3 AI Stocks That the Big Money Is Flocking To

Stocks to buy

While artificial intelligence is all the rage these days, knowing which AI stocks to buy can be crucial. Let’s be real – the sector is no spring chicken. With the space commanding so much mainstream attention, many if not most ideas are bound to disappoint.

It’s one of the reasons I’m hesitant about diving into certain celebrated AI stocks to buy. Yes, these companies may seem as if they’re printing money. However, at some point, the expectations will rise so much that inevitably, disappointments will follow. When that happens, a steep correction may materialize.

On the other hand, if you still want to engage the digital intelligence ecosystem, going with the top endorsed names may be most prudent. Big institutions don’t like to lose their money. Combined with their ample resources, they’re theoretically likelier to conduct robust research into their choices. This reality may benefit the following AI stocks to buy.

IBM (IBM)

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As a legacy technology giant long struggling for relevance in the modern ecosystem, IBM (NYSE:IBM) comes off as boring. However, it deserves more respect than it’s getting as one of the top AI stocks to buy. Indeed, the company has been a pioneer in the development of advanced computers, beginning with IBM 702, a data processing machine.

From there, the company has specialized in several AI and machine learning platforms such as IBM Watson. Stated differently, while many other companies are talking a good game about digital intelligence, Big Blue offers a history of practical use cases. It’s still continuing its research, making it an underappreciated player in the burgeoning field.

However, the good news is that IBM’s potential isn’t going unnoticed by hedge funds. Since the first quarter of 2023, these Wall Street giants have been adding significantly to their position. Right now, TipRanks notes that hedge fund sentiment toward IBM stock stands as “very positive.”

In fairness, analysts rate shares a consensus hold. However, this assessment could change as the company continues to impress onlookers.

Salesforce (CRM)

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A cloud-based software stalwart focused on customer relationship management, Salesforce (NYSE:CRM) has been enjoying the spotlight recently. For its latest fiscal fourth-quarter earnings disclosure, the company reported revenue of $9.29 billion. This figure beat analysts’ consensus target of $9.22 billion. It also represented an 11% year-over-year lift. Also, the software firm posted earnings per share of $2.29, beating out expectations of $2.27.

However, one of the biggest stories to emerge from the Q4 print was that the company is going to issue its first-ever dividend. It may be a great move. While the company has also pivoted to AI, incorporating digital intelligence for its business solutions, CRM stock is no longer a growth machine.

For example, revenue may reach $38.11 billion at the end of this fiscal year but it would only represent a 9.3% lift from last year’s result. So, the passive income could keep investors interested in the new-look CRM. That appears to be what hedge funds are thinking. Since Q2 2023, these players have been increasing their exposure to the security.

Analysts peg CRM a consensus moderate buy with a high-side price target of $380. Therefore, it could be one of the compelling AI stocks to buy for the long haul.

C3.ai (AI)

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Easily the riskiest idea on this list of AI stocks to buy, I must admit that I’m not fully convinced with C3.ai (NYSE:AI). While the enterprise-level AI specialist offers turnkey solutions for government clients and critical industries, its share price has been all over the map. Just look at its performance since it made its public market debut: that’s a lot of red ink.

Still, AI stock has also been making some strong moves since the start of this year. Further, Wall Street’s experts have been paying more attention to the proposition. At the end of the current fiscal year, they anticipate that revenue will land at $307.9 million. If so, that would represent a 15.4% lift from last year’s haul.

Also, in 2025, they believe the company could print sales of just under $369 million. That would be almost 20% up from 2024’s projected revenue. Given the tremendous growth potential of the underlying industry, these estimates might not be unreasonable.

What’s more, hedge fund sentiment is very positive. Since Q4 2022, the Street’s top players have significantly ramped up their holdings of AI stock. If you’re willing to speculate on a risky venture, C3.ai could be enticing.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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