muhi Majzoub, OpenText EVP of Security Products, explained, “Enterprises need a way to continuously adapt threat analysis to the unique behaviors of their organization without further straining security teams.”
8. Innodata (NASDAQ:INOD)
Number of Hedge Fund Holders: 15
Innodata (NASDAQ:INOD) is a global data engineering company that provides artificial intelligence (AI) data preparation services. It offers services such as data collection, data annotation, and data transformation. It also helps businesses use AI to automate operations. The company delivered solid fourth quarter and full year 2024 results on February 20, which affirms its transformation into a leading AI services provider. Its revenue in the quarter was up 127% year over year to $59.2 million, as net income came in at $10.3 million or $0.34 per basic share.
The robust revenue growth came as the company grew aggregate revenues from seven big tech customers, affirming strong demand for AI-powered solutions. Increased growth from the big tech customers is expected to support robust growth in 2025. Additionally, Innodata (NASDAQ:INOD) is well positioned to benefit from the AI-driven capital expenditure among the magnificent seven companies amid the AI boom and innovation in hardware optimization. Innodata is projecting revenue growth of at least 40% in 2025 due to a strong uptake of AI-powered solutions and services.
7. Upland Software, Inc. (NASDAQ:UPLD)
Number of Hedge Fund Holders: 15
Upland Software, Inc. (NASDAQ:UPLD) is a cloud-based software company that offers enterprise work management tools, including solutions for digital marketing, contact center services and sales productivity. On February 19, the company confirmed the launch of Sidekick, an AI-powered agent assistant that utilizes the power of AI search by Upland Panviva.
The AI-powered agent assistant is designed to provide critical real-time guidance that instantly improves customer experience. It also comes with sophisticated, cutting-edge AI search to enhance knowledge delivery. The new AI agent should reshape the contact center operations while also enabling robust knowledge management.
“For over two decades, Panviva has been the backbone of driving compliance for contact centers across highly regulated industries like healthcare, utilities, and banking. Now, we’re evolving to help these same customers harness the power of AI with governed knowledge management,” said Sean Coleman, Senior Vice President and General Manager of Knowledge and Contact Center Management solutions at Upland Software, Inc. (NASDAQ:UPLD).
6. SAP SE (NYSE:SAP)
Number of Hedge Fund Holders: 27
SAP SE (NYSE:SAP) is a technology company offering applications, technology, and services worldwide, allowing businesses to run more efficiently and profitably. The company is using artificial intelligence to enhance its core systems, products, and services. On February 20, it moved to accelerate AI-driven business transformation by integrating significant updates on its SAP Proffered Success offering. Adding a business AI accelerator workshop to SAP Proffered Success is part of an effort to transform AI adoption into an achievable process.
The Business AI Accelerator Workshop will offer crucial information, strategic frameworks, and a well-defined action plan for better business processes, data-driven decision-making, and improved customer experiences. By combining extensive knowledge, strategic frameworks, and state-of-the-art AI capabilities, the AI workshop tool enables businesses to realize their full potential through daring inventions and quantifiable business results.
5. NXP Semiconductors N.V. (NASDAQ:NXPI)
Number of Hedge Fund Holders: 44
NXP Semiconductors N.V. (NASDAQ:NXPI) is a technology company that designs and manufactures semiconductors for the automotive, industrial, and consumer markets. Its products include microcontrollers, processors, sensors, and connectivity modules. The company has expanded its portfolio with neural processing units (NPU) and AI software that deliver energy-efficient performance across neural networks. On February 20, analysts at Citi led by Christopher Danely upgraded the stock to a Buy from a Neutral and hiked the price target to $290 from $210.
The upgrade comes amid growing expectations that the analog semiconductor sector is on a recovery trajectory. NXP Semiconductors N.V. (NASDAQ:NXPI) is one of the companies well-positioned to benefit from the recovery. The company has already confirmed the acquisition of AI firm Kinara for $307 million as it seeks to enhance its processing portfolio with AI software and high-performance neural processing units.
4. Flex Ltd. (NASDAQ:FLEX)
Number of Hedge Fund Holders: 52
Flex Ltd. (NASDAQ:FLEX) is an electronic components company that provides manufacturing solutions to various brands. It also offers design, engineering and manufacturing services for artificial intelligence hardware. In the data center space, it specializes in creating and assembling high-performance computing components. On February 20, the company expanded its manufacturing operations with the opening of a new 400,000-square-foot facility in Dallas.
The new facility is tailored to enhance the company’s production capabilities for power infrastructure solutions. The facility’s primary focus will be on low-voltage switchgear, power distribution units, and power pod fabrication and assembly. The decision to enhance production capacity is in response to the growing need for dependable and effective power infrastructure brought on by the broad use of artificial intelligence (AI).
Expansion of production capacity comes at a critical moment when demands for AI infrastructure are driving up data center power requirements to unheard-of levels. The market for specialized power solutions is expanding at an exponential rate as businesses and major cloud providers compete to implement AI capabilities.
Chris Butler, President of Embedded and Critical Power at Flex, said, “As AI adoption accelerates, the need for reliable, efficient, and scalable power infrastructure grows. Our new Dallas facility positions us to deliver next-generation power infrastructure solutions that help customers maximize computing performance while reducing deployment times. We are committed to tackling the complex power challenges of AI-enabled data centers.”
3. Elastic N.V. (NYSE:ESTC)
Number of Hedge Fund Holders: 64
Elastic N.V. (NYSE:ESTC) is a search artificial intelligence (AI) company that delivers hosted and managed solutions designed to run in hybrid, public or private clouds and multi-cloud environments. On February 20, the company confirmed that its Elasticsearch Open Inference API integrates with Jina AI’s latest embedding models.
The integration underscores Elastic N.V.’s (NYSE:ESTC) commitment to offering generative AI solutions that enhance the development of innovative search experiences. Developers can now leverage Jina AI’s advanced AI tools to build semantic search and rapid answer general (RAG) applications at no extra cost. Over half of the Fortune 500 companies leverage Elastic’s search AI platform, which provides search, observability, and security solutions.
2. Snowflake Inc (NYSE:SNOW)
Number of Hedge Fund Holders: 85
Snowflake Inc (NYSE:SNOW) is a technology company that offers a cloud-based data warehousing platform that allows users to store, analyze, and securely share large volumes of data. It offers Snowflake Cortex a suite of AI features that use large language models to understand unstructured data. It also offers Snowflake ML, which provides functionalities for building traditional machine learning models.
On February 21, analysts at KeyBank Capital Markets reiterated their optimistic stance on the company with an Overweight rating and a $210 price target. The bullish buy rating follows a recent survey that showed Snowflake is well-positioned to benefit as online analytical processing becomes a key priority. The company is experiencing strong momentum on its new product offerings, such as data engineering, and has achieved over $200 million in annual recurring revenue. Cortex is expected to contribute a few percentage points to growth in fiscal year 2026.
1. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 107
Alibaba Group Holding Limited (NYSE:BABA) is an internet giant that offers e-commerce services in China and internationally. In addition, it offers cloud computing and payment services. The company delivered solid fiscal third-quarter results on February 20, bolstered by strong performance in the core business and aggressive expansion into artificial intelligence. Net profit came in at 48.945 billion yuan ($6.72 billion). The revenue was 280.154 billion yuan, which was higher than the analysts’ expectation of 279.34 billion yuan.
Alibaba Cloud Intelligence Group, its cloud computing and artificial intelligence division, saw a 13% increase in revenue to 31.742 billion yuan. The company’s AI-related products delivered triple-digit growth for the sixth consecutive quarter.
Alibaba CEO Eddie Wu said, “This quarter’s results demonstrated substantial progress in our ‘user first, AI-driven’ strategies and the re-accelerated growth of our core businesses.”
While we acknowledge the potential of Alibaba Group Holding Limited (NYSE:BABA) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BABA 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.
Hedge Fund Resource Center