NVIDIA-backed coalition to revolutionize AI-powered drug discovery

We recently compiled a list of the 35 trending AI stocks on the latest news and analyst ratings. In this article, we'll take a look at where Exscientia plc (NASDAQ:EXAI) stands compared to the other trending AI stocks.

Two years after ChatGPT's public debut, the generative AI landscape has rapidly evolved, driving significant investments in artificial intelligence and increasing the valuations of startups and large tech companies alike. This surge in interest has focused primarily on cloud-based AI, where services such as the OpenAI models run on large data infrastructures. However, as these models become more complex, the demand for larger and more advanced data centers increases, leading to a race among companies to build larger facilities. Significant investments are forecast, with major players estimated to spend a total of around $160 billion in capital expenditures next year, primarily to acquire high-performance GPUs and the associated infrastructure needed to train AI models. Top executives have even predicted that global data center investment could double to $2 trillion in the next few years. Nevertheless, the sustainability of this buying frenzy raises the question of whether the revenue from AI applications can meet the high costs of development and infrastructure.

For more information on these developments, see The 10 Best AI Data Center Stocks And 10 Booming AI Stocks According to Goldman Sachs.

Amid these challenges, a new trend in edge AI is emerging. This concept involves running AI algorithms directly on personal devices such as smartphones and computers, rather than relying on centralized cloud servers. Edge AI offers numerous benefits, including real-time responsive capabilities without the need for a high-speed internet connection and improved data protection by keeping user data on personal devices. Analysts expect that almost 50% of smartphones will have generative AI capabilities by 2027, a significant increase from the current 4%. However, implementing edge AI presents technical hurdles, primarily because existing devices do not have the computing power and storage necessary to support large AI models. For example, running OpenAI's GPT-4 model, which contains approximately 1.8 trillion parameters, is not possible on typical smartphones today. Still, smaller, task-specific AI models are gaining traction because they require less training data and can outperform larger, more general models in certain applications. These lightweight models are often open source and designed for specific functions, making them easier to implement on consumer devices.

The story continues

As semiconductor companies continue to innovate by increasing processing power and storage in smartphones and PCs, the capacity to run AI models on these devices is expected to grow. Research suggests that the proportion of smartphones supporting large AI models could increase significantly in the next few years. Major chipmakers are advancing technologies such as chipset designs, allowing them to develop more powerful processors without having to shrink circuitry. For investors, the rise of edge AI could lead to new opportunities and growth in the consumer electronics market as users are likely to upgrade their devices to take advantage of expanded AI capabilities. UBS analysts expect total smartphone and PC sales could exceed $700 billion by 2027. Ultimately, the success of Edge AI depends on developing compelling applications that consumers find valuable enough to invest in.

For more information on these developments, see 30 The most important AI stocks according to BlackRock And Beyond the Tech Giants: 35 Non-Tech AI Opportunities.

Our methodology

For this article, we selected AI stocks by reviewing news articles, stock analysis and press releases. 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 the benchmark by 150 percentage points (see more details here).

A data scientist stands in front of a large monitor and presents an analysis on drug development.

Exscientia plc (NASDAQ:EXAI)

Number of hedge fund owners: 6

Exscientia plc (NASDAQ:EXAI) is an AI-driven pharma-tech company engaged in the design and development of differentiated medicines for diseases with high unmet patient needs. Back in August, the NVIDIA-backed biotech company Recursion announced that it would take over competitor Exscientia as part of an all-stock deal. NVIDIA, one of the largest AI companies in the world, invested nearly $50 million in Recursion last year. Recent reports suggest that the two biotech companies are now seeking shareholder support for their proposed merger agreement at upcoming investor meetings next month. David Hallett, CEO of Exscientia, previously said that by merging the two companies, the duo would be able to develop better medicines for patients faster and at a lower cost.

Overall EXAI takes 35th place are among the AI ​​stocks that are currently trending. While we recognize EXAI's potential as an investment, we believe some AI stocks are more promising for generating higher returns, and within a shorter time frame. If you're looking for an AI stock that has more promise than EXAI but trades at less than 5x 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.