We recently compiled a list of the 10 AI News Investors Shouldn't Miss. In this article, we are going to take a look at where Pegasystems Inc. (NASDAQ:PEGA) stands against the other AI stocks.

Angie Newman from UBS Private Wealth Management discussed how to take advantage of the ongoing artificial intelligence boom on CNBC’s Squawk Box Asia. Discussing the macroeconomic environment, Newman stated how the correlation between stocks and bonds often increases during geopolitical uncertainty and fluctuating interest rates.

READ ALSO: 10 AI Stocks Taking Wall Street by Storm and Top 10 AI Stocks on Latest News and Analyst Ratings

While investors may think that balancing stocks and bonds will make their portfolio well diversified and they would be able to create smooth returns over time, it's not always the case. To address this, Newman recommends incorporating other alternative asset classes like gold. Investors can particularly focus on sectors such as data centers, which are poised to benefit significantly from AI advancements.

She noted that AI’s impact extends beyond tech companies producing AI components, highlighting data centers and established value companies integrating the technology. Newman also stressed the importance of adopting an equal-weight portfolio strategy and rebalancing regularly to capture opportunities across AI beneficiaries.

Heading into 2025, the frenzy around artificial intelligence and its vast potential show no signs of slowing down. Even business executives and researchers anticipate that autonomous "agents" and profitability are likely to dominate the artificial intelligence agenda next year. Speaking at the Reuters NEXT conference in New York, the executives explained how agents, or systems that can perform actions without direct involvement have long been an intangible goal for researchers. However, the capabilities were likely to be enabled by step-by-step reasoning approaches like those used in OpenAI's o1 model.

“I think we are going to see a lot of motion next year around agents, and I think people are going to be surprised at how fast this technology comes at us. We think that's just the beginning of what 2025 will be about: agents who are really there to help you with day to day tasks”.

- OpenAI CFO Sarah Friar.

Sarah Friar, CFO of OpenAI, anticipates that Artificial General Intelligence, a theoretical AI system with capabilities rivaling a human's, will be developed in the next few years. Analysts and venture capitalists are already very bullish on 2025, stating that it is going to be “a year of profitability”. Moreover, companies have already moved beyond the stage of experimentation, having integrated AI technology into their operations. Businesses are benefiting from integrating AI by streamlining operations, enhancing decision-making, and driving innovation for increased efficiency and profitability.

For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds.

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).

An enthusiastic programmer working on a laptop, surrounded by screens displaying code.

Pegasystems Inc. (NASDAQ:PEGA)

Number of Hedge Fund Holders: 28

Pegasystems Inc. (NASDAQ:PEGA) develops, markets, licenses, hosts, and supports enterprise software. On December 11, the company announced a new edition of Pega Smart Investigate™, an end-to-end case management system powered by Pega's low-code platform for AI-driven decisioning and workflow automation. The new edition includes expanded automation and generative AI capabilities to help banks process payment exceptions and investigations faster and more efficiently.

It comes with a modernized user interface and supports the latest ISO 20022 standards, enabling financial institutions to tackle increasing payment exceptions while cutting down operational costs and improving client satisfaction. Key innovations in Pega Smart Investigate Enterprise Edition include expanded automation and improved workflows, advanced AI agents for guidance and summaries, and improved architecture and user interface.

"This new version of Pega Smart Investigate represents a significant leap forward in payment exception handling. By combining advanced automation with generative AI capabilities, we're helping banks transform what has traditionally been a complex, manual process into a streamlined, intelligent workflow that can dramatically reduce resolution times and improve the client experience”.

-Ryan White, director, product management, Pega.

Overall, PEGA ranks 7th on our list of AI news investors shouldn't miss. While we acknowledge the potential of PEGA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PEGA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article is originally published at Insider Monkey.