We recently created a list of the 35 trending AI stocks based on recent news and analyst ratings, focusing on Cognex Corporation (NASDAQ: CGNX) in comparison with other AI stocks. Since the public introduction of ChatGPT two years ago, the generative AI sector has rapidly evolved, attracting significant investment and boosting valuations for both startups and established tech firms. This growth has mainly centered around cloud-based AI solutions, which require extensive data infrastructures. As these AI models become more complex, the need for advanced data centers has surged, prompting a competitive push among companies to build extensive facilities. It is estimated that major players will collectively invest around $160 billion next year on capital expenditures to acquire powerful GPUs and infrastructure for training AI models, with global data center investments potentially reaching $2 trillion in the coming years. However, concerns remain regarding whether the revenue from AI applications can keep pace with these high development and infrastructure costs. A parallel trend is emerging in edge AI, where algorithms run directly on devices like smartphones and computers instead of centralized servers. Edge AI enhances real-time responsiveness and privacy, with nearly 50% of smartphones expected to have generative AI capabilities by 2027, up from 4% today. Yet, technical barriers exist, as many existing devices lack the processing power for large AI models. Nevertheless, smaller, specialized AI models are gaining popularity for their efficiency and performance.

Ongoing advancements by semiconductor companies are expected to improve the ability of consumer devices to support more complex AI applications, with experts predicting sales of smartphones and PCs could surpass $700 billion by 2027. The ultimate success of edge AI will depend on the development of valuable applications that encourage consumer investment. **Our Methodology** AI stocks were selected from analyses of news articles, stock assessments, and hedge fund interests; we find that mimicking the top picks of hedge funds can yield significant market outperformance. Our quarterly investment strategy has returned 275% since May 2014, significantly outperforming benchmarks. **Cognex Corporation (NASDAQ: CGNX)** Cognex specializes in machine vision products that automate manufacturing and distribution. CEO Robert Willett indicated that growth in semiconductors and memory chips fueled by AI is expected. Cognex leads the integration of AI in machine vision, highlighted by their launch of the Insight L38, the first AI-enabled 3D industrial vision system. This system has reportedly attracted twice the customer interest compared to previous models. Cognex ranks 24th among trending AI stocks, but we believe there are other AI stocks that may offer greater returns in a shorter period. If you seek AI stocks trading below 5 times earnings with more growth potential than CGNX, check out our report on the cheapest AI stocks. For more insights, see "30 Most Important AI Stocks According to BlackRock" and "15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley. "