We recently compiled a list of the 15 AI News Investors Should Not Miss.In this article, we are going to take a look at where Zoom Video Communications, Inc. (NASDAQ:ZM) stands against the other AI stocks investors should not miss.
Artificial Intelligence developments are making headlines across various sectors. From high-profile legal battles to groundbreaking advancements in model performance and safety protocols, AI is reshaping the landscape across industries at an unprecedented pace.
Before we move on to the breaking news on AI, let’s talk about Morningstar’s recent report. The investment research firm reveals that for the third consecutive year, investors are leaving exchange-traded funds related to specific themes for funds linked to broad stock-market benchmarks "that are hitting record highs". Despite overall growth in equity ETFs, thematic ETFs have lost $5.8 billion in investor capital in the year 2024. This is greater than $4.8 billion outflows in all of 2023. The reason? Broad market index returns are setting a higher bar for thematic funds this year.
"It's not that people don't like the idea of themes any longer, but that a bull market dominated by a handful of megacaps makes it hard for any theme to stand out”.
As per Morningstar, thematic ETFs often struggle due to mistimed investments, with investors usually missing out on two-thirds of their returns. Despite some AI-themed funds having strong holdings, higher fees and timing challenges reduce their overall appeal.
"I think that when S&P 500 megacaps stop delivering the way they do today, the focus will shift back to thematic ETFs”.
Moreover, while AI remains a key focus in many thematic ETFs, its impact goes far beyond investing. Consider Penguin Random House, the first of the Big Five anglophone trade publishers to amend its copyright information. The publisher has recently added a language to its copyright pages to prohibit the use of those books to train AI. Publishers and AI firms will be increasingly clashing in the future if clear guidelines and processes aren’t kept in place. In a similar endeavor, The New York Times has sent Perplexity AI, an AI-powered research firm, a "cease and desist" notice demanding that it stop using the newspaper's content for generative AI purposes. The news publisher claims that the way the AI Company uses its material violates copyright law.
In other news, Anthropic, a U.S.-based artificial intelligence public-benefit startup, is now adding a comprehensive update to its safety policy, reinforcing the guardrails of its AI as it becomes more capable. This push to improve AI safety is in stark contrast to competitors such as OpenAI, whose increasing focus on improving capabilities and performance is very likely to threaten safety guidelines in the future. As per McKinsey, 63% of companies consider inaccuracy risk to be relevant. However, only 38% of companies are working to mitigate the risk.
While artificial intelligence may be intimidating, it is equally, if not more, beneficial for mankind. In its latest achievement, AI has helped UCLA researchers develop a deep-learning framework that teaches itself to automatically analyze and diagnose MRIs and other 3D medical images. That too, with the accuracy matching that of medical specialists in a fraction of the time. Another breakthrough from Archetype AI, a physical AI company, is set to significantly change how we understand and interact with the physical world. The model, named Newton, shows the unparalleled capacity to generalize across diverse physical phenomena using only raw sensor measurements as input.
Finally, in our roundup of the latest AI news, the US rules that will ban certain US investments in artificial intelligence in China are under final review, as per a government posting. The rules, requiring US investors to notify the Treasury Department regarding some investments in AI and other stem technologies, come from an executive order signed by President Joe Biden in August 2023. The order aims to keep American investors' know-how from aiding China's military. Chipmakers and related companies that may be impacted by the decisions denied responding to Reuters' requests for comment.
Methodology
For this article, we selected AI stocks by combing through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of a hand using a laptop to control an immersive video meeting.
Zoom Video Communications, Inc. (NASDAQ:ZM) is a communications technology company popularly known for its video conferencing application called Zoom. The company leverages AI in several ways, such as through Zoom AI Companion, an AI assistant that can compose messages, summarize meetings, and offer meeting assistance.
On Tuesday, October 22, Zoom Video Communications, Inc. (NASDAQ:ZM) announced that it is partnering with Suki, an AI medical scribe provider. The partnership aims to offer doctors on its platform an AI scribe to help them take notes about consultation with their patients. Punit Soni, founder and CEO of Suki, claims that the popular video conferencing platform considered every other AI medical scribe startup before they chose Suki.
Earlier this month, Zoom’s founder and CEO, Eric Yuan revealed that the company is aiming to transform itself from merely a conferencing company to one focused on AI tools for workplaces. On October 17, Wedbush, a privately held financial services firm, upgraded the rating on the company’s stock from “Neutral” to “Outperform”, raising the price target from $80 to $85. As per analysts, the company is expected to see a re-acceleration in growth at enterprise customers. The company’s broad portfolio is also expanding into a contact center with a “strong installed base” of small-to-mid-sized business, mid-market, and enterprise customers. This will position it for strong up-sell and cross-sell opportunities, the analysts note.
Overall ZM ranks 10th on our list of the AI stocks investors shouldn't miss. While we acknowledge the potential of ZM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ZM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
