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).
A laptop and a computer monitor display a detailed stock market technical analysis chart. Photo by Jakub Zerdzicki on Pexels
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.”
4. Broadcom Inc (NASDAQ:AVGO)
Number of Hedge Fund Investors: 128
Sara Kunst from Cleo Capital said in a latest program on CNBC that Broadcom will remain a key AI player in the chips space. When asked whether Nvidia’s continuous rise would impact Broadcom Inc (NASDAQ:AVGO) 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 Broadcom Inc (NASDAQ:AVGO) 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.”
Baron Opportunity Fund stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q3 2024 investor letter:
“We continued to build our position in Broadcom Inc. (NASDAQ:AVGO), a global technology leader that designs, develops, and supplies a broad range of semiconductor and infrastructure software solutions. As AI continues to proliferate, we believe hyperscalers – such as Meta, Microsoft Azure, Google Cloud Compute, and Amazon Web Services, to name just a few – will increasingly deploy custom accelerator chips for their AI workloads as they can be more cost-effective and energy-efficient than using NVIDIA’s general-purpose GPUs. Broadcom has a leading position partnering with hyperscalers to develop these custom chips, with its AI customer accelerator business up 3.5-times year-over-year in its most recently reported quarter, and a goal of at least $8 billion in custom accelerator revenues for this fiscal year. Additionally, VMware continues to perform better than expected as Broadcom is implementing its product simplification and subscription revenue model strategy. Further, its non-AI related semiconductor business, which tends to be more cyclical, is in the early stages of a recovery. Combined, all these factors will drive strong revenue and earnings growth over the next several years.”
3. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 158
Daniel Newman from The Futurum Group was recently asked on Schwab Network his thoughts on Apple Inc (NASDAQ:AAPL). The analyst explained why he was skeptical about the stock.
“I’m still skeptical about Apple Inc (NASDAQ:AAPL) because of where the valuation sits. I mean, this is one of the most consequential companies in the world. It has a massive install base, but I just don’t think it’s quite gotten its AI rollout correct. That could be artificial intelligence or app intelligence. The early readouts are low use and not super great value.
The fact that it’s connecting back to OpenAI says the company really hasn’t executed yet in terms of figuring out its plan for language models and video models. We’ve also seen this kind of super cycle that was promised to the market for smartphones and next-generation PCs sputter a bit.
I mean, you’d think even just one year between CES events—in 2024, it was supposed to be the year of the AI PC and the AI smartphone. We heard “super cycle” over and over again, and we’ve seen nothing, if not just a blip of an uptick.”
Apple Inc (NASDAQ:AAPL) is desperately in need of new catalysts. The company’s revenue in China fell 8% in fiscal year 2024, following a 2% decline the previous year. The Chinese market accounts for about 15% of Apple’s total revenue, so this downtrend cannot be ignored.
Investors had hopes from the Wearables, Home, and Accessories segment, but so far its performance has been weak. Vision Pro faces tough competition from Meta’s $500 Quest and the more affordable Quest 3S, making it hard to justify its $3,500 price tag. The failure of Apple’s HomePod, unable to compete with Amazon’s and Google’s lower-priced offerings, further highlights the challenges in this market.
Apple’s iPhone 16 has not shown promising growth prospects yet and investors are still in a wait-and-see mode on the AI platform.
CDT Capital Management stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q4 2024 investor letter:
“The crowd. While this evolution in AI is going to change the world, market expectations for the technology have become unhinged. The crowd, which is more like an exuberant mob, anointed the Mag 7 with spectacular, nonsensical valuations based on the premise that AI will be an amazing, money-printing growth engine for these companies – and the truth is it likely will be. The problem is that the math just isn’t mathing.
Let me explain what I mean by picking on the world’s most valuable stock, Apple Inc. (NASDAQ:AAPL). For background, Apple does not have a robust homegrown AI platform, nor does it have a plan to meaningfully monetize AI from Apple users. Right now, from our perspective, Apple’s, Apple Intelligence strategy of implementing third-party AI tools to stay competitive will likely be more of a cost of doing business than an avenue for sales and yet in 2024, the stock soared +33% based on the AI dream as exemplified by the quote below.
2. Alphabet Inc (NASDAQ:GOOG)
Number of Hedge Fund Investors: 160
Jessica Inskip from StockBrokers.com recently said in a program on Schwab Network that Alphabet Inc (NASDAQ:GOOG) is one of her top picks for 2025 because of several factors. Here is how she explained her bull thesis:
“This is going to be one of my top stock picks of the year thus far, and it goes again with that AI narrative and the AI ecosystem. The next leg that I see coming is actually AI agents. There are lots of resources and next-gen assistants, and even this Vertex AI Agent Builder that Google—or Alphabet Inc (NASDAQ:GOOG), has, which is going to lead that initiative and make it easier for enterprises.
We still need that Nvidia chip, and there’s still this interconnectivity among the hyperscalers, but I think AI agents are what we’re going to see transform. That’s really my theme from the AI lens for 2025, and I put Google at the forefront of that.”
The market has been ignoring Alphabet Inc (NASDAQ:GOOGL)’s key secondary businesses and the stock remains undervalued despite concerns around AI search and regulatory onslaught.
Alphabet Inc (NASDAQ:GOOGL)’s secondary ventures in AI, autonomous driving, and other areas are making solid progress, especially in the Waymo robotaxi segment. With the 2025 EPS forecast at around $9, Alphabet (NASDAQ:GOOGL) could realistically achieve earnings closer to $10 if it maintains its historical outperformance rate. At a projected $10 EPS, Google’s forward P/E multiple would be approximately 17, a relatively low valuation for a diversified market leader.
What are the key drivers for Alphabet (NASDAQ:GOOGL)?
Alphabet Inc (NASDAQ:GOOGL) remains on track to reach a $100 billion revenue run rate from YouTube Ads and Google Cloud by the end of 2024. In its autonomous driving division, Waymo has shown notable progress, with paid autonomous rides growing 200% quarter-over-quarter to 150,000 weekly rides as of late October, thanks to a fleet of 700 vehicles in service since August.
This growth is significant: Waymo vehicles now average about 30.6 autonomous rides per day—substantially higher than Uber’s average of 4.18 rides per driver daily, based on Uber’s 31 million daily trips and 7.4 million drivers last quarter. This performance underscores Waymo’s competitive edge in autonomous ride volume compared to traditional ride-hailing.
Google Cloud has been expanding steadily, with revenue climbing from $13.06 billion in 2020 to $33.09 billion in 2023. Notably, Google Cloud turned profitable for the first time in 2023, posting $1.72 billion in operating profit—a significant improvement from a $5.61 billion loss in 2020. This segment’s performance continues to strengthen, with the latest quarterly revenue reaching $11.35 billion, up 35% from $8.41 billion in the same period last year.
RiverPark Large Growth Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q3 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOG): Google was our top detractor in the third quarter despite reporting second quarter results that were generally in line with expectations. The company reported slightly better revenue growth in Search, which grew 14% and continues to be resilient in the face of AI challengers, and Google Cloud, which grew 29% in the quarter. Service operating income margins of 40% and Cloud operating income margins of 11% were also both ahead of investors’ expectations as management’s cost-efficiency efforts drove operating leverage. YouTube revenue growth was slightly below expectations (+13% v. +16%) driven by tougher year-over-year comparisons and some general weakness in the Brand Advertising vertical. Finally, Cap Ex in the quarter of $13.2 billion was more than expected and likely the driver of the weakness in the stock as investors grapple with how much infrastructure investment will be required to achieve Google’s AI goals.
1. NVIDIA Corp (NASDAQ:NVDA)
Number of Hedge Fund Investors: 193
NVIDIA Corp (NVDA) bull Stacy Rasgon, Bernstein Research managing director, was recently asked on CNBC what could be the biggest competitor to Jensen Huang’s company. The analyst said custom AI chips space, or ASICs, can “outgrow” NVIDIA Corp (NASDAQ:NVDA). However, this does not worry the investor for now.
“I actually do think the ultimate shake is probably NVIDIA Corp (NASDAQ:NVDA) GPUs, and then for captive workloads at hyperscalers, it’ll likely be ASICs—they’re all working on their own. I suspect ASICs, frankly, will probably outgrow in the sense that they’re coming from a much smaller base. But you can do the math today. If I was, you know, it’s a little bit of monkey math, but I bet ASICs relative to GPUs are probably low double digits—10, 11, 12% of the spend today. Could that number be 20% of a much bigger pie in 5 years? Yeah, I think it could.
But my sense is that’s the likely competition now. Does it worry me? It doesn’t really worry me at this point because I don’t think we’re on the saturated part of the S curve. Things are still growing. So right now, I think the question to ask is, is it a big market or is it not? If it’s a big opportunity, I think there’s room for everybody. If it’s not a big opportunity, then everybody’s in trouble. So I think that’s the question that you want to have confidence in one way or the other. I’ll worry about competition later—I don’t think it’s the time to worry about it now.”
Manole Capital Management stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q3 2024 investor letter:
“As of this publication, Nvidia is up roughly 150% year-to-date. NVIDIA Corporation (NASDAQ:NVDA) was the largest gainer in the S&P 500 last year and has more than tripled in value over the last year. It hit an eye-opening market capitalization of $3 trillion in June, less than four months after it eclipsed the $2 trillion mark. Enthusiasm for everything AI-related, especially for the primary chip maker whose products are essential to powering AI technology, continues to fuel the market. Last quarter, and for the fifth consecutive quarter, Nvidia reported sales and profits that blew past Wall Street expectations. The stock rose +37% in the second quarter alone.”
While we acknowledge the potential of NVIDIA Corp (NASDAQ:NVDA), our conviction lies in the belief that under the radar 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 NVDA 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.
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