We recently compiled a list The 12 Hottest Artificial Intelligence Stocks in Latest News and Ratings. In this article, we'll take a look at how Cadence Design Systems, Inc. (NASDAQ: CDNS ) stacks up against other trending artificial intelligence stocks.
Donald Trump is proving to be the spark that takes AI investment to new heights. Just days after rescinding an executive order regulating the risks of artificial intelligence, the US president unveiled a $500 billion private sector plan. Stargate is a project that highlights how companies are racing against time to position themselves in the AI revolution.
"The Stargate Project is a new company that aims to build new artificial intelligence infrastructure for OpenAI in the United States," OpenAI, Oracle and SoftBank said in a joint statement. "This project will not only support the reindustrialization of the United States, but also provide protection." Strategic capabilities for the national security of the United States and its allies.”
The new AI initiative includes several leading AI developers, including ChatGPT creator OpenAI, paving the way to build the data centers needed to drive and support various AI models. Goldman Sachs estimates that artificial intelligence will account for 19% of data center power needs by 2028, and technology giants are racing to build and secure data center computing power.
Investment continues to grow as significant technological advances are made in the field of artificial intelligence, particularly in machine learning and generative AI models such as ChatGPT. Investment is expected to increase significantly as businesses look to dominate this revolution and enhance their competitive advantage. However, it is unclear whether these investments will pay off accordingly.
The cost of training a single cutting-edge AI model has increased exponentially, from $1,000 in 2017 to nearly $200 million in 2024. This growth comes against the backdrop of continued returns on scale in AI model training data, computing power, and model complexity. Although unit costs per computing operation have fallen rapidly over the same period, costs could still reach billions of dollars by 2030. By the mid-2030s, the hardware cost of global artificial intelligence infrastructure may exceed $1 trillion.
Amid escalating cost concerns, physical AI has become the next frontier for AI investment. Companies are increasingly investing in robot makers, automotive suppliers and specialty semiconductor companies.
AI technology started with search bots and later evolved into "agent AI," which includes research assistants and customer support agents. Investors studying this technological frontier are now focusing on real-world interactions with autonomous devices that use artificial intelligence, such as self-driving cars, drones and robot nurses.
"As we move into 2025, agent AI will be the next inflection point before the physical AI moment... Like everything else in the world, you have to crawl before you can walk and then you can run," a senior CFRA equity source said. Analyst Angelo Zino
The surge in investment around artificial intelligence also brings exciting investment opportunities. Likewise, investors are increasingly vying for positions at tech giants and lesser-known companies with revolutionary technologies.
Our methodology
In this article, we use news articles, stock analysis, and press releases to select artificial intelligence stocks. The stocks are also popular among hedge funds.
Why are we interested in stocks that hedge funds invest in? The reason is simple: our research shows we can beat the market by mimicking the top hedge funds' stock picks. Our quarterly newsletter strategy, which selects 14 small- and large-cap stocks each quarter, has returned 275% since May 2014 and beat the benchmark by 150 percentage points (more details here).
Office of software engineers and designers collaborating on digital projects.
Number of hedge fund holders: 53
Cadence Design Systems, Inc. (Nasdaq: CDNS) provides global software, hardware, services and reusable integrated circuit (IC) design modules. On January 21, the company reached an agreement to acquire Secure-IC, a well-known supplier of embedded security IP platforms. The acquisition is designed to strengthen the company's intellectual property portfolio while meeting the growing demand for integrated security in electronic systems across various industries.
Additionally, the acquisition should complement the company's silicon-proven IP offerings, which include interfacing artificial intelligence, machine learning, and DSP solutions. Cadence Design Systems, Inc.'s (Nasdaq: CDNS) current IP offerings range from protocol controllers and AI accelerators to support customers using different processor architectures, resulting in mutually beneficial synergistic go-to-market opportunities. Upon completion of the transaction, both companies will be well-positioned to grow internationally, deliver more value to customers and develop the next wave of embedded cybersecurity solutions for complex silicon systems and chipsets.
Overall CDNS Ranked sixth Be on our list of trending AI stocks with the latest news and ratings. While we acknowledge the potential of CDNS as an investment, we firmly believe that AI stocks are poised to deliver high returns over a shorter period of time. If you're looking for an AI stock that's more promising than CDNS but trades at less than 5x its P/E, check out our report on the stock The Cheapest Artificial Intelligence Stocks.
Read next: 20 Best Artificial Intelligence Stocks to Buy Right Now and Complete list of 59 artificial intelligence companies with market capitalization below $2 billion.
Disclosure: None. This article was originally published on Insider Monkey.