AI-Preferred Stocks Garnering Favor among Prominent Hedge Funds
In the realm of investing, hedge funds often utilize sophisticated financial analysis to seek out stocks with superior value or growth potential. One sector that has garnered considerable attention is artificial intelligence (AI). Hedge funds have been keenly interested in AI stocks, particularly tech giants that have seamlessly integrated AI into their core business operations.
To assess which AI stocks hedge funds favor, our analysis utilized several metrics, including net change in holdings, percentage of hedge funds holding the stock, appearance in top 10 holdings, quarter-over-quarter market cap changes, and put/call ratio.
Here are the top 5 AI stocks favorite among hedge funds:
- Microsoft (NASDAQ: MSFT)With 45% of hedge funds holding Microsoft and more than 500 appearing in top 10 holdings, Microsoft is a popular choice. The company collaborates with AI pioneers like OpenAI, and in 2023, it launched Microsoft Copilot, a cutting-edge AI companion.
- Amazon (NASDAQ: AMZN)Amazon ranks second, with more than 40% of hedge funds holding the stock and 393 appearing in top 10 holdings. AI is a fundamental aspect of Amazon's overall success, powering services like Alexa, forecasting, and supply chain optimization.
- Meta Platforms (NASDAQ: META)With a low put/call ratio, indicating a bullish sentiment, Meta Platforms is a hit with hedge funds. The company has released several AI tools, such as its massive language model, Llama, and Meta AI Assistant, and explore AI advertising solutions.
- Nvidia (NASDAQ: NVDA)Nvidia is another top choice among hedge funds with over 36% of hedge funds holding the stock. This tech giant manufactures graphics processing units (GPUs) ideal for training and running AI models. With Nvidia AI Enterprise, businesses can deploy AI models in cloud environments.
- Alphabet (Google) (NASDAQ: GOOGL)The holding company behind Google is loved by hedge funds, boasting 38% of hedge funds' ownership. AI powers Google's core products like search tools, Google Maps, YouTube, and Gmail, and it also provides a proprietary AI assistant called Gemini.
Here are five AI stocks hedge funds prefer less:
- Synopsys (NASDAQ: SNPS)Synopsys is not a significant holding for many hedge funds, with a market cap that dropped by 16.41% quarter-over-quarter. Despite this, the company utilizes AI tools to speed up chip development and design, offering a portfolio called Synopsys.ai.
- Arm Holdings (NASDAQ: ARMH)Few hedge funds invest in Arm Holdings, which is in the top 10 holdings of only five hedge funds. The company leverages AI-enabled chip designs and licenses out chip designs to receive royalties from companies using them.
- IonQ (NYSE: IONQ)Quantum computing company IonQ is the least popular AI stock, with less than 3% of hedge funds ownership. IonQ collaborates with leading AI companies, including Nvidia, Amazon, Microsoft, and Dell, to explore quantum AI and develop more powerful AI models.
- ASML Holding (NASDAQ: ASML)As a manufacturing company supplying semiconductors and chips, ASML Holding is not as popular as other AI stocks. Only 15% of hedge funds hold ASML stock, and it is a top 10 holding for 14.
- Mobileye Global (NASDAQ: MBLY)Mobileye Global is not as popular as other AI stocks, with only 4% of hedge funds ownership. This autonomous driving company aims to leverage AI in its Advanced Driver-Assistance Systems (ADAS) and autonomous vehicle projects, although it faces stiff competition from Chinese firms.
For individual investors, hedge fund interest in AI companies can provide valuable insight into potential investment opportunities. By following the same approach as hedge funds, investors can add different types of AI stocks to their portfolios, focusing on companies that have integrated AI into their overall strategy. One should always conduct thorough research and consider their investment objectives before making any investment decisions.
Following the analysis, it was discovered that hedge funds have a strong interest in integrating AI into their investment strategies, particularly in tech giants like Microsoft, Amazon, Meta Platforms, Nvidia, and Alphabet. These companies have seen significant investment from hedge funds due to their use of AI in various operations, such as Microsoft's collaboration with OpenAI and the launch of Microsoft Copilot, or Amazon's AI-powered services like Alexa.
To further explore the world of AI finance, researchers could conduct more in-depth studies on the role of machine learning algorithms in financial prediction models or investigate the impact of blockchain technology and cryptocurrencies on the financial sector. By bridging the gap between AI research and finance, investors can make more informed decisions and potentially identify promising investment opportunities in the AI space.