Goldman Sachs AI Stocks: Top 10 Stock Picks
In this article, we will be taking a look at Goldman Sachs AI stocks: top 10 stock picks. To skip our detailed analysis of the artificial intelligence market, you can go directly to see the Goldman Sachs AI Stocks: Top 5 Stock Picks.
Artificial intelligence has been all the hype so far in 2023. Every notable tech company is trying to roll out advanced artificial intelligence products and services, while every consumer and investor is obsessively following AI-related news to keep apprised of how this technology develops and evolves even further. With rising interest in this technology, companies investing in this space are trying to make the most out of the artificial intelligence craze, as recent moves by several big tech names have shown.
Competition In The AI Space
An example of one such company is that of Alphabet Inc. (NASDAQ:GOOG). The tech giant has recently announced that it is now going to be offering the company's Duet AI, a technology that is introducing generative AI applications to the Google suite of products, generally in Google Workspace. It is charging large businesses about $30 per month for each user making use of its artificial intelligence enhancements, which are being added to Gmail and other Alphabet Inc. (NASDAQ:GOOG) productivity apps. The technology is being offered with a free trial before the paid subscription begins, allowing users to get a feel of what they can accomplish on their Alphabet Inc. (NASDAQ:GOOG) applications with this technology incorporated in them. According to the company's announcement, a consumer version of Duet AI is expected to be made available in Google Workspace early in 2024, leaving those who are following the news closely in anticipation of the transformations they can expect from this tech.
Alphabet Inc.'s (NASDAQ:GOOG) Duet AI is set to rival its competitor Microsoft Corporation's (NASDAQ:MSFT) 365 Copilot enhancements in both pricing and user experience. The rivalry between the two big tech companies really goes to show how neither wants to be left in the dust by the other, leading both to continue working on and investing in AI-related products and services to make them readily available to their respective consumers. While companies are busy competing with each other over besting the other in the AI race, investors are in a panic over how to invest in this space to make the most of the AI boom we have been seeing. Considering this, here are some comments from CNBC's Financial Advisor Council member, Barry Glassman, about artificial intelligence, made this August:
"AI has the potential to transform every company and how we go about the world. I believe AI is going to be as transformative as the internet itself. There's going to be distruptions just like the internet, there are going to sectors, industries, companies that fail because AI is just too easy and cheap. But at the same time, the overall productivity of the US and global economy, I think is going to take leaps and leaps so that we get so much more done and so many more innovations that the economy as a whole will benefit."
Niche Players Or Outliers?
On the subject of how to invest in AI, Glassman said the following:
"The niche players early on may not, in fact, be the long-term plays. For example, the early internet investments like AOL and Cisco were phenomenal in the first few years - they weren't the major players over the next 10 or 20. The same was true during the pandemic stocks... Even the non-AI companies, even the non-technology companies, they're going to benefit so much from this technology that I'm not sure it makes sense to just invest in the niche players in today's market."
Investors can thus benefit from taking a broader view of the market to find outliers that have the potential to benefit from AI alongside companies like NVIDIA Corporation (NASDAQ:NVDA) that are right in the middle of the AI boom. Considering the above, we have gone through Goldman Sachs' AI stock picks to give investors an idea of what sort of companies institutional investors are leaning toward in this space today. These include top AI stock picks for the long term alongside many cheap AI stocks.
Copyright: kentoh / 123RF Stock Photo
Our Methodology
We went through Goldman Sachs' second-quarter 13F holdings to pick 10 AI stocks based on the investor's stakes in them. The stocks are ranked based on the stake value, from the lowest to the highest. We also mentioned hedge fund information for each stock, using Insider Monkey's hedge fund data for the second quarter.
Goldman Sachs AI Stocks: Top Stock Picks
10. salesforce.com, inc. (NYSE:CRM)
Goldman Sachs' Q2 Stake Value: $1.2 billion
Number of Hedge Fund Holders: 122
Gregg Moskowitz, an analyst at Mizuho, maintains a Buy rating on shares of salesforce.com, inc. (NYSE:CRM) as of August 16. The analyst also placed a price target of $250 on the stock.
Based in San Francisco, California, salesforce.com, inc. (NYSE:CRM) is an application software company. It provides Customer Relationship Management (CRM) technology and cloud services, among more. The company has been infusing generative AI across its platform with Einstein GPT, and has introduced AI solutions in its products like Service Cloud, Sales Cloud, Marketing Cloud, and Commerce Cloud.
At the end of the second quarter, 122 hedge funds held stakes in salesforce.com, inc. (NYSE:CRM). Their total stake value in the company was $7.2 billion.
Like Alphabet Inc. (NASDAQ:GOOG), NVIDIA Corporation (NASDAQ:NVDA), and Microsoft Corporation (NASDAQ:MSFT), salesforce.com, inc. (NYSE:CRM) is one of Goldman Sachs' top AI stocks this year.
9. Intuit Inc. (NASDAQ:INTU)
Goldman Sachs' Q2 Stake Value: $1.3 billion
Number of Hedge Fund Holders: 86
Intuit Inc. (NASDAQ:INTU) is another application software company on our list. It is based in Mountain View, California, and provides financial management and compliance products and services for consumers, small businesses, self-employed individuals, and accounting professionals. The company has introduced a generative AI operating system, GenOS, which helps design, build, and deploy generative AI experiences at a rapid speed.
As of August 28, Steven Enders, an analyst at Citigroup, maintains a Buy rating on shares of Intuit Inc. (NASDAQ:INTU). The analyst also raised his price target on the stock from $495 to $565.
Our hedge fund data for the second quarter shows 86 hedge funds long Intuit Inc. (NASDAQ:INTU), with a total stake value of $4.9 billion.
Holding 1.4 million shares in the company, Durable Capital Partners was the most prominent shareholder in Intuit Inc. (NASDAQ:INTU) at the end of the second quarter.
This is what ClearBridge Investments had to say about Intuit Inc. (NASDAQ:INTU) in its second-quarter 2023 investor letter:
“Taking advantage of post-earnings weakness, we initiated a position in Intuit Inc. (NASDAQ:INTU), a provider of software for small business accounting and tax preparation under the QuickBooks and TurboTax brands as well as personal finance (Credit Karma) and marketing services (Mailchimp). We see a clear path to upside earnings revisions as the company expands new products that increase its total addressable market and drive average revenue per user growth.”
8. Texas Instruments Incorporated (NASDAQ:TXN)
Goldman Sachs' Q2 Stake Value: $1.4 billion
Number of Hedge Fund Holders: 56
Generation Investment Management was the largest shareholder in Texas Instruments Incorporated (NASDAQ:TXN) at the end of the second quarter, holding 4.3 million shares in the company.
Texas Instruments Incorporated (NASDAQ:TXN) is a semiconductor company based in Dallas, Texas. It designs, manufactures, and sells semiconductors to electronics designers and manufacturers in the US and internationally. The company offers AI-supported vision processors through which users can execute facial recognition, object detection, and pose estimation, among other related products and services.
As of July 26, Hans Mosesmann holds a Buy rating on shares of Texas Instruments Incorporated (NASDAQ:TXN). The analyst also maintains a price target of $230 on the stock.
There were 56 hedge funds long Texas Instruments Incorporated (NASDAQ:TXN) in the second quarter. Their total stake value in the company was $2.3 billion.
The London Company made the following comments about Texas Instruments Incorporated (NASDAQ:TXN) in its second-quarter 2023 investor letter:
“Texas Instruments Incorporated (NASDAQ:TXN) – TXN shares declined 2% during the quarter. Demand was weaker in all markets except auto. While revenue was down 11% due to the slowing economy, we believe the outlook is positive. The company continues to invest in manufacturing facilities and should benefit from increased spending related to the CHIPS act. TXN is exposed to various end markets across the economy (e.g. automotive industrials). We believe growth in analog semiconductor content demand, in most markets, will drive TXN.”
7. Accenture Plc (NYSE:ACN)
Goldman Sachs' Q2 Stake Value: $1.8 billion
Number of Hedge Fund Holders: 56
A total of 56 hedge funds were long Accenture Plc (NYSE:ACN) in the second quarter, with a total stake value of $2.1 billion.
Accenture Plc (NYSE:ACN) is an information technology company providing strategy and consulting, interactive, industry X, song, and technology and operation services across the globe. The company is based in Dublin, Ireland. It also offers generative AI technology services and other AI solutions.
An Overweight rating was maintained on shares of Accenture Plc (NYSE:ACN) on August 22 by Tien-Tsin Huang, an analyst at JPMorgan. The analyst also raised his price target on the stock from $314 to $341.
GuardCap Asset Management was the most prominent shareholder in Accenture Plc (NYSE:ACN) at the end of the second quarter, holding 1.9 million shares in the company.
Here are some comments Polen Capital made about Accenture Plc (NYSE:ACN) in its first-quarter 2023 investor letter:
“To fund this new purchase, we made modest trims to our positions in Aon and Accenture plc (NYSE:ACN). In order to fund the purchase of, and subsequent addition to, Teleperformance, we modestly trimmed our positions in Aon and Accenture. We trimmed our weighting in Aon, though it remains a top three weighting in the Portfolio. We believed there was room to trim the position after significant relative outperformance by the stock in 2022. There is no change to our positive outlook for this business. We also trimmed our weighting in Accenture, our second trim in the past four months, as the company returns to a normal growth trajectory after an extended stretch of robust results brought about by the pandemic. In addition to growth normalizing, we see increased signs of slowing enterprise tech spending. We continue to believe Accenture is well positioned to grow in line with historical performance, meaning we see the business producing low-double digit total return growth from here.”
6. Oracle Corporation (NASDAQ:ORCL)
Goldman Sachs' Q2 Stake Value: $1.8 billion
Number of Hedge Fund Holders: 84
Oracle Corporation (NASDAQ:ORCL) is a systems software company providing products and services addressing enterprise information technology environments across the globe. It is based in Austin, Texas. The company's AI services offer pre-trained models that an organization can customize with its own data to improve model quality, among more.
Oracle Corporation (NASDAQ:ORCL) was spotted in the 13F holdings of 84 hedge funds at the end of the second quarter. Their total stake value in the company was $3.4 billion.
Karl Keirstead, an analyst at UBS, upgraded shares of Oracle Corporation (NASDAQ:ORCL) from Neutral to Buy on August 29. The analyst also raised his price target on the stock from $120 to $140.
Like Alphabet Inc. (NASDAQ:GOOG), NVIDIA Corporation (NASDAQ:NVDA), and Microsoft Corporation (NASDAQ:MSFT), Oracle Corporation (NASDAQ:ORCL) is an AI stock many hedge funds are piling into this year.
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Disclosure: None. Goldman Sachs AI Stocks: Top 10 Stock Picks is originally published on Insider Monkey.