An updated edition of the April 7, 2025 article.

Artificial Intelligence (AI) enables machines to process vast amounts of data, recognize patterns and make autonomous decisions. AI is solving real-world problems, including customer service (chatbots), medical diagnosis, fraud detection, autonomous vehicles, personalized recommendations and many more. Significant improvements in computing hardware (GPUs and TPUs) are allowing the development of more complex AI models.

AI is gaining popularity thanks to multimodal learning and growing context awareness. The emergence of Generative AI (Gen AI) and Agentic AI has further enhanced AI’s capabilities, making it a key driver of efficiency, automation and innovation. AI is revolutionizing industries such as robotics, healthcare, finance, cybersecurity and e-commerce with its ability to mimic human intelligence through machine learning, deep learning and natural language processing. Agentic AI is delivering sophisticated agents that can reason, plan and even learn from customer interactions. 

Enterprises are rapidly infusing AI into their applications to solve complex issues and offerings from Cognizant Technology Solutions CTSH has been a major help. Search giant Alphabet GOOGL is infusing AI into its search business. U.S. tech giants, including Microsoft MSFT, Amazon AMZN, Google and Meta Platforms META, have been at the forefront of bringing remarkable advances to the AI technology well, supported by powerful AI chips from NVIDIA NVDA, which is again powered by solutions from the likes of Lam Research LRCX. 

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Microsoft is benefiting from its strategy of infusing AI into its applications. The company has more than 60,000 Azure AI customers. The Azure AI Foundry application and agent development hub has now been adopted by developers at more than 70,000 enterprises and digital-native companies. This Zacks Rank #2 (Buy) company’s Azure AI Agent Service has been utilized by more than 10,000 organizations to build, deploy and scale agents. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Microsoft’s Phi small language models have gained significant traction, with 38 million downloads to date. In the development space, GitHub Copilot's code review agent has handled more than eight million requests, while GitHub Copilot itself has surpassed 15 million users, representing more than fourfold growth year over year.

Microsoft Copilot has proven instrumental in enhancing employee productivity and creativity, with data from the Work Trend Index research showcasing potential time savings of up to 10 hours per month. Microsoft is now extending Copilot’s capabilities across its entire product spectrum, including Windows, Microsoft 365, Microsoft Teams and Edge.

Lam Research’s etch and deposition technology is critical for HBM, and its advanced packaging technologies are essential for AI workloads. LRCX capitalizes on the opportunities from the booming demand for AI and datacenter chips, which require advanced fabrication technologies. Lam Research, with its robust etch and deposition product line like SABRE, Striker, ALTUS, VECTOR, Syndion and Vantex, remains well-poised to capitalize on the growing demand for components that support the development of AI chips.

LRCX’s ALTUS ALD tool utilizes the capabilities of metal molybdenum to ensure high-precision deposition of low-resistivity, void-free molybdenum metallization that enables chip makers to develop memory and logic chips for AI workloads. This Zacks Rank #2 company’s Aether platform allows extended single-print patterning, higher resolution and pattern fidelity, enabling chip manufacturers to produce chips with higher performance, greater density, and energy efficiency, ideal for AI chip manufacturing.

Strategic investments in research and development activities position Lam Research well to capitalize on the growing wafer fab equipment spending. 

Another Zacks Rank #2 company, Cognizant Technology Solutions, is benefiting from healthy discretionary spending as clients continue to invest in cloud and data modernization and in building foundations for AI-led innovation. In first-quarter 2025, Cognizant deepened its AI capabilities with more than 1,400 Generative AI engagements across multiple clients.

Cognizant is investing heavily in AI-powered software-led engineering at the intersection of digital and physical worlds, making products intelligent, connected and autonomous. The company expects AI-written code to increase to more than 20% in the first quarter of 2025. 

Cognizant’s rich partner base that includes hyperscaler partners like Microsoft, Amazon and Google and enterprise software providers like ServiceNow and Salesforce is noteworthy. In March, Cognizant launched an AI-powered dispute management solution in partnership with ServiceNow. The solution leverages ServiceNow’s advanced dispute management technology to streamline dispute resolution for mid-market banks in North America.

Cognizant, in collaboration with NVIDIA, announced advancements in AI technology. The company leverages NVIDIA’s advanced AI solutions across five key areas, including enterprise AI agents, industry-specific large language models, digital twins for smart manufacturing, and AI infrastructure. The integration of NVIDIA’s AI technology into Cognizant’s Neuro AI platform is expected to drive business transformation.

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