We recently compiled a list of the Top 10 AI Stocks on Latest News and Analyst Ratings. In this article, we are going to take a look at where SAP SE (NYSE:SAP) stands against the other AI stocks.

Hugh Gimber, global market strategist at J.P. Morgan Asset Management, joined CNBC’s Squawk Box Europe to discuss the sectors poised to benefit from the artificial intelligence boom as the dominance of the “Magnificent 7” fades.

READ ALSO: 10 AI Stocks Taking Wall Street by Storm and Why Nvidia (NVDA) Stock Is Declining Again Today

Gimber anticipates a broadening across sectors in 2025, stating that the current gap between Mag7 and the rest doesn’t make sense. This is because it is unrealistic to have a handful of stocks priced as if they are going to unlock new productivity across the economy alone, while other sectors don’t witness any major earnings upgrades.

He further stated that he believes the story for next year is to see some of those earnings benefits coming through in sectors such as financials, manufacturing, and healthcare, particularly, as these sectors start to reap the rewards of the capital expenditures already initiated by tech giants.

As the gap between mega caps and the rest starts to close, it is going to set the stage for a healthy market and more opportunity under the surface. As such, attention turns to how quickly certain stocks respond and what unfolds as the market acknowledges the increasing number of AI-related opportunities heading into the year.

For instance, some utility names could emerge as critical players, and healthcare stands out as a particularly strong candidate for growth. There are going to be plenty of examples that are showing up over the next few quarters, and some of the biggest gains might come from names that aren’t yet on the radar.

As of today, artificial intelligence stocks are still the hottest in the market, even though the Magnificent Seven has delivered mixed results lately due to concerns over escalating expenditures and valuation pressures.

In a notable shift, Barron’s reports that investor sentiment may be shifting from AI infrastructure providers, such as those focusing on hardware and cloud-based resources, toward software-centric players. These software companies are now being recognized for their potential to deliver higher margins, scalability, and faster adoption cycles as AI applications permeate industries ranging from healthcare to finance and beyond.

Moreover, the upcoming inflation report, seen as a key to future interest rates, is also causing investor skepticism. While AI stocks are poised for long-term growth as the technology continues to revolutionize multiple sectors, short-term fluctuations remain tied to macroeconomic concerns.

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For this article, we selected AI stocks by going 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).Goldman Sachs Initiates Coverage on Penguin Solutions, Inc. (NASDAQ:PENG) with ‘Buy’ Rating, Citing AI Growth Potential

A data centre room with cloud technology, illustrating the enterprise application software services.

SAP SE (NYSE:SAP)

Number of Hedge Fund Holders: 36

SAP SE (NYSE:SAP), a leader in ERP software, leverages artificial intelligence to enhance its enterprise resource planning (ERP) solutions. On December 9, the SAP News Center revealed that the company is integrating the AI copilot Joule into its popular SAP Mobile Start app, facilitating users with smartphones or tablets to interact with SAP applications in natural language. This is the ultimate combination of native mobile experience and generative AI for Apple or Android-based systems. Users can interact with the AI copilot using their own words to work on approval or maintenance activities. The feature will allow users to operate SAP “with your fingertips”, using natural conservation that is potentially going to be hands-free in the future. This is because certain tasks, such as working on machines at heights, make it difficult or even dangerous to operate apps.

“Consider SAP Mobile Start as the future beginning and center for a fully AI-enabled mobile app suite. It’s exciting to see our vision becoming a reality now. The power of business AI and the latest mobile technology transform the way people engage with our applications, making it more natural and just better for all of us.”

Overall, SAP ranks 7th on our list of top 10 AI stocks on latest news and analyst ratings. While we acknowledge the potential of SAP 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 time frame. If you are looking for an AI stock that is more promising than SAP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article is originally published at Insider Monkey.

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