We recently compiled a list of 35 Trending AI Stocks According to Latest Analyst Ratings and News. In this article, we’ll take a look at where Meta Platforms, Inc. (NASDAQ: META) stands in relation to other trending AI stocks.

As earnings season unfolds, investors are eager to see how investments in artificial intelligence (AI) among S&P 500 companies perform. Analysts expect earnings growth to slow, with S&P 500 earnings expected to rise 5.3% from the same quarter last year, down from the 13.2% rise in second quarter, according to a report from the Reuters news agency. The technology and communications services sectors are expected to post the strongest year-over-year growth, with technology profits expected to increase 15.4% and communications services 12.3%. AI-related companies have dominated earnings stories since last year, generating substantial gains in the market. The S&P 500 Index is currently at record highs, having risen about 21% year to date, largely fueled by strong performance in the technology and communications sectors.

Learn more about these developments by accessing 10 Unsexy AI Stocks According to Goldman Sachs And 10 Hot AI Stocks According to Goldman Sachs.

Howard Chan, CEO of Kurv Investment Management, noted that analysts are interested in assessing how large companies monetize their AI initiatives, and that those that succeed in this regard are particularly rewarded. Meta, for example, saw its stock price rise after forecasting strong sales growth, suggesting that its digital ad revenue is effectively funding its AI investments. Conversely, spending by giants like Google on AI technologies has raised questions about their integration with existing business models. With the S&P 500 trading at 22.3 times 12-month expected earnings, surpassing its long-term average of 15.7, many investors are hoping this quarter’s earnings will justify higher stock valuations. UBS Global Wealth Management’s Solita Marcelli said she was optimistic that upcoming third-quarter results could catalyze further gains, especially as the semiconductor sector remains a focal point for investments in the AI.

Learn more about these developments by accessing 30 The Most Important AI Stocks According to BlackRock And Beyond Tech Giants: 35 Non-Tech AI Opportunities.

Our methodology

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

Why are we interested in stocks that hedge funds are piling into? The reason is simple: our research has shown that we can outperform the market by imitating the stocks selected by the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

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A team of developers working in unison to create the company’s messaging application.

Meta Platforms, Inc. (NASDAQ:META)

Number of hedge fund holders: 219

Meta Platforms, Inc. (NASDAQ: META) is dedicated to developing products that enable users to connect and share with friends and family. Truist analyst Youssef Squali recently raised the stock’s price target from $570 to $650 and maintained a buy rating on the shares. The advisory expects the company’s third-quarter results to be at the high end of guidance of 13% to 20% for revenue growth amid sustained demand for social media advertising and CPMs higher. Meta’s investments in AI also continue to drive better ranking and recommendation results for users and advertisers, the notice added.

Overall META ranks 3rd on our list of trending AI stocks. While we recognize the potential of META as an investment, our conviction lies in the belief that certain AI stocks hold more promise in terms of higher returns in a shorter time frame. If you’re looking for an AI stock that’s more promising than META but is trading at less than 5x earnings, check out our report on cheapest AI stock.

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