We recently compiled a list of the 10 AI Stocks That Will Skyrocket. In this article, we are going to take a look at where Credo Technology Group Holding Ltd (NASDAQ:CRDO) stands against the other AI stocks.
DWS, an expert in active, passive, and alternative asset management, believes that expectations around the usage of Artificial Intelligence (AI) across industries acted as one of the critical stock market drivers over the previous 2 years. In 2025, AI developments are expected to make significant strides throughout various domains. The firm anticipates a shift from generalized applications to industry-specific solutions. Notably, companies are expected to refine their strategies to target specific use cases providing measurable results.
DWS, while quoting Bloomberg estimates, highlighted that some of the big technology firms can collectively increase capex to ~$200 billion in 2025. More than $90 billion in incremental capital spending in 2024-25 vs. 2023 is projected to be earmarked mainly for expanding Gen AI infrastructure. On a related note, Goldman Sachs Asset Management believes that the AI capex from well-established hyperscalers is projected to surpass $250 billion in 2025. This hints at optimism that hyperscalers remain confident in the ROI (Return on Investment) they will witness from such significant investments.
DWS sees the de-globalization movement spreading to data and AI, with countries spending a significant amount to subsidize “sovereign AI.” To provide a brief overview, it refers to a nation’s capabilities to establish, control, and deploy its own AI technologies. It spans both physical and data infrastructures. Notably, in the past year, the governments of the US and China have pledged $40 billion - $50 billion each dedicated towards AI investments.
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Appinventiv believes that conversational AI, Predictive Analytics, AI Democratization, Agentic AI, and Generative AI, among others, are some of the key trends to watch out for. While conversational AI focuses on streamlining customer interactions, generative AI has been revolutionizing content creation across fields including healthcare. Additionally, multi-modal Al remains one of the most popular AI trends in business. It focuses on leveraging machine learning trained on multiple modalities, including speech, images, and traditional numerical data sets. As a result, there will be a more holistic and human-like cognitive experience.
Appinventiv opines that companies can capitalize on multi-modal Al and develop intelligent systems analyzing diverse data streams, which can help improve natural language understanding and voice recognition for better user experiences.
To list the 10 AI Stocks That Will Skyrocket, we sifted through several online rankings and shortlisted the companies catering to the broader AI sector. Next, we chose the ones that analysts see significant upside to. Finally, the stocks are arranged in ascending order of their average upside potential, as of February 24. We also mentioned hedge fund sentiments around each stock, as of Q4 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Average Upside Potential: 50.3%
Number of Hedge Fund Holders: 43
Credo Technology Group Holding Ltd (NASDAQ:CRDO) is a critical player in the AI ecosystem as it offers advanced semiconductor solutions supporting high-performance data transfer and interconnects that are important for AI-driven applications. The broader AI infrastructure market continues to experience strong growth, courtesy of higher adoption of AI technologies throughout various industries. Credo Technology Group Holding Ltd (NASDAQ:CRDO)’s emphasis on power-efficient solutions for AI clusters remains in line with the trend, with data centers seeking to balance performance with energy consumption.
As AI workloads grow in complexity and scale, there are expectations that the demand for high-speed, efficient connectivity solutions will increase. Credo Technology Group Holding Ltd (NASDAQ:CRDO)’s expertise in this area can place it as a critical enabler of AI infrastructure development, potentially resulting in sustained long-term growth with the expansion of the AI market. As per Credo Technology Group Holding Ltd (NASDAQ:CRDO)’s chief, the company is in the early stages of widespread market adoption and remains well-placed as the market leader. Notably, AI-driven demand for high-speed, power-efficient, and reliable connectivity has been accelerating.
TimesSquare Capital Management, an equity investment management company, released its Q2 2024 investor letter. Here is what the fund said:
“Among the wide variety of Information Technology companies, we prefer critical system providers, specialized component designers, systems that improve productivity or efficiency for their clients, and others that closely tie to increasing shares of corporate IT budgets. Credo Technology Group Holding Ltd (NASDAQ:CRDO), a supplier of high-speed connectivity solutions, surged ahead by 51%. The company reported inline April quarter results and management’s July quarter guidance met expectations; AI spending is a growth driver.”
Overall CRDO ranks 3rd on our list of the AI stocks that will skyrocket. While we acknowledge the potential of CRDO as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than CRDO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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