In this article, we discuss 10 AI news and ratings making waves on Wall Street.
US Energy Shortage Threatens AI Advancements
CNBC reported that the U.S. is facing a power capacity shortage as it races with China to lead in artificial intelligence, according to Caroline Golin, Google’s global head of energy market development. Speaking at a Nuclear Energy Institute conference, Golin highlighted the growing need for reliable energy to support AI advancements, with renewables causing grid instability and prompting the company to turn to nuclear power.
Last October, it partnered with Kairos Power to purchase 500 megawatts from small modular nuclear reactors, with the first reactor expected in 2030. Other Big Techs have also shown interest in nuclear energy, investing in projects to meet rising power demands. While nuclear is seen as a long-term solution, Golin emphasized the immediate need for more power to compete with China. President Trump declared a national energy emergency to fast-track power plant construction for AI data centers.
Stargate Project Aims to Strengthen US AI Leadership
While the energy needs look like a significant hurdle, the latest Stargate project is aiming to solve that problem. Reuters reported on February 6 that OpenAI announced it is assessing U.S. states for AI data center locations under the $500 billion Stargate project, aimed at strengthening the U.S. position in the global AI race against China. Chris Lehane, OpenAI’s chief global affairs officer, stressed the competition’s high stakes and noted that it could shape the future of democratic versus authoritarian AI. He commented:
“As news emerged about DeepSeek, it makes it clear this is a very real competition and the stakes could not be bigger… Whoever ends up prevailing in this competition is going to really shape what the world looks like going forward, whether we have democratic AI that’s free and open, or authoritarian AI that is autocratic.”
The initial Stargate data center is under construction in Abilene, Texas, with the potential for 5-10 campuses overall. However, China’s DeepSeek recently demonstrated that advanced AI models could be developed on less specialized, cheaper chips, challenging the assumption that large, costly data centers are necessary for AI progress, the report stated.
For this article, we selected AI stocks by reviewing news articles, stock analysis, and press releases. We listed the stocks in ascending order of their hedge fund sentiment taken from Insider Monkey’s database of 900 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).
10 AI News and Ratings Making Waves on Wall Street
10. Tempus AI, Inc. (NASDAQ:TEM)
Number of Hedge Fund Holders: 7
Tempus AI, Inc. (NASDAQ:TEM) provides healthcare technology services, including sequencing diagnostics, molecular testing, data analytics, and clinical trial matching, serving the healthcare and pharmaceutical industries.
On February 12, William Blair downgraded Tempus AI (NASDAQ:TEM) to Market Perform from Outperform due to valuation concerns. Despite shares rising 111% year-to-date, the firm believes the company is trading near fair value at $71.21, compared to an estimated value of $65. While recent momentum followed events like Pelosi’s call option purchase and the Trump administration’s AI investment, these are not expected to affect Tempus’ financials. The firm remains positive on Tempus’ business, strategy, and market, but sees limited upside given current revenue growth and AEBITDA guidance.
9. Energy Transfer LP (NYSE:ET)
Number of Hedge Fund Holders: 29
Energy Transfer LP (NYSE:ET) provides natural gas, crude oil, and NGL transportation, storage, processing, and marketing services across the U.S., along with fuel sales and other energy-related services.
On February 12, Stifel raised its price target for Energy Transfer LP (NYSE:ET) from $21 to $23 while maintaining a Buy rating. The company reported Q4 EBITDA of $3.88 billion, slightly below Stifel’s $3.99 billion estimate and the consensus of $3.98 billion. Energy Transfer also announced plans for $5 billion in 2025 growth capital expenditures, which could delay other capital returns due to project timing.
The company’s first natural gas supply contract with Cloudburst, serving a Texas data center, is expected to be well-received by investors, as it marks a significant milestone in midstream’s involvement with data centers. The firm wrote:
“Yesterday, ET announced its first natural gas supply contract with Cloudburst, supplying a Texas data center with ~450 MMcf/d, in what we view as midstream’s first data center related agreement. Today they expanded on the opportunity which we believe will be very well received by investors.”
8. GlobalFoundries Inc. (NASDAQ:GFS)
Number of Hedge Fund Holders: 22
GlobalFoundries Inc. (NASDAQ:GFS) produces semiconductor devices and provides wafer fabrication services globally, with a focus on processors, microcontrollers, and RF modems.
On February 12, Needham upgraded GlobalFoundries (NASDAQ:GFS) to a Buy rating with a $50 price target, as the firm mentioned an improving outlook as the semiconductor industry recovers from its downturn. The firm expects year-over-year growth in 2025 and significant gross margin expansion, expecting margins to reach around 30% by Q4 2025, over 300 basis points higher than previous estimates. Growth is expected to be driven by the automotive and communications/data center sectors. Additionally, geopolitical tensions between the U.S. and China may push customers to diversify and onshore semiconductor manufacturing, which could benefit GlobalFoundries.
7. Freshworks Inc. (NASDAQ:FRSH)
Number of Hedge Fund Holders: 32
Freshworks Inc. (NASDAQ:FRSH) develops global SaaS solutions for customer and employee experiences.
On February 12, Cantor Fitzgerald maintained a Buy rating on Freshworks (NASDAQ:FRSH) and raised its price target to $22 from $18. The firm highlighted that Freshworks trades at a significant discount compared to peers like Atlassian, HubSpot, and ServiceNow. Freshworks’ increasing presence in the mid-market and enterprise sectors now accounts for over 60% of its annual recurring revenue. The analyst believes the company’s product features, pricing, and AI advancements position it well for future growth, especially in deploying enterprise AI across different business roles.
Additionally, Scotiabank analyst Nick Altmann raised Freshworks’ (NASDAQ:FRSH) price target from $17 to $19 while maintaining a Sector Perform rating. The company’s FY25 outlook slightly exceeded consensus expectations, with Freddy AI remaining a main focus. Additionally, Freddy Copilot is performing ahead of internal projections, with significant monetization expected in 2025, the firm noted.
6. GDS Holdings Limited (NASDAQ:GDS)
Number of Hedge Fund Holders: 32
GDS Holdings Limited (NASDAQ:GDS) operates data centers in China, offering colocation, managed hosting, cloud services, and consulting to cloud providers, internet firms, financial institutions, and more.
On February 12, Morgan Stanley analyst Yang Liu reaffirmed an Overweight rating and a $39 price target on GDS Holdings Limited (NASDAQ:GDS), and highlighted it as a catalyst-driven idea ahead of Alibaba’s FY3Q25 earnings on February 20. The report is expected to provide insights into Alibaba’s future CapEX and cloud revenue outlook, which are important for GDS’s growth since Alibaba is its largest customer in China. Three potential scenarios were outlined: if Alibaba maintains FY26 capex at around RMB 70 billion (US$1 = RMB 0.14) or provides no CapEX update, GDS’s stock impact is expected to be neutral.
A more than 10% capex increase driven by AI investments, coupled with a bullish cloud revenue outlook, could lead to more new bookings and faster move-ins for GDS, potentially driving a 10% increase in share price. On the other hand, a CapEX reduction could slow GDS’s move-ins and result in a 10% stock price decline. Additionally, any AI investment increases, especially after Alibaba’s partnerships with Apple, Qwen model releases, and ByteDance’s investment plans, could further drive demand across the data center industry.
5. Super Micro Computer, Inc. (NASDAQ:SMCI)
Number of Hedge Fund Holders: 33
Super Micro Computer, Inc. (NASDAQ:SMCI) develops and provides modular server and storage solutions, software, and support services for enterprise, cloud, AI, and 5G markets worldwide.
On February 11, Super Micro (NASDAQ:SMCI) announced preliminary FQ2 2025 results and provided an update on Supermicro’s fiscal 2025 progress. Projected net revenue is expected between $5.6 billion and $5.7 billion, a 54% year-over-year increase. The company expects continued growth fueled by AI demand and the transition to Blackwell GPUs. Preliminary non-GAAP earnings range from $0.58 to $0.60 per share, with margins affected by product mix and R&D investments.
Technology progress includes shipments of NVIDIA Blackwell products and expanded liquid-cooled data center solutions, which aim to lower costs and improve energy efficiency. Production capacity is increasing across Malaysia, Taiwan, Europe, and the U.S.
The management said that AI platforms contributed over 70% of Q2 revenue. Despite some margin pressure, cash flow remains managed, and cash ended at $1.4 billion. Adjustments were made to prior financial results without a restatement. Supermicro expects Q3 revenue between $5 billion and $6 billion, with updated fiscal 2025 revenue guidance at $23.5 billion to $25 billion. Completion of fiscal year 2024 filings is anticipated by the extended Nasdaq deadline.
4. Arm Holdings plc (NASDAQ:ARM)
Number of Hedge Fund Holders: 38
Arm Holdings plc (NASDAQ:ARM) designs and licenses microprocessors, system IPs, and related technologies for semiconductor companies across industries like automotive, consumer tech, and IoT.
On February 12, TipRanks reported that Sara Russo from Bernstein maintained a Sell rating on ARM Holdings, keeping the price target at $100. Despite ARM’s strong quarterly results exceeding revenue and EPS expectations, concerns remain about its high valuation relative to industry averages. While the company’s long-term prospects in AI and CSS look favorable, a shift toward licensing may lead to a slight royalty revenue decline. Additionally, increased R&D spending could limit short-term margin growth, leading to continued skepticism about its current valuation.
3. PG&E Corporation (NYSE:PCG)
Number of Hedge Fund Holders: 49
PG&E Corporation (NYSE:PCG) provides electricity and natural gas services to various customers in northern and central California.
As reported by The Fly on February 11, Citi estimates that PG&E could have around 5 GW of potential data center load, including 3.4 GW in the engineering study phase by 2029 and an additional 1.5 GW projected from 2030 to 2040. However, concerns about this demand materializing have increased due to issues like wildfires, rate-making challenges, local opposition, and reliability risks. If California’s data center expansion slows, Citi’s telecom team expects improved pricing, margins, and returns for existing and future facilities, favoring Digital Realty and Equinix. Citi maintained a Buy rating on PG&E with a $21 price target.
2. Equinix, Inc. (NASDAQ:EQIX)
Number of Hedge Fund Holders: 55
Equinix, Inc. (NASDAQ:EQIX) provides a digital infrastructure platform that helps organizations interconnect and scale their services efficiently while supporting sustainability goals.
On February 12, Equinix reported Q4 non-GAAP EPS of $7.92, exceeding expectations by $5.18, while revenue reached $2.26 billion, up 7.1% year-over-year but missing estimates by $10 million. For 2025, the company projects revenue of $9.03–$9.13 billion, below the $9.45 billion consensus. Adjusted EBITDA is expected at $4.39–$4.47 billion with a 49% margin. AFFO is forecasted at $3.61–$3.69 billion or $36.69–$37.51 per share, above the $27.52 consensus, reflecting a 5–7% increase.
Adaire Fox-Martin, CEO and President of Equinix commented:
“Our strategic focus on our customers, solutions, and capacity has not only driven remarkable financial results, but also positioned Equinix to make the very most of the growing AI opportunity. With 22 years of consecutive quarterly revenue growth, a record-breaking Q4 and full year in gross bookings, and significant advancements in our xScale portfolio, we have demonstrated our ability to deliver sustained value to our customers and shareholders alike—all whilst setting our business and ecosystem up to scale even more in the years ahead.”
1. Western Digital Corporation (NASDAQ:WDC)
Number of Hedge Fund Holders: 66
Western Digital Corporation (NASDAQ:WDC) manufactures and sells data storage solutions, and enterprise storage products globally.
On February 12, TipRanks reported that Wells Fargo analyst Aaron Rakers maintained a Buy rating on Western Digital with an $85 price target. He talked about expected revenue growth driven by increasing data storage needs and advancements in AI and autonomous driving, with the total addressable market forecasted to grow from $65 billion in 2024 to $100 billion by 2030. Rakers also highlighted Western Digital’s efforts in cost management and margin improvement, along with its partnership with Kioxia in flash memory, as significant factors supporting the positive rating.
While we acknowledge the potential of Western Digital Corporation (NASDAQ:WDC) as an investment, our conviction lies in the belief that 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 WDC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure. None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
