Rene Haas, CEO of Arm Holdings plc (ARM), highlights AI advances and market share gains; William Blair initiates coverage with an Outperform rating

We recently compiled a list of the 20 trending AI stocks according to latest analyst ratings and news. In this article, we'll take a look at where Arm Holdings plc (NASDAQ:ARM) stands compared to the other trending AI stocks.

Global management consulting firm Bain & Company recently released a report on the artificial intelligence industry, highlighting that AI is driving an unprecedented wave of technological change, with the market for AI products and services expected to reach between $780 billion and $990 billion by 2027 become. According to research conducted by Bain, major cloud service providers have been at the forefront of AI research and development, pushing the boundaries of larger models, advanced infrastructure, and energy efficiency. These hyperscalers focused on developing larger, more complex models that required significant computing power and resources, leading to the need for data centers with power capacities of up to gigawatts and potentially straining energy grids and supply chains.

For more information on these developments, see 30 The most important AI stocks according to BlackRock And AI news you don't want to miss.

Bain emphasized that while the big players dominate the upper end of the market with expansive models and huge data centers, innovation is also flourishing in smaller models. These smaller, domain-specific models were deployed at the edge, where they were more cost-effective, energy-efficient, and capable of meeting real-time processing requirements, particularly in applications such as autonomous driving. The proliferation of models like Llama, Claude, and Gemini highlighted how AI was quickly evolving beyond a few proprietary models and many options now included open source models or options specialized for specific tasks.

The study further stated that the rapid growth of AI workloads, particularly in data-intensive applications, is also changing the technology landscape. The need for more storage, computing power, and memory drove innovation in data center design, networking, and storage technologies. According to Bain, chipmakers and especially GPU makers expanded beyond their core graphics processing units to offer integrated solutions that improved the efficiency of AI models, with their products now combining compute, storage and networking functions. The competition also spurred the development of vertically integrated AI solutions, with technology companies developing everything from hardware to software to optimize AI performance.

For more information on these developments, see The top 33 AI companies to watch out for And 20 industrial stocks are already riding the AI ​​wave.

Our methodology

For this article, we selected AI stocks based on the latest news and analyst ratings. These stocks are also popular with hedge funds.

Why do we care about the stocks hedge funds invest in? The reason is simple: Our research shows that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, outperforming its benchmark by 150 percentage points (Further details can be found here).

A leading semiconductor chip on a computer robotic arm, reflecting the company's technological advances.

Arm Holdings plc (NASDAQ:ARM)

Number of hedge fund owners: 38

Arm Holdings plc (NASDAQ:ARM) designs, develops and licenses central processing unit products and related technologies to semiconductor companies and original equipment manufacturers. The company's CEO, Rene Haas, recently appeared on news platform CNBC to highlight his company's progress in the AI ​​space. Haas told investment adviser Jim Cramer that Arm has achieved a number of design wins in the data center in recent years. He noted that the company has recently gained significant market share in the data center space. AI workloads that require large computing power are great for Arm, he added. According to Haas, the company is well positioned for the future.

William Blair recently initiated coverage on shares of Arm Holdings plc (NASDAQ:ARM) with an Outperform rating. In a research note, analysts at the consulting firm noted that Arm is a major provider of computing intellectual property with top-notch financials. Analysts further noted that Arm provided critical computing IP underpinning more than $200 billion in chip value across the mobile, automotive, Internet of Things and data center markets, with its royalty/royalty revenue model driving best-in-class profitability .

Overall, POOR takes 10th place on our list of hot AI stocks. While we recognize ARM's potential as an investment, we believe some AI stocks are more promising to deliver higher returns, and within a shorter time frame. If you're looking for an AI stock that has more promise than ARM but trades at less than 5 times earnings, check out our report on it cheapest AI stock.

READ MORE: $30 Trillion Opportunity: The 15 Best Humanoid Robot Stocks to Buy, According to Morgan Stanley And Jim Cramer says NVIDIA has “become a wasteland”.

Disclosure: None. This article was originally published on Insider Monkey.