Analysts Say These 13 AI Stocks Will Skyrocket in 2024
In this article, we will take a detailed look at the Analysts Say These 13 AI Stocks Will Skyrocket in 2024. For a quick overview of such stocks, read our article Analysts Say These 5 AI Stocks Will Skyrocket in 2024.
While there’s a strong debate out there on whether or not the Magnificent Seven group of stocks would be able to sustain their rally in 2024, there’s hardly anyone questioning the permanence and significance of the AI revolution. In its 2024 outlook report by titled AI: More to Come in 2024, UBS cited Bloomberg Intelligence data which said the global AI demand is set to increase from $28 billion in 2022 to $300 billion in 2027.
UBS said in its report that 2024 would be the year of quality stocks. The firm defined quality stocks as those having strong returns on invested capital, healthy operating margins and low debt. UBS said these quality indicators are found in the technology sector.
“This quality tilt speaks in favor of US technology companies. Technology offers the highest ROIC of the 11 US equity sectors: around 20% over the last 12 months (compared with around 3–4% for utilities or real estate). Tech sector balance sheets are also the strongest, with an average net-debt-to-EBITDA ratio of just 0.5x. With business models that combine subscription-based revenue streams with a presence in high-growth segments including artificial intelligence, we think tech companies look poised to deliver healthy earnings growth next year. Stocks have already rallied hard in anticipation of higher AI demand, yet we think companies across the AI value chain— from cloud to semis, software, and internet—have further to run, both in 2024 and over the longer term. We believe that investors looking for exposure to AI should seek broad exposure across the value chain.”
Photo by Ruben Sukatendel on Unsplash
For this article we picked 13 stocks about which Wall Street is excited about when it comes to AI. Many notable analyst firms like Wedbush, Goldman Sachs, Jefferies, among others, upgraded these stocks citing AI-related catalysts. With each stock we mentioned why the Street is bullish on it with specific catalysts and bullish analyst thesis. Some notable plays include Salesforce Inc (NYSE:CRM), Alphabet Inc Class A (NASDAQ:GOOGL) and Microsoft Corp (NASDAQ:MSFT).
With each stock we have mentioned hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
13. Palantir Technologies Inc (NYSE:PLTR)
Number of Hedge Fund Investors: 31
Wedbush in its December 2023 report named Palantir Technologies Inc (NYSE:PLTR) as one of its top favorite tech stocks for 2024. In July 2023, Dan Ives of Wedbush called Palantir Technologies Inc (NYSE:PLTR) the “Messi” of AI, saying the market is still not recognizing the potential of Palantir Technologies Inc (NYSE:PLTR) in what the analyst called a $1 trillion opportunity. Ives at the time said that Palantir Technologies Inc (NYSE:PLTR) could skyrocket to $25 per share. As of January 7 the stock was trading at around $15.
As of the end of the third quarter of 2023, 31 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Palantir Technologies Inc (NYSE:PLTR). The most significant stake in Palantir Technologies Inc (NYSE:PLTR) is owned by D E Shaw which owns a $388 million stake in Palantir Technologies Inc (NYSE:PLTR).
Carillon Scout Mid Cap Fund made the following comment about Palantir Technologies Inc. (NYSE:PLTR) in its Q3 2023 investor letter:
“Palantir Technologies Inc. (NYSE:PLTR)’s stock moved higher on hopes that it could win business from the U.K.’s National Health Services and as customer counts grew rapidly in the latest quarterly report for the company’s new Artificial Intelligence Platform (AIP). Palantir also won a significant new contract with the U.S. Army in September, which should last through 2026. The debate on the street is how fast Palantir can monetize its new commercial customers. After the quarter closed, the company announced an enhanced marketing deal with a major auditing and consulting firm.”
12. Accenture Plc (NYSE:ACN)
Number of Hedge Fund Investors: 55
Wealth advisor Luke Lloyd said while talking to CNBC that Accenture Plc (NYSE:ACN) is one of the biggest and the best consulting firms in the world and Accenture Plc (NYSE:ACN) would play a key role in helping other companies in implementing AI technologies. The analyst said companies turn to consulting firms like Accenture Plc (NYSE:ACN) when they want to implement newer technologies and that is what makes Accenture Plc (NYSE:ACN) one of the AI stocks to watch in 2024.
Many other analyst firms are bullish on Accenture Plc (NYSE:ACN). Back in December, BMO Capital increased its price target on the stock to $35.
As of the end of the third quarter of 2023, 55 hedge funds tracked by Insider Monkey reported having stakes in Accenture Plc (NYSE:ACN).
ClearBridge Multi Cap Growth Strategy made the following comment about Accenture plc (NYSE:ACN) in its Q2 2023 investor letter:
“While the ClearBridge Multi Cap Growth Strategy has limited mega cap exposure, which has been a recent headwind to relative performance, we own several companies that stand to benefit from the explosive growth in generative AI. These holdings play key roles in building out the necessary infrastructure and helping customers leverage capabilities enabled by this emerging technology
Accenture plc (NYSE:ACN), a business and IT services consultant, will be instrumental in helping enterprises reinvent and modernize their IT architecture for AI. The company recently announced a $3 billion investment, which includes doubling their data and AI workforce to 80,000 to address this growing opportunity.”
11. Rtx Corp (NYSE:RTX)
Number of Hedge Fund Investors: 63
Wealth advisor Luke Lloyd in a latest program on CNBC counted Rtx Corp (NYSE:RTX), or Raytheon, among the under-the-radar AI stocks he’s watching this year. Lloyd is bullish on the stock amid geopolitical tensions in the world that help defense companies like Raytheon. While the analyst did not talk about the AI offerings of Rtx Corp (NYSE:RTX), Raytheon is being pitched as an AI play because of several AI technologies. Last year, Rtx Corp (NYSE:RTX) revealed a new airborne sensor called “Raiven” which Rtx Corp (NYSE:RTX) says will use artificial intelligence (AI) to identify targets in real time.
Out of the 910 hedge funds tracked by Insider Monkey, 63 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Rtx Corp (NYSE:RTX). The most significant stake in Rtx Corp (NYSE:RTX) belongs to Ken Fisher’s Fisher Asset Management which owns a $682 million stake in Rtx Corp (NYSE:RTX).
Carillon Eagle Mid Cap Growth Fund made the following comment about RTX Corporation (NYSE:RTX) in its Q3 2023 investor letter:
“RTX Corporation (NYSE:RTX) lowered its free cash flow guidance for the year due to a new issue in its jet engine business. Although the company’s management has a solution, the total implementation cost remains unknown, which caused the stock to react negatively.”
10. Zscaler Inc (NASDAQ:ZS)
Number of Hedge Fund Investors: 50
Cloud security company Zscaler, Inc. (NASDAQ:ZS) uses AI in its platforms. The company is also introducing new generative AI tools in its product suite. Recently, Oppenheimer chose Zscaler, Inc. (NASDAQ:ZS) as its top 2024 pick and set a $290 price target, which is much higher than the stock’s current price of $230.
Artisan Mid Cap Fund made the following comment about Zscaler, Inc. (NASDAQ:ZS) in its Q3 2023 investor letter:
“Notable trims in the quarter included Zscaler, Inc. (NASDAQ:ZS), BioNTech and Ingersoll Rand. Zscaler provides cloud-based Internet security solutions. In the quarter, it announced solid financial results including 43% revenue growth and 38% growth in billings, which were both ahead of expectations. We believe the dual trends of rising security vulnerability and increased enterprise digitization will lead to sustained demand, even in a recession. Cybersecurity remains a top concern for businesses and governments as cyberattacks can have devastating financial and reputational consequences. Meanwhile, managing the security needs of legacy on-premise applications, a growing number of cloud-based applications (e.g., Office 365 and Salesforce) and more remote workers than before the pandemic make operating IT infrastructures increasingly complex. The stock has been a top performer this year, and we decided to trim the position based on valuation considerations.”
9. Mongodb Inc (NASDAQ:MDB)
Number of Hedge Fund Investors: 62
In December 2023, Wedbush said in a report that the tech bull run was just getting started and the firm was extremely bullish on technology stocks because of the boom in AI. Mongodb Inc (NASDAQ:MDB) was one of the favorite stock picks of Wedbush for 2024.
“We view AI as the most transformative technology trend since the start of the Internet in 1995 and believe many on the Street are still underestimating the $1 trillion of AI spend set to happen over the next decade in a bonanza for the chip and software sectors looking forward with Nvidia and Redmond leading the way,” Wedbush’s analyst Dan Ives wrote in a note.
Mongodb management talked about how the company is using AI for business during Q3 earnings call:
First, AI is in nearly every conversation with customers of all sizes. We’re seeing great early feedback from our partnership with AWS’s CodeWhisperer, the AI-powered coding companion that is now trained on MongoDB data to generate code suggestions based on MongoDB’s best practices from over 15 years of history. Microsoft GitHub Copilot is also proficient at generating code suggestions that reflect best practices, enabling developers to build highly-performing applications even faster on MongoDB. And with the recent advances in Gen AI, building AI applications is no longer the sole domain of AI or ML experts, increasingly it’s software developers who are being asked to build powerful AI functionality directly into their applications. We are well-positioned to help them do just that. We saw exceptional interest in our Vector Search public preview and we announced general availability yesterday. Customers are building a range of AI use cases from semantic search to retrieval augmented generation or RAG where organizations can leverage the use of their private data, to increase the accuracy of LLMs. For example, UKG, a human capital and workflows management technology serves over 80,000 plus customers around the globe chose to use MongoDB Atlas Vector Search for an AI-powered assistant that helps guide their customers employees, people managers, and HR leaders.
Read the entire earnings call transcript here.
8. Crowdstrike Holdings Inc (NASDAQ:CRWD)
Number of Hedge Fund Investors: 69
Cybersec company Crowdstrike Holdings Inc (NASDAQ:CRWD) ranks 8th in our list of the best AI stocks to buy for 2024 according to Wall Street analysts. It is one of the top picks for 2024 according to Dan Ives of Wedbush.
Crowdstrike Holdings Inc (NASDAQ:CRWD) is aiming to use AI in cyber security systems. Crowdstrike Holdings Inc (NASDAQ:CRWD) released Charlotte AI, its generative AI “security analyst.”
Recently, Jefferies increased its price target on CrowdstrikeCrowdstrike Holdings Inc (NASDAQ:CRWD) to $50. Oppenheimer also increased its price target on the stock to $60.
Like CRWD, hedge funds and analysts also like Salesforce Inc (NYSE:CRM), Alphabet Inc Class A (NASDAQ:GOOGL) and Microsoft Corp (NASDAQ:MSFT).
Artisan Developing World Fund stated the following regarding CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its fourth quarter 2023 investor letter:
“Top contributors to performance for the quarter included cybersecurity leader CrowdStrike Holdings, Inc. (NASDAQ:CRWD). CrowdStrike gained amid resilient cybersecurity spend, continued revenue growth against well-managed expenses, and traction in endpoint adjacencies.
We have underscored that the purpose of our risk management framework is to enhance value creation and aid in the execution and implementation of our investment program. However, this stage of risk management best manifests itself in down markets as it did in 2022. This year has been quite different since equities have broadly recovered, and our risk management focus has shifted toward establishing a level of permanence. We characterize this phase of risk management as Value Capture. Essentially, we have harvested disproportionate equity outcomes (Nvidia)and other strong performers (Passport holdings such as CrowdStrike) to fund a ~700bps increase in our India weighting (Makemytrip, Apollo Healthcare), a 235bps investment in Coca Cola (in correlation terms the real thing), and even a 114bps position in Alibaba (6.6X consensus 2023 EPS at purchase). These investments are not risk free, but they are stores of value that have the potential to enhance diversification and staying power in any market reversal. Moreover, we have marginally reduced portfolio concentration over the course of the year. Essentially, 2022 was a moment of extremely low reinvestment risk that allowed us to deemphasize China and other holdings, while concentrating around a handful of financially and strategically sound investments such as Nvidia, MercadoLibre, Airbnb and CrowdStrike.With these investments having largely reflated, we have sought to redistribute some of this capital while retaining significant residual positions. It is our hope that these actions can enhance our ability to execute our investment program if, for example, market exuberance about monetary policy proves excessive.”
7. Palo Alto Networks Inc (NASDAQ:PANW)
Number of Hedge Fund Investors: 79
Palo Alto Networks Inc (NASDAQ:PANW) is another stock in the list of Wedbush’s top AI and tech picks for 2024, according to the firm’s report published in December 2023.
Palo Alto Networks Inc (NASDAQ:PANW) has been consistently scoring price target increases and ratings upgrades from notable Wall Street analysts. Earlier this month, Jefferies increased its price target on the stock to $65.
In addition to Salesforce Inc (NYSE:CRM), Alphabet Inc Class A (NASDAQ:GOOGL) and Microsoft Corp (NASDAQ:MSFT), PANW is a top AI stock pick.
As of the end of the third quarter of 2023, 79 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Palo Alto Networks Inc (NASDAQ:PANW).
TimesSquare Capital U.S. Mid Cap Growth Strategy made the following comment about Palo Alto Networks, Inc. (NASDAQ:PANW) in its Q3 2023 investor letter:
“Across the Information Technology universe, we seek companies possessing differentiated capabilities, products, and services. Palo Alto Networks, Inc. (NASDAQ:PANW) supplies network and cloud-based security solutions to enterprises, service providers, and government entities. The latest quarter was mixed with the company falling shy versus the Street on billings, in line for revenues, and outpacing earnings. Palo Alto’s updated guidance was materially ahead of lowered Street expectations. Nevertheless, its shares pulled back by -8%.”
6. ServiceNow Inc (NYSE:NOW)
Number of Hedge Fund Investors: 99
Futurum Group’s Daniel Newman thinks ServiceNow Inc (NYSE:NOW) is one of the stocks that will benefit in 2024 and beyond because ServiceNow Inc (NYSE:NOW) is among the “pick-and-shovel” technology providers when it comes to AI.
Recently, BofA increased its price target on ServiceNow Inc (NYSE:NOW) to $90. Jefferies has also increased its price target on the stock to $125.
As of the end of the third quarter of 2023, 99 hedge funds tracked by Insider Monkey had stakes in ServiceNow Inc (NYSE:NOW). The most significant stakeholder of ServiceNow Inc (NYSE:NOW) during this period was Rajiv Jain’s GQG Partners which owns an $832 million stake in ServiceNow Inc (NYSE:NOW).
In its October 2023 investor letter, Lakehouse Capital stated the following regarding ServiceNow, Inc. (NYSE:NOW):
“ServiceNow, Inc. (NYSE:NOW) also delivered a strong quarterly result that surprised on the upside. Subscription revenues grew 27% year-on-year to $2.29 billion and non-GAAP operating income grew 41%, both exceeding analyst expectations and the company’s own guidance. Key performance indicators were healthy, with current remaining performance obligations growing 27% year-on-year to $7.4 billion and renewal rates holding firm at 98%. Despite the challenging macro environment for many software companies, ServiceNow’s multi-product platform continues to resonate with large enterprise customers with the number of clients spending over $1 million in annual contract value (ACV) up 17% year-on-year to 1,789, while the cohort spending over $20 million swelled by 58% year-on-year to 49. Helping drive some of that product adoption was their Creator Workflows module, first launched near the start of 2021, which crossed the $1 billion ACV threshold this quarter.
We remain impressed by the execution from management, who continue to expand the company’s total addressable market with new product launches that generate significant return on investment for their customers. Right before the quarter ended, they launched the Vancouver Platform release, which embedded generative AI across all workflows on the Now Platform and managed to close four large deals in a single day. Their generative AI offering drove the highest number of customer requests ever for a prerelease product in the company’s history, providing an attractive pipeline of new deals. Overall, we have high conviction in their growth trajectory and are happy to remain patient shareholders.”
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Disclosure. None. Analysts Say These 13 AI Stocks Will Skyrocket in 2024 was initially published on Insider Monkey.