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In this piece, we will take a look at the 12 best AI stocks to buy now. For more stocks, head on over to 5 Best AI Stocks to Buy Now.
Artificial intelligence and machine learning are at the heart of the technological revolution of late. These technologies, like smartphones, are near ubiquitous in their nature since they have the potential to affect nearly every major industry.
Artificial intelligence involves using patterns in existing datasets to 'infer' or make decisions. It is most commonly referred to in the context of robots or smart assistants carrying out tasks that would normally be assigned to humans. The machines carry out these tasks by using predefined data sets that have classes and labels assigned to them and then use these classes to categorize new information or inputs through these parameters. This allows for decisions that mimic human behavior to an extent. A subset of artificial intelligence is machine learning, which also uses existing data sets to generate inferences and insights. There are two categories of machine learning, namely supervised and unsupervised learning. The former sees the researcher assign labels to the data for the machine to then use these labels to sort out new data, while the latter involves the computer generating the labels by itself.
These techniques help industries such as healthcare, drug development, and oil and gas exploration generate new insights from their data to improve performance and create new products. Naturally, the applications also paint an optimistic future for the industry. A report from Fortune Business Insights shares that the artificial intelligence industry is worth $347 billion this year, and from now to 2029 it will grow at a mind blowing compounded annual growth rate (CAGR) of 20.1% to sit at $1.3 trillion at the end of the forecast period.
This makes artificial intelligence one of the few multibillion dollar industries that have a double digit CAGR. Fortune Business Insights highlights that practical applications such as those in the food and beverages industry, logistics, automotive, and retail will drive this growth. Additionally, it notes that healthcare will constitute the largest chunk of the growth, with an unbelievable 150% rate. Other drivers include the Internet of Things (IoT) gadgets and the growing use of robotics. North America represented nearly half of the market in 2020, and Asia Pacific will be the fastest growing region during the time period.
Today's list will look at some of the top artificial intelligence firms in the industry, and these range from software and hardware providers to firms that have made AI a centerpiece of their business model. Some big ticket names are Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), and Amazon.com, Inc. (NASDAQ:AMZN).
Our Methodology
We picked the most popular AI stocks among the 920 elite hedge funds tracked by Insider Monkey as of the end of the third quarter of 2022.
Best AI Stocks to Buy Now
12. SAP SE (NYSE:SAP)
Number of Hedge Fund Holders: 17
SAP SE (NYSE:SAP) is a German company that provides enterprise resource planning software. Its products allow firms to manage their daily operations and integrate data under a single platform from multiple divisions such as finance, manufacturing, and supply chain management. The company is headquartered in Walldorf, Germany.
SAP SE (NYSE:SAP)'s platform provides users with a host of artificial intelligence solutions that allow them to clear their payments, use product recommendations to grow revenue, enable inventory planning, and automate their accounts payable. Despite a slowing macroeconomic environment, SAP SE (NYSE:SAP)'s cloud computing revenues grew by a strong 36% annually in its third fiscal quarter, and are further estimated to grow at a 17.9% CAGR between 2022 and 2027.
By the end of this year's third quarter, 17 out of the 920 hedge funds polled by Insider Monkey had invested in SAP SE (NYSE:SAP).
Out of these, Ken Fisher's Fisher Asset Management is SAP SE (NYSE:SAP)'s largest investor. It owns 6.7 million shares that are worth $549 million.
Polen Capital mentioned the company in its Q3 2022 investor letter. Here is what the fund said:
“SAP SE (NYSE:SAP) is Europe’s largest software company and the global leader in enterprise resource planning (ERP) software. ERP is a software category that is particularly critical to business functions, and, therefore, has high retention rates even in times of economic stress. For the past several years, SAP has been going through several transitions, including moving to cloud-based SaaS (Software as a service) solutions and an initiative to better integrate its various software solutions. In recent quarters, we have seen increasing evidence that both transitions are being successfully executed, and the result should be a faster-growing, more consistent, higher margin, and more advantaged business. As investment costs from these transition programs wane, and as the benefits of higher growth continue, we expect that earnings will grow at a double-digit rate from next year (2023) onwards. In light of this, we believe the valuation is very attractive for longterm investors.”
Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN) are met by SAP SE (NYSE:SAP) in our list of top artificial intelligence (AI) firms.
11. UiPath Inc. (NYSE:PATH)
Number of Hedge Fund Holders: 26
UiPath Inc. (NYSE:PATH) is an American company that provides an automation platform that lets its customers use artificial intelligence to record daily operations, automate processes, and create new automation processes. The firm is headquartered in New York, New York.
UiPath Inc. (NYSE:PATH)'s UiPath platform is incomplete without artificial intelligence. It lets developers create AI components by dragging and dropping components for robotic process automation (RPA). These robots can also use computer vision to detect objects the way that a human would, and they can be programmed to work with documents as well.
Insider Monkey's Q3 2022 survey of 920 hedge funds outlined that 26 had held a stake in UiPath Inc. (NYSE:PATH).
UiPath Inc. (NYSE:PATH)'s largest shareholder is Catherine D. Wood's ARK Investment Management which owns 46 million shares that are worth $581 million.
ClearBridge Investments mentioned the firm in its Q3 2022 investor. Here is what the fund said:
“Over the last three months, we similarly exited UiPath Inc. (NYSE:PATH) due to a change to our original thesis as we believe a new go-to-market strategy for its automation software could impact near-term execution. While we think process automation is a growing market, in a slowing macro environment single solutions may be more vulnerable than the platform solutions of software providers who can bundle products to meet a wide range of needs. In addition, the company has a material component of sales sourced in Europe where the economy is more vulnerable.”
10. Verisk Analytics, Inc. (NASDAQ:VRSK)
Number of Hedge Fund Holders: 40
Verisk Analytics, Inc. (NASDAQ:VRSK) is a data analytics company whose products serve customers in the insurance underwriting, finance, risk analytics, and economic forecasting industries. The firm is headquartered in Jersey City, New Jersey.
Verisk Analytics, Inc. (NASDAQ:VRSK)'s artificial intelligence platform is called Verisk Vai and it lets the insurance industry use natural language processing to communicate with machines, computer vision, neural networks, and machine learning for generating insights.
40 out of the 920 hedge funds part of Insider Monkey's survey for this year's third quarter had invested in Verisk Analytics, Inc. (NASDAQ:VRSK).
Charles Akre's Akre Capital Management is Verisk Analytics, Inc. (NASDAQ:VRSK)'s largest investor through a $416 million stake that comes via 2.4 million shares.
9. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 40
International Business Machines Corporation (NYSE:IBM) is one of the oldest technology companies in the world since it was set up in 1911 and is headquartered in Armonk, New York. The firm has been through the thick and thin of the technology industry and has transformed itself to meet these trends.
International Business Machines Corporation (NYSE:IBM) lets its customers revamp their workflows and operations with artificial intelligence to improve business outcomes and improve other capabilities. These enable firms to improve customer interactions with virtual agents, scale up artificial intelligence deployment, and drive innovation. International Business Machines Corporation (NYSE:IBM) was also ranked as the world's top artificial intelligence firm by IDC in 2021.
Insider Monkey scanned 920 hedge fund portfolios for this year's third quarter to discover that 40 had invested in International Business Machines Corporation (NYSE:IBM).
Out of these, International Business Machines Corporation (NYSE:IBM)'s largest shareholder is Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital which owns 4.3 million shares that are worth $515 million.
8. ANSYS, Inc. (NASDAQ:ANSS)
Number of Hedge Fund Holders: 44
ANSYS, Inc. (NASDAQ:ANSS) is an engineering simulation software provider. This lets engineers develop and design their products, by studying the interaction between structures, heat transfer, fluid dynamics, and electronics. The company is headquartered in Canonsburg, Pennsylvania.
ANSYS, Inc. (NASDAQ:ANSS) uses artificial intelligence to generate simulations and identify parameters that enable users to run thousands of parameters to find the perfect mix for their products. This also speeds up simulations by a staggering 100 times by training neural networks for advanced generative insights.
By the end of 2022's third quarter, 44 out of the 920 hedge funds polled by Insider Monkey had held a stake in ANSYS, Inc. (NASDAQ:ANSS).
ANSYS, Inc. (NASDAQ:ANSS)'s largest investor is Robert Joeseph Caruso's Select Equity Group which owns 907,395 shares that are worth $201 million.
7. Autodesk, Inc. (NASDAQ:ADSK)
Number of Hedge Fund Holders: 62
Autodesk, Inc. (NASDAQ:ADSK) is a software company that provides design and engineering products. These let engineers, designers, and architects plan and design their products. The company is headquartered in San Rafael, California.
The primary artificial intelligence component of Autodesk, Inc. (NASDAQ:ADSK)'s products is what it calls Generative Design. This process lets architects and others use artificial intelligence to sift through a myriad of different scenarios to balance out their design objectives and create a perfect solution. Other AI tools include Spacemaker and BIM 360.
As of Q3 2022, 62 out of the 920 hedge funds part of Insider Monkey's research had bought Autodesk, Inc. (NASDAQ:ADSK)'s shares.
Autodesk, Inc. (NASDAQ:ADSK)'s largest investor is Rajiv Jain's GQG Partners which owns 2.8 million shares that are worth $539 million.
6. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 67
Oracle Corporation (NYSE:ORCL) is a technology company that provides a cloud computing platform, an enterprise resource planning (ERP) software suite, and a database system. The firm is headquartered in Austin, Texas, the United States.
Oracle Corporation (NYSE:ORCL) provides customers with a variety of artificial intelligence solutions under the Oracle AI platform. These include using pretrained models to let users use their own data for easier adoption, machine learning solutions, and applications for software as a service (SaaS) services. These are used for several different purposes, such as AI chatbots, disruption minimization and mitigation, and predictive modeling.
Insider Monkey studied 920 hedge fund portfolios for their third quarter of 2022 investments to discover that 67 had held a stake in Oracle Corporation (NYSE:ORCL).
Out of these, Jean-Marie Eveillard's First Eagle Investment Management is Oracle Corporation (NYSE:ORCL)'s largest shareholder. It owns 25 million shares that are worth $1.5 billion.
Oracle Corporation (NYSE:ORCL) is a top artificial intelligence (AI) stock, joining others such as Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), and Amazon.com, Inc. (NASDAQ:AMZN).
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Disclosure: None. 12 Best AI Stocks to Buy Now is originally published on Insider Monkey.
