10 Hidden AI Stocks to Buy Now (2024)

In this article, we will talk about the 10 hidden AI stocks to buy now.

Collaborative Partnerships in AI

Research and development in artificial intelligence began in academia and dominated the sector until the early 2000s. Later, this pattern switched up and industry took over AI with higher investment, research, and cheaper inputs. Investments in AI by businesses are also almost always followed by commercial applications, making it a more profitable activity than academia.

While these commercial relationships flourish, many companies focus on taking collaborative approaches to partnerships, revolutionizing the AI industry. By partnering with tech giants, such companies are accelerating AI adoption, driving vertical growth through specialized models, and increasing demand for powerful computing resources. This strategic approach is shaping the future of AI.

This was recently discussed in another article, 7 Most Popular AI Penny Stocks Under $5. Here’s an excerpt from it:

“OpenAI’s approach to fostering collaborative partnerships instead of competing directly with tech giants makes it an exceptional model. Macquarie’s Fred Havemeyer (lead software equity research analyst) praised GPT 4 for its “emotional intelligence”. The growing demand for AI chips, exemplified by OpenAI’s use of over 1.7 trillion parameters in its GPT 4 model, will further help NVIDIA and other AI chip manufacturers grow.

On August 20, Bloomberg reported that OpenAI is releasing a feature that will allow businesses to use their company data to customize GPT 4 so that it can be trained on additional information for niche tasks. This is an example of letting companies fine-tune the AI model to act as a customer-service chatbot for their subject areas. According to DeepL CEO, Jarek Kutylowski, specialised AI models are essential for companies to grow vertically.”

Ever since it was founded in 2015, this research company has promoted open research and collaboration within the AI community. By sharing its findings and models, OpenAI encourages other researchers and organizations to build upon its work. This has accelerated advancements in AI and fostered a more inclusive environment.

OpenAI partnered with Microsoft so that the tech giant’s investment ($1 billion in 2019) could facilitate deep integration of OpenAI’s models into its products. Azure offers these models as compliance-ready solutions, crucial for industries requiring high data security.

This was also followed by Brazil’s partnership with the tech giant to use OpenAI to reduce judicial costs. By automating tasks, the Brazilian judiciary is expediting case processing and improving efficiency, saving costs in public sectors.

In a recent discussion on CNBC, Barton Crockett from Rosenblatt Securities and Amit Daryanani from Evercore ISI both agreed that AI is crucial for Apple’s future success. Crockett emphasized that AI offers a unique opportunity to reinvigorate The company’s device ecosystem and that consumers are increasingly valuing AI capabilities in their tech devices, and it seems to be falling behind in this regard. He suggested that partnerships with AI companies like OpenAI could help it bridge this gap and enhance its offerings.

According to reports from Bloomberg and The Wall Street Journal, OpenAI is reportedly seeking significant new funding, potentially valuing the company at over $100 billion. The investment round, led by Thrive Capital, highlights the intensifying competition among tech giants for a dominant position in the AI industry.

In August 2024, WebProNews reported that OpenAI’s user base doubled to over 200 million in a year and its annual revenue exceeded $2 billion. Over 90% of Fortune 500 companies now use OpenAI products. However, maintaining lead requires addressing practical, safety, and user-friendliness concerns. OpenAI’s plans, including its new search engine, SearchGPT, aim to address these challenges and solidify its position. CEO Sam Altman believes SearchGPT can significantly improve search capabilities.

These instances leave us thinking about whether it’s collaboration or competition that can help AI progress fastest. As the Managing Partner at Boldsquare, Dylan Jones points out, strategic partnerships can significantly impact a company’s valuation. Tech giants’ moves indicate a calculated effort to maintain their AI leadership, even if it means blurring the lines between collaboration and competition.

In a discussion at CNBC’s ‘Squawk Box’, CoreWeave co-founder and CEO, Mike Intrator, said that the demand for AI infrastructure is relentless and has been in a state of severe disequilibrium for the past 2.5 years.

He believes that the demand for Nvidia chips is skyrocketing, while the rest of the industry is trying to keep up with it, including CoreWeave. According to Intrator, CoreWeave and its clients anticipate significant growth in AI infrastructure demand. Due to limited industry capacity, clients are struggling to train and serve AI models. CoreWeave, with its ability to provide large-scale AI infrastructure, is well-positioned to meet this growing demand.

However, startups often suffer at the cost of these partnerships, failing to compete with tech giants. Still, many companies are emerging and progressing at a good pace. In this context, we are here with a list of the 10 hidden AI stocks to buy now.

Methodology

To compile our list, we reviewed media reports and watched Wall Street analysts’ interviews to determine under-the-radar and hidden AI stocks. We compiled a list of 20 potential stocks and selected the 10 most popular among elite hedge funds that are expected to be key beneficiaries of the secular trends in artificial intelligence. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 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).

10 Hidden AI Stocks to Buy Now

10. SoundHound AI (NASDAQ:SOUN)

Number of Hedge Fund Holders: 15

SoundHound AI (NASDAQ:SOUN) is an application software company that uses voice AI in speech recognition and understanding, allowing users to interact with technology using their voice. It is used by many companies across a range of products from smart home devices to automotive systems.

This company was the first to introduce ChatGPT-like capabilities to in-vehicle assistants in Japan and Latin America. By partnering with Perplexity, it has integrated cutting-edge online LLMs into its SoundHound Chat AI which will be released soon.

SoundHound AI (NASDAQ:SOUN) recently announced the acquisition of the AI startup, Amelia AI, for $80 million in the second quarter of 2024. Amelia offers customizable solutions for businesses and has clients like BNP Paribas, Teva, and Fujitsu. The full-year 2024 revenue guidance is at $80 million, while that for 2025 is $150 million, where $45 million will come from Amelia. In June, the company also bought Allset, an ordering platform for restaurants.

The company has a history of 50% revenue growth per year since 2021. This quarter the company recorded a 53.83% year-over-year increase in sales. The subscriptions and bookings backlog doubled year-over-year, and annual query volume exceeded 5 billion.

Despite growing interest due to AI advancements and partnerships, SoundHound AI (NASDAQ:SOUN) remains in its growth phase. Investors should be prepared for potential volatility and may need to wait for significant returns. However, it is well-positioned for growth due to the increasing demand for voice AI solutions. As of June 30, 15 hedge funds were long in the company.

9. UiPath Inc. (NYSE:PATH)

Number of Hedge Fund Holders: 29

UiPath Inc. (NYSE:PATH) is a leading provider of robotic process automation (RPA) software. RPA technology automates repetitive, rule-based tasks, freeing up human workers to focus on more complex and strategic activities, across a range of departments, such as finance, human resources, and customer service.

8. Bloom Energy Corp. (NYSE:BE)

Number of Hedge Fund Holders: 29

Bloom Energy Corp. (NYSE:BE) is a leading provider of fuel cell technology, engaged in the making of solid oxide fuel cells, all while using AI to optimize the performance of fuel cell systems, predict maintenance needs, and improve overall efficiency.

Core products include SOFCs (solid oxide fuel cells), which convert natural gas or hydrogen into electricity without combustion, producing only water vapor and heat as byproducts. It is also actively involved in generating clean hydrogen as a fuel source for these fuel cells and/or other applications. The end goal is to help deliver clean, reliable, and cost-effective energy solutions to customers.

These fuel cells provide reliable, sustainable, and efficient power for data centers. They operate independently of the grid, reducing the risk of outages, and can also be integrated into microgrids, providing additional energy security.

In July 2024, the company partnered with CoreWeave, an AI company backed by Nvidia. According to this deal, Bloom Energy Corp. (NYSE:BE) would power CoreWeave’s data center in Illinois, helping it provide cloud solutions for AI. As a result of this deal, the stock surged 1.3% on the 17th of July.

It also partnered with Silicon Valley Power, to supply 20 megawatts of fuel cell-based power to AWS data centers in Santa Clara, which aligned with the adoption of clean energy solutions for data center operations.

In Q2, the company recorded a year-over-year growth of 11.52%, generating $335.77 million in revenue. The loss per share was $0.06. Driven by the expansion of AI-driven data centers and increased regulatory pressure to reduce carbon footprint, affordable fuel cell technology is expected to see significant adoption by tech giants, and analysts estimate a 24% increase in revenue in 2025 and positive earnings of $0.5.

Analysts predict that the company will break even soon and become profitable in 2025, with an expected profit of $26 million. To meet this target, the company needs to grow by 78% year-over-year. Currently, 29 hedge funds are long on it. The largest stake is held by Graham Capital Management, with a position of $51,415,452.

ClearBridge Investments made the following comment about Bloom Energy Corporation (NYSE:BE) in its Q3 2022 investor letter:

“We were active in repositioning the portfolio in the quarter as market crosswinds opened idiosyncratic opportunities, adding two new industrials companies.Bloom Energy Corporation (NYSE:BE) is an electrical equipment company that makes solid-oxide fuel cell systems for on-site power generation, serving a variety of industries. Its fuel cells convert natural gas, biogas or hydrogen into baseload (non-intermittent) electricity without combustion, so there is low or no carbon emission. We expect significant upside through its ability to support the growing hydrogen economy, with a large opportunity for this in South Korea and meaningful policy support in the U.S. via the IRA, while other markets include biogas, carbon capture and marine transportation. Its natural gas energy server business is growing in the U.S. amid higher grid reliability concerns.”

7. AppLovin Corp. (NASDAQ:APP)

Number of Hedge Fund Holders: 54

AppLovin Corp. (NASDAQ:APP) is a mobile app platform that uses AI to optimize app discovery, user acquisition, and monetization. It uses ML algorithms to analyze user data, identify target audiences, and deliver relevant ads to increase app downloads and engagement. Its products are used by both its gaming advertisers and the connected television market which relies on the Internet.

During this quarter, improvement in the company’s AXON technology contributed to the growth of its software platform, generating $711 million in revenue. The app revenue was $369 million, an increase of 7% from last year. The overall revenue for Q2 2024 was $1.08 billion, a 43.98% year-over-year improvement. Management says that the plan now is to invest in organic growth, focusing on engineering and business development to support AXON technology and e-commerce expansion.

AppLovin Corp.’s (NASDAQ:APP) CEO, Adam Foroughi, highlighted the growth potential of in-app advertising. He emphasized the MAX platform’s role in driving this growth by transitioning from inefficient waterfall methods to programmatic bidding. He expressed optimism about maintaining steady growth rates ( 5% to 7% quarter-over-quarter) in the software business, driven by ongoing product enhancements and new categories.

It is well-positioned for growth in the mobile advertising market. With its AI-powered platform and strong partnerships, it can grow rather quickly. As of June 30, the company is held by 54 hedge funds. The largest one is valued at $1,105,913,583 by GQG Partners.

ClearBridge Select Strategy stated the following regarding AppLovin Corporation (NASDAQ:APP) in its first quarter 2024 investor letter:

“We also addedAppLovin Corporation (NASDAQ:APP), a disruptor in the IT sector that helps developers market and monetize their mobile apps. Powered by its proprietary targeting engine, the company’s software segment grew robustly in 2023 and should benefit from improving AI efficiency. We believe growth of the company’s targeting engine is still in the early innings as precision continues to improve, its adoption and dataset grow and AppLovin starts to license the engine to e-commerce advertisers, which could open up a brand new multibillion dollar market.”

6. Cisco Systems Inc. (NASDAQ:CSCO)

Number of Hedge Fund Holders: 61

Cisco Systems Inc. (NASDAQ:CSCO) is a multinational technology conglomerate in networking and IT solutions and uses AI to optimize network performance, improve security, and automate IT operations.

It offers a range of networking solutions, including IoT, security, videoconferencing, and energy management. Key products include Webex, OpenDNS, and the Silicon One chip, which is designed for high-capacity data handling. 61 hedge funds were long in the company in Q2. Harris Associates holds 10.4 million shares of the company, valued at $496,382,254, making it the company’s largest shareholder.

In August, it announced restructuring for 2025, including a 7% workforce reduction and $1 billion in cost savings. This will allow the company to shift focus to high-growth areas like AI and cloud networking, as legacy hardware businesses stagnate, boosting operating margins by over 220 basis points.

While AI is not yet a major revenue driver, contributing less than 2% next year, its focus on growth markets like AI and cloud networking could accelerate overall revenue growth in the future.

In Q2 2024, there was a 10.27% revenue decline year-over-year. Still, Cisco Systems Inc. (NASDAQ:CSCO) is well-positioned for growth due to strong demand for its networking products, driven by cloud computing and cybersecurity.

The company’s transition to subscription-based models enhances its long-term growth potential. The recent $28 billion acquisition of Splunk will enhance its cybersecurity capabilities and strengthen its position in data security and analytics.

Oakmark Fund made the following comment about Cisco Systems, Inc. (NASDAQ:CSCO) in its Q3 2023 investor letter:

“Cisco Systems, Inc.(NASDAQ:CSCO) is the leading networking solutions company. Networking equipment becomes more important as businesses modernize their IT infrastructure, and Cisco is well positioned to capture this demand given its broad portfolio and highly effective go-to-market strategy. Cisco is transitioning away from selling mainly transactional hardware and toward selling more software and subscriptions. This shift is expected to accelerate revenue growth, improve operating margins and build recurring revenue. Despite these notable business improvements, Cisco still trades near a trough valuation relative to the S&P 500 Index. More recently, Cisco announced its intention to acquire Splunk, a leader in security and observability, adding to its already strong position in the increasingly important security market. At a low-teens multiple of our estimate of normalized earnings, Cisco is trading comfortably below our estimate of intrinsic value.”

5. Constellation Energy Corp. (NASDAQ:CEG)

Number of Hedge Fund Holders: 71

Constellation Energy Corp. (NASDAQ:CEG) is a supplier of power, natural gas, and energy products and services, like electricity. It serves a range of residential, commercial, and industrial clients.

The increase in demand for power due to a surge in AI data centers has put a spotlight on energy firms. Constellation Energy Corp. (NASDAQ:CEG) itself uses AI to improve customer service, analyze energy usage data, predict demand, and optimize grid management.

CEO Joseph Dominguez emphasized the importance of data centers for national security and economic competitiveness. He highlighted the benefits of colocating data centers with nuclear power plants, offering a faster and more cost-effective solution for developing critical digital infrastructure.

Goldman Sachs projects a 2.4% annual increase in power demand until 2030. The company is set to benefit from the rise in clean energy demand amid the data center and AI boom.

It’s also investing $800 million to upgrade its Illinois plants, boosting energy output by 158 megawatts. The re-powering of the Criterion wind project in Maryland will further increase clean energy production by 79,000 megawatt-hours.

It is expanding its clean energy portfolio and investing in sustainable initiatives and recently issued a $900 million green bond to fund projects like nuclear upgrades, clean hydrogen production, and energy storage. Major tech companies have long-term contracts with Constellation Energy Corp. (NASDAQ:CEG) for sustainable energy, providing the company a stable revenue stream.

As of the second quarter, the stock is held by 71 hedge funds. Coatue Management is the largest shareholder and has stocks worth $982,902,129 as of June 30. The company plans to buy back $1.5 billion worth of shares as of August.

It is expected to grow its earnings by 45.84% this year. However, for Q2 of 2024, the year-over-year revenue growth was only 0.53%, translating into a $5.48 billion revenue.

ClearBridge Global Infrastructure Value Strategy stated the following regarding Constellation Energy Corporation (NASDAQ:CEG) in its first quarter 2024 investor letter:

“On a regional basis, the U.S. and Canada was the top contributor for quarter, with U.S. electric utilityConstellation Energy Corporation(NASDAQ:CEG) and U.S. rail operator CSX the lead performers. Constellation Energy is primarily a nuclear generation company and is the largest producer of carbon-free electricity in the U.S., serving states including New York, Illinois, Maryland, Pennsylvania and New Jersey. The company’s combined generation capacity is more than 32 GW and 90% of annual output is carbon free. Constellation has been a beneficiary of AI and subsequent power demand as its 24/7 base load nuclear generation can get premium contracts.”

4. ASML Holding NV (AMS:ASML)

Number of Hedge Fund Holders: 81

ASML Holding NV (AMS:ASML) is a leading supplier of lithography systems used in the semiconductor manufacturing process. It uses AI to optimize its system’s performance, improve yield, and accelerate the development of new chip technologies. These AI-powered solutions help chip manufacturers produce more advanced and efficient chips.

This company strongly benefits from the growth of Taiwan Semiconductor Manufacturing. TSMC’s 40% year-over-year revenue growth, driven by AI chip demand, has positively impacted ASML Holding NV’s (AMS:ASML) stock. This is because it’s a key supplier of lithography systems for TSMC.

CEO of ASML Holding NV (AMS:ASML), Peter Wennink, highlighted the strong growth in AI-related demand for both Logic and Memory chips. He also mentioned other secular growth drivers for the semiconductor industry, such as the energy transition, electrification, and AI.

In Q2 2024, it sold 89 new lithography machines and 11 used ones. The company recorded a total of $6.83 billion in revenue for this period. However, there was a year-over-year decline of 11.69%. But this decline was smaller than that of the year prior, which was 23.63%. The earnings per share were $4.39. The primary reason for the decline was the uncertainty surrounding potential US restrictions on chip equipment exports to China.

Its strong market position and focus on AI-driven solutions make it a promising investment for the long term. With the global semiconductor industry planning to invest over $2.3 trillion in infrastructure upgrades between 2024 and 2032, this company is well-positioned to capitalize on this growth.

By the end of this quarter, 81 hedge funds were long in the company, with the largest stake amounting to $3,226,042,315 by Fisher Asset Management.

Polen International Growth Strategy stated the following regarding ASML Holding N.V. (NASDAQ:ASML) in its fourth quarter 2023 investor letter:

“Netherlands-basedASML Holding N.V. (NASDAQ:ASML) and Japan-based Lasertec play dominant roles within different segments of the global semiconductor industry. In both cases, shares rallied significantly in the fourth quarter of 2023, prompting our positions to grow as a percentage of the overall portfolio. We believe both companies will see demand for their products as extreme ultraviolet (EUV) lithography and soon high-numerical aperture lithography must be utilized to manufacture the world’s smallest chips. However, in our estimation, 2024 could deliver a year of less exciting growth for the semiconductor industry, which prompted us to trim these positions back.”

3. Vistra Corp. (NYSE:VST)

Number of Hedge Fund Holders: 92

Vistra Corp. (NYSE:VST) is a prominent independent power producer company that uses 400+ AI models to optimize operations, improve customer service, analyze energy usage data, predict demand, and optimize grid management.

It operates as an integrated retail electricity and power generation company and delivers essential energy resources to households, businesses, and communities. The surge in AI data center demand has promoted this company’s growth. It is also the largest independent power producer (IPP) in Texas, well-positioned to serve the state’s growing data center market.

In March, the company acquired Energy Harbor for $3.43 billion, a nuclear power and retail energy business. This deal added around 4,000 MW of nuclear capacity and 1 million retail customers to the company portfolio, making it the owner of the second-largest competitive nuclear fleet in the US.

The Nuclear Regulatory Commission approved Vistra Corp.’s (NYSE:VST) request to extend the operation of its Comanche Peak Nuclear Power Plant through 2053, an additional 20 years beyond the original license, continuing reliable generation of zero-carbon electricity from this 2,400-MW facility.

In the US, which houses a significant share of these data centers, electricity use is forecasted to increase from 200 TWh in 2022 to 260 TWh by 2026. This is a 6% surge in the nation’s total power consumption.

According to the International Energy Agency (IEA), data centers that used 460 terawatt-hours (TWh) of electricity in 2022 are expected to see their energy needs double to over 1,000 TWh by 2026. The total energy share of data centers is expected to increase by 3%-10% in the coming years.

Its AI-powered Heat Rate Optimizer (HRO) is deployed across 67 power-generation units and has achieved an average 1% improvement in efficiency, resulting in annual cost savings of over $23 million. This technology helped reduce carbon emissions, contributing to the goal of achieving a 60% reduction by 2030 and net-zero emissions by 2050.

In the second quarter of 2024, the company saw an overall 20.57% year-over-year improvement in revenue. The company is well-positioned to capitalize on the growing power demand. 92 hedge funds are long in the company as of June 30, and the largest stake is valued at $587,931,842 by Lone Pine Capital.

Legacy Ridge Capital stated the following regarding Vistra Corp. (NYSE:VST) in its Q2 2024 investor letter:

“One of the sectors we know well which had been out of favor for several years has quickly come into favor: Independent Power Producers (IPPs). We’ve written consistently about NRG andVistra Corp.(NYSE:VST) since the 2019 letter, have owned each, or both, since 2018, and invested a meaningful amount of our assets in VST specifically the past few years. Nate and I intend on spending more time in the year-end letter on our updated views on the IPPs and our learnings from the on-going investment, but we were a bit surprised how quickly the narrative around these companies changed. Our Blue Sky 2030 estimates of intrinsic value converged with the share price 6-years before we thought probable. In the 2019 letter, with respect to VST, we wrote:

“Over the next decade management should have close to $15 Billion to deploy to share repurchases. If you assume they have to pay an average price for the stock that’s higher than the current one, and they can only repurchase 60% of shares outstanding instead of the 100% the math implies, FCF per share in 2030 would be $14. That’s a $70 stock at today’s valuation, but a $140 stock at a more reasonable FCF yield of 10%.” And… “The IPPs are un-investable for most money managers, so there we are. When they become investable we’ll probably be long gone.”

We’re not exactly long gone, but sentiment has certainly surpassed investable. After 5+ years of VST trading between $17 – $26 a share—and $26 exactly a year ago—it hit a high of $107 in May on the heels of the Artificial Intelligence (AI) narrative and the implications for electricity demand. While we agree with the prevailing consensus view that more Data Centers will be built, Data Centers require base load energy, and that the US will probably be short base load energy, predicting the rate of any technological advancement is not our area of expertise, and we feel the margin of safety has dissipated. Therefore, what had been our largest position entering 2023 and 2024, and has been our greatest contributor to performance, is now one of the smaller positions in the fund.”

2. Oracle Corp. (NYSE:ORCL)

Number of Hedge Fund Holders: 93

Oracle Corp. (NYSE:ORCL) is a technology company, that uses AI to enhance its products and services, improve database performance, automate IT operations, and provide intelligent insights to its customers.

The company’s FQ4 2024 result was influenced by multiple AI deals with leading companies in the industry. Management said it reached a deal with OpenAI and Microsoft to extend the Azure Al platform to Oracle Cloud Infrastructure (OCI) to provide additional capacity for OpenAl. It partnered with Google after which Google Cloud is to offer Oracle Cloud Infrastructure database services and high-speed network interconnect.

There was only a 3.25% revenue improvement from 2023, and the revenue generated ($14.29 billion) was also less than analyst estimates, but despite these results, the company’s Cloud infrastructure (IaaS) revenue jumped 42% year-over-year. FQ1 2025 is expected to register a 6% to 8% revenue increase. The Remaining Performance Obligations (RPOs) surged 44% in FQ4.

The top 3 shareholders own 52% of the company. Currently, it is held by 93 hedge funds, of which the largest amounts to $2,483,329,721 by Fisher Asset Management. Oracle Corp. (NYSE:ORCL) said the company is building data centers and analysts believe the company’s automated OCI services will grow amid rising demand.

Carillon Eagle Growth & Income Fund stated the following regarding Oracle Corporation (NYSE:ORCL) in its Q2 2024 investor letter:

“Oracle Corporation(NYSE:ORCL) stock rose to all-time highs after the company announced better than expected cloud infrastructure revenue. Oracle signed dozens of new customers, including two leaders in generative artificial intelligence. The backlog remains, and strong growth appears poised to accelerate.”

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

Number of Hedge Fund Holders: 108

Advanced Micro Devices, Inc. (NASDAQ:AMD) is a leading semiconductor company that uses AI to optimize chip design, improve manufacturing processes, and develop AI-accelerated hardware and software solutions. AMD’s AI-powered technologies help drive innovation in various industries, including gaming, data centers, and scientific computing.

Microsoft recently praised its Instinct MI300X AI accelerators as the best price-to-performance AI chip. This is significant as Microsoft expects to sell up to 50 million AI-enabled personal computers soon. The Instinct MI300 Series accelerators, launched in 2023, include AI and HPC chips that compete with Nvidia’s H100.

CEO Lisa Su highlighted the growing AI traction for its Instinct MI300X solutions. As leading cloud and enterprise providers expand their offerings, demand for AMD’s AI chips is increasing. Additionally, Su noted positive demand signals for general-purpose compute in both client and server processor businesses.

In Q2, the data center revenue grew 49% year-over-year. Overall revenue growth was 8.88% for the quarter, recording a total revenue of $5.84 billion. Ryzen CPU sales increased 49% over the year. Gaming revenue declined 59% due to decreased PlayStation and Xbox sales, but Radeon 6000 GPUs saw a year-over-year sales increase.

The company’s strong results and AI investments suggest a promising future in the AI market. It will benefit greatly from the growing AI spending. 108 hedge funds held long positions in this company by June 30. Fisher Asset Management had the largest stake, valued at $3,755,355,818.

Meridian Contrarian Fund stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in itsfourth quarter 2023 investor letter:

“Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global semiconductor chip maker specializing in central processing units (CPUs), which are considered the core component of most computing devices, and graphics processing units (GPUs), which accelerate operations running on CPUs. We invested in 2018 when it was a mid-cap value stock plagued by many years of underperformance due to lagging technology and lost market hi share versus competitors Intel and Nvidia. Our research identified that changes and investments made by current management under CEO Lisa Su had, over several years, finally resulted in compelling technology that positioned AMD as a stronger competitor to Nvidia and that its latest products were superior to Intel’s. We invested on the the belief that AMD’s valuation at that that time did not reflect the potential for its technology leadership to generate significant market share gains and improved profits. This thesis has been playing out for several years. During the quarter, AMD unveiled more details about its upcoming GPU products for the AI market. The stock reacted positively to expectations that AMD’s GPU servers will be a viable alternative to Nvidia. Although we pared back our exposure to AMD into strength as part of our risk-management practice, we maintained a position in the stock. We believe AMD will continue to gain share in large and growing markets and is reasonably valued relative to the potential for significantly higher earnings.”

As we acknowledge the growth potential of Advanced Micro Devices, Inc. (NASDAQ:AMD), 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 the ones on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT:$30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan StanleyandJim Cramer Says NVIDIA ‘Has Become A Wasteland’.

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