In this article, we will take a detailed look at 10 AI Stocks Everyone is Talking About These Days.
President Donald Trump’s $500 billion investment plan to build AI infrastructure, Stargate, is making waves as analysts believe the project provides a new growth catalyst for major tech companies. Sasha Ostojic, Playground Global venture partner, said in a latest program on CNBC that the plan is just the beginning of AI “renaissance” in the country:
“Stargate is just the beginning, I think, of this renaissance of AI technology in this country, even though it seems like we’ve been in it for a few years. And, you know, it reminds me of the Apollo program from the 50s and 60s. In that case, it was a government-run program that created a bunch of technology, propelled the world forward, created a bunch of companies, and set us up for a lot of prosperity in the decades to follow.”
Ostojic also talked about the Jensen Huang-led company and said its stock has been going “sideways” and the market is waiting for the next big “trigger.” He is bullish on the company and thinks the $500 billion plan with the company at its center could be the next growth catalyst investors were waiting for.
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For this article, we picked 10 AI stocks currently trending on the back of the latest news. With each stock, we have mentioned the number of hedge fund investors. 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).
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10. Palantir Technologies Inc (NASDAQ:PLTR)
Number of Hedge Fund Investors: 43
Malik Ahmed Khan from Morningstar in a recent program on CNBC explained why he is worried about Palantir Technologies Inc (NASDAQ:PLTR) valuation.
“The US commercial side of the business is actually doing really well and is firing on all cylinders. Our issue with Paler as a stock has been its valuation, and that’s what we’ve highlighted over the last few quarters. The valuation is getting out of hand, especially if you think about trying to bake in the assumptions that would take you to the current stock price. Those are some very, very optimistic assumptions.”
The analyst is right. Palantir’s revenue growth is expected to slow over the next two years, with estimates suggesting a 22% YoY growth rate, potentially bringing revenues to around $4 billion by fiscal 2026. If Palantir Technologies Inc (NYSE:PLTR) can improve margins by 100 basis points annually, it would be able to generate about $1.5 billion in adjusted operating income by FY26, with a present value of $1.3 billion when discounted at 8%. Applying an S&P 500-like growth multiple of 2.5 to 2.75 times earnings, Palantir Technologies Inc (NYSE:PLTR) would have a P/E of 46, translating to a price target of $27, significantly down from its current price.
Fidelity Growth Strategies Fund stated the following regarding Palantir Technologies Inc. (NASDAQ:PLTR) in its Q3 2024 investor letter:
“Untimely ownership of Palantir Technologies Inc. (NASDAQ:PLTR) (+47%) also hurt the fund’s relative result. This software and services firm, which operates in both government and commercial segments, saw strong growth during the quarter, largely driven by its “AIP” – or Artificial Intelligence Platform – offering. In early August, the company reported Q2 financial results that mostly met somewhat lofty expectations. We established a sizable holding in Palantir Technologies during the quarter, and at quarter end it was the second-largest position and a slight overweight.”
9. Marvell Technology Inc (NASDAQ:MRVL)
Number of Hedge Fund Investors: 70
Sara Kunst from Cleo Capital said in a latest program on CNBC that Marvell will remain a key AI player in the chips space. When asked whether Nvidia’s continuous rise would impact Marvell Technology Inc (NASDAQ:MRVL) negatively, the investor said:
“What we’ve seen over the last year or so is that once the market finds a new old—in most cases, these aren’t new companies—you know, AI companies, they tend to double down on it for a while. So I would guess that Marll is going to have a good run as long as their fundamentals can continue to be good. I think that the market has a lot of appetite for new AI names, and I suspect that those are going to remain kind of the darlings for a while.”
Artisan Mid Cap Fund stated the following regarding Marvell Technology, Inc. (NASDAQ:MRVL) in its Q2 2024 investor letter:
“During the quarter, we initiated new GardenSM positions in CCC Intelligent Solutions, Marvell Technology, Inc. (NASDAQ:MRVL) and Insmed. Marvell Technology is a semiconductor company offering networking, secure data processing and storage solutions to customers worldwide. We believe Marvell has among the broadest range of intellectual property in technological areas (e.g., high-bandwidth data switching and storage applications) that position it well for the growing requirements of data centers, wireless networks and autos. Several of the company’s product lines (e.g., custom silicon, optical connectivity and switching) are benefiting from the growth of AI data centers. And we believe a significant opportunity exists for the company to help design and manufacture cost-effective custom data center chips that would help cloud providers reduce their reliance on expensive graphics processing units (GPUs). Furthermore, like many other semiconductor companies, a portion of its business may be poised for a cyclical recovery after the industry’s recent inventory correction.”
8. Tesla Inc (NASDAQ:TSLA)
Number of Hedge Fund Investors: 99
Daniel Newman from The Futurum Group said while talking to Schwab Network that investors “pour in” when Elon Musk tells a story and he believes autonomous driving, solar and electric cars could be the key drivers for Tesla Inc (NASDAQ:TSLA) shares in the future.
“You saw the recent deliveries numbers—not necessarily where they need to be, but the market seems to be willing to shrug that off as a whole. Of course, it’s always a little bit more volatile. Tesla is a stock that can move in really big ways and seems to be a very emotional move.
The other thing, though, is in the short term, getting that RoboTaxi and getting people to believe that’s a real thing and starting to monetize it. That smaller Tesla Inc (NASDAQ:TSLA) 2 model they talk a lot about, Nicole, is something that could really move the needle because that changes the spreadsheets.”
Looking beyond the recent spike in Tesla shares amid Donald Trump’s victory, Tesla’s fundamentals are challenged. How? Tesla Inc’s (NASDAQ:TSLA) key robotaxi event was short on details. Notably absent was the discussion of a “more affordable” model that Musk had previously mentioned to boost confidence in Tesla’s vehicle sales growth outlook.
What about the $30,000 price tag claim?
Musk has indicated that the Cybercab will have a production cost of approximately $30,000. Operating within the robotaxi fleet is projected to cost around $0.20 per mile. With a production cost of $30,000, the retail price of the Cybercab is likely to exceed this figure. For instance, if the Cybercab is priced at $30,000 per unit, that translates to $15,000 per seat. In contrast, the average price per passenger seat in Tesla Inc (NASDAQ:TSLA)’s most affordable long-range RWD Model 3—factoring in full self-driving (FSD) licensing—is under $10,000 ($29,990 post-incentive vehicle price plus $8,000 for the FSD license, divided by four passenger seats). Regarding operational costs, while the Cybercab is expected to cost $0.20 per mile, charging the Model 3 is estimated at under $0.10 per mile, leaving a significant margin to cover maintenance and downtime.
There is a lot of hype around Tesla Inc (NASDAQ:TSLA) robo taxis but many believe they will not be enough to fix the company’s long-term challenges.
What are these challenges?
Tesla Inc’s (NASDAQ:TSLA) product lineup is showing signs of stagnation, with over 95% of sales still coming from the Model 3 and Model Y. Meanwhile, competitors are rolling out more advanced models. Even Rivian’s CEO suggested Tesla Inc (NASDAQ:TSLA) could be nearing market saturation for these models. According to Reuters, Tesla’s market share in Europe is slipping as legacy automakers like BMW post stronger sales. Chinese competitor BYD is also gaining ground in Europe, despite talk of tariffs.
Delaware Ivy Core Equity Fund stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q3 2024 investor letter:
“Tesla, Inc. (NASDAQ:TSLA) – Though it isn’t a holding within the portfolio, Tesla continues to be a cult-like stock with weak fundamentals dependent on highly speculative development of autonomous driving technology. The company’s share price moved higher during the quarter after weakness in the year-to-date period.”
7. Advanced Micro Devices Inc (NASDAQ:AMD)
Number of Hedge Fund Investors: 107
Jim Cramer in a latest program on CNBC commented on the recent downgrade action on Advanced Micro Devices Inc (NASDAQ:AMD) shares by HSBC, calling it “jarring.”
“HSBC, it’s not my first guy to when I follow the semis but he goes from buy to sell. You know those are pretty big and saying listen, there’s a weaker road map they’re not being able to catch up to Nvidia they do believe that there’s the possibility that they will miss the numbers. David. I’ve got to tell you, Advanced Micro Devices Inc (NASDAQ:AMD) is one where it was not unexpected because the stock has not moved like the others but it’s still jarring when you read it.”
HSBC Frank Lee downgraded the stock to Sell and cut his price target to $110 from $200 calling the company’s offerings “less competitive” compared to Nvidia.
Rogue Funds stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q3 2024 investor letter:
“We sold our Advanced Micro Devices, Inc. (NASDAQ:AMD) puts for a sold profit after the Japan Carry Trade caused volatility to spike considerably and allowed for a significant increase in the value of our put options. I felt that was an ideal time to capture these profits which has turned out to be a good choice in hindsight.”
6. Netflix Inc (NASDAQ:NFLX)
Number of Hedge Fund Investors: 121
Daniel Newman from The Futurum Group explained in a latest program on Schwab Network why he believes Netflix has a bright future. He said the NFL games streaming on Netflix Inc (NASDAQ:NFLX) proved to be an “inflection” point for the company.
“Netflix has always kind of led the content, led the development, led the subscription rates, and led the growth. They’ve had some sticky moments over the past few years, but those that stuck with it, those that believed, have seen really great returns from Netflix Inc (NASDAQ:NFLX). And you bring in the NFL, which, of all the sports, is kind of the Holy Grail. Now you start to think there could be some really exciting times ahead for Netflix Inc (NASDAQ:NFLX).”
Sensing major threats amid rising competition in the market from Disney Plus, Peacock (CMCSA), Max. Amazon and YouTube, Netflix Inc (NASDAQ:NFLX) has fired all engines and is using a multi-pronged approach to thrive. Netflix Inc (NASDAQ:NFLX) is expanding into emerging markets, aggressively focusing on user engagement and tapping into advertisement and gaming. Netflix Inc (NASDAQ:NFLX) is also expanding into NFL games and WWE. Netflix’s ad-tier now has 40 million global monthly active users, up from 23 million in January.
Polen Focus Growth Strategy stated the following regarding Netflix, Inc. (NASDAQ:NFLX) in its Q2 2024 investor letter:
“Finally, we trimmed Netflix, Inc. (NASDAQ:NFLX) mostly due to valuation but also as a source of funds to add to the new position in Shopify. As a reminder, we added to our position in August 2022 amid broad concerns about the company’s ability to grow and monetize shared passwords. We expected Netflix to show progress in monetizing shared passwords, leading to robust free cash flow generation. This is now playing out and is appreciated by the market. Hence, given the balance of growth and valuation, we felt it was appropriate to reduce our exposure to a more normal weight.”
5. Adobe Inc (NASDAQ:ADBE)
Number of Hedge Fund Investors: 123
Adobe (NASDAQ:ADBE) was recently downgraded by Deutsche Bank amid a lack of “tangible” evidence for monetizing artificial intelligence.
“Although management has praised Firefly’s potential, we haven’t yet seen its effect on the financials,” said Deutsche Bank analyst Brad Zelnick in a note to clients. “Full-year [constant currency net-new annual recurring revenue] still slowed for the third consecutive year on a dollar basis in FY24, with Street estimates anticipating further deceleration in FY25.” Zelnick lowered his rating on Adobe to Hold from Buy and reduced his price target to $475 from $600.
Zelnick also expressed concerns about the health of Adobe Inc (NASDAQ:ADBE) core Creative business, noting that Creative Cloud growth may have been affected by the allocation of Document Cloud and Cyber Monday, both of which occurred in fiscal 2025’s first quarter.
Parnassus Core Equity Fund stated the following regarding Adobe Inc. (NASDAQ:ADBE) in its Q3 2024 investor letter:
“Also in the Information Technology sector, we exited a position in Adobe Inc. (NASDAQ:ADBE) and initiated a new one in Synopsys. Adobe is contending with market cyclicality, rising competition and lofty AI monetization expectations that are unlikely to be met in the near term. We sold Adobe for Synopsys, which faces fewer competitive threats and has room to grow as companies adopt Synopsys software for custom semiconductor design.”
